INSUBCONTINENT EXCLUSIVE:
Mumbai | Bengaluru: Tata Consultancy Services grew the slowest among industry peers in the third quarter of this financial year hobbled by
structural changes in deals involving large banking and retail customers in the US
Chief executive officer Rajesh Gopinathan termed the muted performance as a “short-term phenomenon,” while also admitting there was
little chance this year of India’s largest software exporter matching its own strong showing in fiscal 2019.
“Overall growth last year
(was) 11.5 per cent, we are not going to be anywhere near that
If we do better than 8 per cent, I’ll be quite happy,” he told reporters at a press conference in Mumbai.
The company’s revenues,
minus currency fluctuations, grew by 0.3 per cent to $5.59 billion over the previous quarter, well below the 1 per cent growth that analysts
were expecting.
TCS is taking a hit on revenue growth due in large part to reduced spending by its largest customers – banks and financial
services companies – in the US and UK that are responding to macro-economic pressures.
Speaking to analysts, Gopinathan said while there
was a dip in spending, the “technology budgets “of these large clients were not “reducing”.
“There is a very strong focus on
optimisation, (what) customers are doing is resetting their structural cost base rather than an absolute cost reduction,” he said.
In
rupee terms, TCS’ profits remained flat at Rs 8,118 crore over the third quarter last year while revenue grew 6.7 per cent to Rs 39,854
In dollar terms, revenue grew 6.4 per cent annually to $5.59 billion.
The company’s stock closed 0.91 per cent down at Rs 2,218.05 on the
BSE on Friday on a day the Sensex closed up 12.1 points at 41,945.37.
TCS’ slower growth comes even as rivals Infosys and HCL Technologies
have raised their guidance for the year
Infosys has forecast it will report overall growth between 10-10.5 per cent in FY20 while HCL Tech now expects 16.5-17 per cent growth,
boosted by acquisitions.
This quarter, the Noida-based company grew 2.1 per cent sequentially while Wipro expanded 1.8 per cent and Infosys
by 1 per cent in the quarter.
TCS headcount also reduced headcount by 4,000 in the quarter, but the company did not offer any reason for the
reduction.
Analysts said TCS’ results would lead to some dampening of growth expectations in the next few quarters.
“We believe these
results will lead to marginal reduction in street expectations,” Brokerage Emkay Global said in a note.
TCS won deals worth $6 billion
dollars in the quarter, taking the total wins to $18 billion in the nine months to December.
North America, the largest market for TCS and
Indian IT firms, grew slow at 4.1 per cent due to issues with its large banking clients.
NG Subramaniam, chief operating officer at TCS,
maintained that the company was gaining market share in the banking vertical.
Responding to questions on the National Company Law Appellate
Tribunal (NCLAT) order reinstating former Tata Sons chairman Cyrus Mistry as a director of the company, Gopinathan said, “The Supreme
Court has granted a blanket stay
We don’t see any impact to the company from that.”
