TCS Is Experiencing A Pause In Deal Cancellation, Says CEO K Krithivasan
Though North America is a significant revenue contributor, India and Asia Pacific are starting to become big growth markets for TCS after the UK and Europe, the CEO said.
Tata Consultancy Services Ltd. is experiencing a pause in deal cancellations, said Chief Executive Officer K. Krithivasan. "Currently, customers are reevaluating projects. The US election and Fed actions on rate cuts may give clients more confidence." he told NDTV Profit in a post-first-quarter earnings interview.
The deal wins so far have been a mix of cost optimisation, vendor consolidation and transformation, with a bias towards cost optimisation deals, he said.
The IT major's revenue rose 2.2% sequentially on a constant currency basis to Rs 62,613 crore in the three months ending June. Bloomberg analysts had projected Rs 62,128 crore. Revenue in dollar terms increased by 2.7% compared to the March quarter, reaching $7.5 billion.
TCS Q1 Results: Key Highlights (QoQ)
Net profit fell 3.2% to Rs 12,105 crore (Bloomberg estimate: Rs 11,959 crore).
EBIT declined 3% to Rs 15,442 crore (Bloomberg estimate: Rs 15,245.5 crore).
India's largest software services provider reported an EBIT margin of 24.7% for the first quarter of the financial year, down from 26% in the previous quarter, according to its stock exchange notification. Analysts tracked by Bloomberg had estimated a margin of 24.5%.
In the medium term, TCS will continue to stick to achieving a margin in the 26-28% range, Krithivasan said. Despite subcontracting costs having bottomed out and utilisation levels having peaked, pricing still remains the lever for achieving the targeted operating margin range, he said.
Though North America is a significant revenue contributor, India and Asia Pacific are starting to become big growth markets for TCS after the UK and Europe, the CEO said.
The company is doing a lot on the generative AI front, for which it is training all its associates and using AI capabilities internally, he said. TCS has close to $5 billion in GenAI deals in the pipeline.
