India’s biggest software exporter saw its earnings dip at home during this year’s virus surge while its business abroad continued to thrive with revenues growing as much as 20% in some regions
Tata Consultancy Services, India’s biggest software exporter, saw its home market shrink as coronavirus infections raged across the world’s second most populous nation.
The IT giant revealed on Thursday that it made a net profit of 90.08 billion rupees ($1.20 billion) in the quarter that ended June 30, an increase of 28% on the same quarter last year when figures were also cut by the pandemic.
But on a quarterly basis, the profit of India’s second most valuable company by market capitalisation declined by 2.6%, despite a strong performance in North America and Europe.
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“It’s a story of two markets,” chief executive officer Rajesh Gopinathan said. “We have the core markets, which are growing very strongly, and we have primarily the Indian market that has been significantly impacted, degrowing at minus 14%.”
India suffered a devastating Covid-19 wave in April and May that caused tens of thousands of deaths and closed many businesses.
Wage hikes also affected what is usually a strong quarter for India’s IT sector, resulting in TCS’s operating margins shrinking by 1.3% quarter on quarter, to 25.5%.
Revenues jumped 18.5% year on year, to 45.41 billion rupees, according to a company statement, but against the previous quarter rose only 3.9%.
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Growth was led by North America, Europe and Latin America, where revenues grew between 16 and 20%, year on year.
Big-ticket deals and contract renewals in the quarter maintained TCS’s order book at $8.1 billion, following record order wins of $9.2 billion in the previous quarter.
Chief operating officer N. Ganapathy Subramaniam called it another “superior quarter” for orders. The company added 20,409 employees in the quarter, its highest net addition ever.
TCS was at the forefront of an IT boom that saw India become a back office to the world as firms in North America and Europe subcontracted work, taking advantage of a skilled English-speaking workforce. The company earns more than 80% of its revenues from Western markets.
Shares of TCS closed 0.67% lower in Mumbai ahead of the results being released.
- Reporting by AFP
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