Tata Consultancy Services (TCS) reported a net profit of Rs 12,040 crore for the first quarter (Q1) of FY25, reflecting an 8.7% increase from Rs 11,074 crore a year ago. The company’s revenue for Q1 reached Rs 62,613 crore, marking a 5.4% annual growth. Despite challenges such as a lack of strong business growth from North America and increased costs due to employee wage hikes, TCS managed to meet market expectations. CEO K Krithivasan noted that it is still early to determine if the growth momentum is sustainable, but he remains optimistic that FY25 will outperform FY24.
The Indian IT industry continues to face challenges due to slower technology spending in North America and Europe, which are key markets. For FY24, TCS experienced a growth rate of below 10%. In Q1 FY25, the company’s operating profit margins were 24.7%, up from 23.2% a year earlier, though there was a sequential decrease of 1.3% compared to Q4 FY24. Key growth drivers for TCS included technology platforms such as artificial intelligence (AI), cloud, cybersecurity, and enterprise solutions. The company has seen strong AI adoption among its clients, with 270 ongoing projects valued at $1.5 billion.
India played a significant role in TCS’s growth in Q1, achieving a 61.8% annual growth rate. North America, which accounted for about 50% of TCS’s revenue, saw a slight decline of 1.1% compared to the previous year. The total contract value (TCV) order book for Q1 stood at $8.3 billion, and the company indicated that a TCV between $7-9 billion would be a comfortable range.
A notable positive development for TCS has been the increase in employee hiring following a declining trend over the past three quarters. The total employee headcount rose to 606,998, an increase of 5,454 compared to Q4 FY24, although it remains lower than the 615,318 employees recorded a year ago. TCS aims to hire around 40,000 freshers annually and plans to meet this target in the current financial year.
Overall, TCS’s performance in the first quarter of FY25 demonstrates resilience despite external pressures. The company remains focused on leveraging its technology platforms and expanding its workforce to drive growth in the upcoming quarters. The outlook for FY25 appears positive, with expectations of improved performance compared to FY24.
