TCS Cuts 2,000 Jobs As Its Operating Margin Contracts 0.5% In Q3

Tata Consultancy Services (TCS) on Monday reported Q3 FY23 revenue at Rs 58,229 crore, +19.1 per cent YoY, +13.5 per cent YoY in constant currency.

During the quarter, the company’s operating margin was 24.5 per cent, a contraction of 0.5 per cent YoY. Its Net Income was recorded at Rs 10,846 crore, +11 per cent YoY and its Net Margin at 18.6 per cent.

Meanwhile, TCS’ Net Cash from Operations was Rs 11,154 crore, 102.8 per cent of Net Income.

TCS workforce was at 6,13,974 as on December 31, 2022, a net reduction of 2,197 during the quarter.

The company’s IT services attrition on an LTM basis trended down to 21.3 per cent and is expected to fall further in the coming quarters.

In a statement, Rajesh Gopinathan, Chief Executive Officer and Managing Director, TCS said: “We are pleased with our strong growth in a seasonally weak quarter, driven by cloud services, market share gains through vendor consolidation, and continued momentum in North America and UK. The sustained strength of demand for our services is a validation of the value we provide to our clients in helping them differentiate themselves, while enhancing their competitiveness. Looking ahead, and beyond current uncertainties, our longer-term growth outlook remains robust.”

In a recent report, ICRA said that the operating margins of the IT services sector for the sample set had moderated by 200-250 bps on a year-on-year (YoY) basis in H1 FY2023 due to continued wage cost inflation and normalisation of operational overheads in Indian IT services.

TCS’ growth in quarter was led by Retail and CPG (18.7 per cent) and Life Sciences & Healthcare verticals (+14.4 per cent). Communications & Media grew +13.5 per cent and Technology & Services grew +13.6 per cent. Manufacturing grew +12.5 per cent while BFSI grew +11.1 per cent.

Among major markets, North America and UK led with +15.4 per cent growth; Continental Europe grew +9.7 per cent. 

In emerging markets, Latin America grew +14.6 per cent, India grew +9.1 per cent, Asia Pacific grew +9.5 per cent and Middle East & Africa grew +8.6 per cent.

TCS shares had closed at more than 3 per cent higher at Rs 3,310 apiece on the BSE, at the closing time on Monday ahead of Q3 results.