Tata Consultancy Services, India’s largest software exporter, reported a 5.9 per cent decline in first-quarter profit at ₹5,950 crore, from ₹6,318 crore in the year-ago period, due to a stronger rupee and wage hikes. Revenue, however, improved marginally to ₹29,584 crore (₹29,305 crore in the year-ago quarter).

“The currency impact pulled down our rupee earnings, creating an impact of ₹650 crore... we’ve had fairly stable profitability except for two factors: one seasonal, one external,” said CEO Rajesh Gopinathan.

“....the impact of currency on profitability is 80 basis points. On top of that, we’ve had [a] 150-basis-point impact from our wage increments, which were at ₹450 crore”.

Operating margin in the reporting quarter declined to 23.4 per cent (25.1 per cent).

Club of uncertainties Beginning this quarter, TCS had clubbed volatile markets such as India, the Middle East, and Japan into a single group called ‘Regional Markets and Others’. This segmentation is to assist in a more accurate discussion of its business performance, TCS said. The newly-created group contributes 18 per cent of its revenues.

The IT giant’s remaining revenues come from major markets such as the Americas, UK, Europe and Australia, where the business has a fair share of annuity-based revenues, and is, therefore, less volatile. “Our revenues from the rest of the world or businesses tend to be more volatile on account of their project-centric nature,” the company said.

New lines of service During the first quarter, TCS also reorganised its service lines, adding new ones such as Cognitive Business Operations and Digital Transformation Services. All the new service lines are seeing good market traction, have a robust pipeline and are witnessing secular growth, TCS said.

Cognitive Business Operations saw over 5 per cent quarter-on-quarter (Q-o-Q) growth. IoT-based services saw over 20 initial engagements, while Cybersecurity services saw double-digit Q-o-Q growth. Digital Interactive services saw multi-million dollar wins with two insurance clients and an energy client, it said.

The total employee strength at the end of Q1 stood at 385,809 on a consolidated basis, with a gross addition of 11,202 and a net addition of (1,414 employees) during the quarter. The total attrition rate (last 12 months) was at 12.4 percent, including BPS, with IT attrition at 11.6 percent.

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