TCS Reports 2.7% Increase in Q1 Revenue and Expands Workforce by Over 9,000 Employees
BENGALURU: Tata Consultancy Services (TCS) reported a revenue of $7.6 billion for the June quarter, marking a 2.7% increase year-on-year but showing little change sequentially. This performance reflects a cautious demand environment as global companies reassess their technology spending amid ongoing macroeconomic uncertainty and a rapid shift towards artificial intelligence. In constant currency terms, revenue grew by 0.4% sequentially and 3.2% year-on-year.
The company experienced a 2.7% decline in consolidated net profit, influenced by a one-time charge of Rs 668 crore related to the rejection of its appeal in the DXC Technology trade secrets lawsuit. TCS’s operating margin fell to 24%, down 130 basis points sequentially, primarily due to annual wage hikes. Chief Financial Officer Samir Seksaria noted that salary revisions typically impact the first quarter, with margins expected to improve throughout the year. He stated, “Our objective is to move back towards 25% operating margins as early as possible while continuing to invest for future growth.”
IT Sector Trends and Workforce Expansion
The results reflect broader trends in the IT services sector, where discretionary technology spending remains subdued, even as companies increase investments in AI to enhance productivity and modernize operations. TCS CEO K Krithivasan emphasized the company’s resilience in the face of geopolitical and macroeconomic challenges. COO Aarthi Subramanian highlighted that customers are increasingly adopting outcome-based AI programs.
TCS also resumed workforce expansion, adding 9,279 employees during the quarter, the highest quarterly net addition in nearly four years, bringing its total headcount to 593,798. Voluntary attrition in IT services improved slightly to 13.6%. The company onboarded around 14,000 campus graduates during this period. Addressing concerns about AI’s impact on white-collar jobs, Krithivasan stated that jobs are expected to evolve rather than disappear, with new roles emerging in areas such as prompt engineering and model training.
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