In a recent fourth-quarter earnings report, Tata Consultancy Services Ltd. (TCS) displayed a notable boost in its financial performance, demonstrating resilience and adaptability amidst persistent macroeconomic uncertainties. The software services behemoth announced that its net profit escalated by a remarkable 9.1% year-on-year, attaining a figure of ₹12,434 crore for the quarter that concluded in March.
The growth narrative extended to the company’s revenues as well, which saw an upturn of 3.5% to reach ₹61,237 crore. Particularly of note, the company’s operating margin achieved an increase of 150 basis points (bps) to settle at 26%, following an expansion that spoke to prudent management strategies. Furthermore, TCS witnessed a 100 bps growth in its net margin, culminating in an impressive 20.3%.
A geographical breakdown of the growth figures revealed that TCS made significant strides in India with a stellar 37.9% increase. The United Kingdom, another key market for TCS, experienced a substantial 6.2% growth. Also, the manufacturing sector contributed handsomely with a 9.7% rise. This remarkable performance was bolstered by the board’s decision to propose a considerable dividend of ₹28 per share, bringing a note of optimism to the company’s shareholders.
Over the span of the full financial year, TCS’ net profit rose to ₹46,585 crore, a healthy 10.5% increase, while its revenue climbed 6.8% to a robust ₹2,40,893 crore. In a notable nod to its workforce, TCS announced a wage hike for its expansive employee base of over six lakh individuals, varying between 4.5% to 7%. High achievers within the company were rewarded with a double-digit pay rise. Looking ahead, TCS has disclosed plans to hire approximately 40,000 fresh graduates in the upcoming financial year FY25, signaling a bullish outlook on business growth and talent development.
The company’s financial success can be attributed to more than just the numbers. K Krithivasan, Chief Executive Officer and Managing Director, weighed in on the quarterly results stating, “This has been a quarter of strong deal wins execution for us.” His reflection highlighted the contributions from new growth markets such as India, Latin America, the Middle East, and Africa which propelled the company’s accelerating development.
Krithivasan continued, “We are very pleased to close Q4 and FY24 on a strong note with the highest ever order book and a 26% operating margin, validating the robustness of our business model and execution excellence.” In the face of global economic challenges, the company has maintained a close connection with its client base, helping them to focus on their central priorities with a comprehensive portfolio of services and capabilities.
Meanwhile, N. Ganapathy Subramaniam, Chief Operating Officer and Executive Director, amplified the positive sentiment with his assessment of the company’s Q4 achievements. He remarked on the company’s robust performance and the broad-based nature of its deal wins across different industries and regions. Subramaniam’s comments came during what would be his final press conference as company COO, as he is slated to retire in May this year. True to TCS’s innovative spirit, his multiple roles will be rearranged among the existing senior management team, effectively leading to the dissolution of the COO position from May onwards.
From the fiscal perspective, Samir Seksaria, Chief Financial Officer, took pride in the company’s disciplined operations, which played a significant role in expanding its industry-leading margins. Despite the overarching challenges, TCS continued to invest in crucial areas such as workforce reskilling, research, and innovation throughout FY 2024.
Furthermore, the company’s Chief HR Officer, Milind Lakkad, spoke of the state of the workforce, mentioning a reduction in attrition to 12.5%, the enthusiastic response to campus hiring, and the fact that increased customer interactions coupled with employees returning to offices have breathed renewed energy and morale into TCS’s delivery centers.
As TCS stands poised at the dawn of a new financial horizon, the company is well-positioned to leverage its strengths and a broad portfolio to drive growth and profitability in an unpredictable global market. Its robust performance in Q4 directly reflects the company’s capacity to manage headwinds effectively while nurturing its vast human resource capital and fostering technological innovation.
