Tata Consultancy Services, India’s largest software services company, has reported a 7% drop in net profit for the quarter ended September 30, but registered a 6.6% growth on a sequential basis. The company also announced a share buyback proposal of 160 billion rupees (US$ 2.18 billion) and the resumption of salary hikes.

For the current second quarter, the IT giant recorded a profit of 74.75 billion rupees ($1.02 billion), as against 80.42 billion rupees in the corresponding quarter of the previous fiscal. In the previous quarter ended June 30, the company reported a profit of 70 billion rupees, a 14% fall from the year-ago quarter, as Covid-19 had prompted countries to resort to lockdowns and travel curbs.

It posted a revenue of 401 billion rupees ($5.47 billion), up 2.9% on an year-on-year basis and 4.7% on a sequential basis, as the easing of lockdowns by countries in the September quarter led to a ramping up of projects and increased focus on digital technologies.

As for segments, retail and consumer packaged goods recorded the highest growth at 8.8%, followed by life sciences and healthcare (6.9%), and banking, financial services and insurance (6.2%). Technology & services and manufacturing registered a modest growth of 3.1% and 1.4%, respectively, while the communications & media segment saw a negative growth of 2.4%.

The company claimed that geography-wise it has registered a sequential growth in all markets. It grew 3.6% in North America, 3.8% in the UK and 6.1% in continental Europe. In the emerging markets it was 20% in India, 8% in the Middle East Africa region, 5.5% in Latin America and 2.9% in the Asia Pacific.

Share buyback

The IT giant has approved a proposal to buy back 53.3 million equity shares for 3,000 rupees each. It will be 1.42% of the total paid-up equity share capital and the aggregate amount will not exceed 160 billion rupees. In 2018, the company opted for a share buyback of 160 billion rupees.

It also declared an interim dividend of 12 rupees per equity share. In the June quarter it had declared an interim dividend of five rupees per equity share.

Salary hikes

The company said it will resume pay hikes effective October 1 and in the second quarter it had increased onboarding of freshers anticipating an increase in deals. It is also continuing to invest in organic talent development, with a focus on upskilling. As of September 30, Tata Consultancy Services’ consolidated headcount stood at 453,540.

CEO speak

CEO Rajesh Gopinathan said, “Driving accelerated business value realization of our customers’ digital investments has resulted in broad-based revenue growth. The strong order book, a very robust deal pipeline, and continued market share gains give us confidence for the future.”

He added, “What we are witnessing right now is the start of the first phase of a multi-year technology transformation cycle. In the current phase, enterprises are building a cloud-based foundation that will serve as a resilient, secure and scalable digital core. In subsequent phases, we will see the native capabilities of these platforms being utilized to create innovative new business models and differentiated customer experiences.”