TCS Q3 profit up 31.6 percent, amid weak Indian market

Indian outsourcing giant posts 31.6 percent climb in net income to US$858 million and 3.8 percent growth in revenue to US$3.44 billion, fueled by robust global demand which buffered "soft demand" in its local market.

Tata Consultancy Services (TCS) has posted stellar results in its latest quarter, clocking a 31.6 percent climb in profits and 3.8 percent increase in revenue. It attributes the strong growth to robust global demand and the company's diversified market presence, among others.

India rupee
TCS expects to see stronger growth in 2014.

In a statement released Thursday, the Indian outsourcing giant said it recorded US$858 million in net income for the third quarter, ended December 31, up 14.7 percent from US$748 million in the previous quarter, and 31.6 percent from US$652 million in the same quarter 2012.  

Its revenue grew 16.6 percent to US$3.44 billion, compared to US$2.95 billion the previous year, and climbed 3.03 percent from US$3.34 billion in the previous quarter. Earnings per share climbed to US$0.44 from US$0.33 in the same quarter last year. 

TCS CEO and Managing Director N. Chandrasekaran said strong global demand for the company's services, "discipline in execution", as well as diversified market presence and services portfolio drove the growth momentum, especially amid softer demand in the Indian market. And he expects the new year to fuel bigger growth for TCS. 

"Based on initial discussions with our customers, we believe 2014 will be a stronger year for us than 2013 as customers execute their business plans in a relatively stable environment," Chandrasekaran noted. "With digital technologies rapidly changing the way an enterprise operates in multiple dimensions, our continuous investments positions us well to help customers re-imagine their business."

The company pointed to verticals such as life science and healthcare, manufacturing, and telecommunications which drove third-quarter growth. Europe also fueled demand with continuous investments in the region, it said, pointing to a multi-year, multi-million dollar deal it inked in Europe with a "leading pharmaceutical company". While other regions including Asia-Pacific and North America also saw strong growth, TCS said its India business declined from market volatility. 

"I don't feel any uneasiness at all. We are in a market where we are doing well and we compete with many companies."

~ N. Chandrasekaran, TCS CEO, on rival Infosys

The company added 5,463 employees, bringing its total headcount to 290,713 on a consolidated basis, with a 10.3 percent attrition rate in IT, and 13.4 percent in BPS (business process services). "To support business growth, we have increased our hiring target by a further 5,000 employees for the current financial year to 55,000 professionals," said Ajoy Mukherjee, TCS' executive vice president and global head for human resources. The BPO vendor is India's largest private sector employer.

Last week, the company unveiled plans to set up a corporate learning and development center with the capacity to train 50,000 professionals a year. Touted as the world's largest of such facilities, the TCS Learning Campus will be built in technopark area of Thiruvananthapuram over 6.1 million square feet, in a property stretching 97 acres. 

At media briefing in Mumbai, Chandrasekaran told local reporters the company remained unconcerned about its competitors, specifically, Infosys , which had been making significant efforts in recent months to turn the company around . Infosys last week also beat estimates with a 21.4 percent profit growth in its December-ending quarter.

"I don't feel any uneasiness at all. We are in a market where we are doing well and we compete with many companies. Our focus is on the customers. I can't really comment on a specific company," Chandrasekaran said, adding that the company will not make any changes to its pricing strategy.