TCS Q3 profit drops 14 pc to Rs 10 657 cr headcount dips another 11 000

     Mumbai, Jan 12 (PTI) Country's largest IT services exporter TCS on Monday reported a 13.91 per cent drop in December quarter profit at Rs 10,657 crore, majorly on a one-time impact of new labour codes.
     Implementation of the new labour codes during the quarter led to a "statutory impact" of Rs 2,128 crore, the company said, adding that but for all the one-time impact, its profit would have grown 8.5 per cent to Rs 13,438 crore.
     The company, one of the largest private sector employers in the country, disclosed that the overall headcount was down by 11,151 in October-December period to 5,82,163.
     Chief Human Resources Officer Sudeep Kunnumal told analysts later that there were 1,800 exits on account of a restructuring exercise announced in August.
     TCS had announced axing of about 12,000 people earlier this fiscal year as part of its restructuring exercise. It reported a reduction of 19,755 in the overall staff count in the September quarter, but hinted that only 6,000 of these were involuntary actions because of the restructuring exercise.
     Overall revenue from operations during the quarter increased 4.86 per cent to Rs 67,087 crore from Rs 63,973 crore, and Chief Executive and Managing Director K Krithivasan told analysts that artificial intelligence and the associated data revenues led the topline growth.
     The company continues to work towards achieving the aim of higher international revenue growth in FY26 as compared with FY25, the CEO said, adding that client conversations and deal momentum make him believe that 2026 will be a "good year".
     In her comments at the analyst meet, the company continued to skip the routine press conference for the second consecutive quarter.
     TCS Chief Operating Officer Aarthi Subramanian said AI revenues have grown 17 per cent on-quarter to an annualised level of USD 1.8 billion and it sees strong growth continuing in the segment.
     The operating profit margin was stable when compared with the September quarter at 25.2 per cent during the three month period but higher than the 24.5 per cent in the year-ago period, as per a company statement.
     Chief Financial Officer Samir Seksaria said margins were positively impacted by productivity gains and currency movements, while the wage hike impact and brand building proved to be a headwind.
     However, changes in the labour codes will continue to have a 0.10-0.15 per cent impact on margins going ahead, he said.
     During the quarter under review, it decided to set aside over Rs 2,100 crore towards the labour code provisions, he said, adding that this included Rs 1,800 crore on gratuity and Rs 300 crore on leave enchashments.
     The company's overall new deal signings, captured through the total contract value number, stood at USD 9.3 billion for the December quarter.
     From a geographical perspective, contributions from India to the topline declined over 34 per cent on-year, leading to the home country's contribution to the overall pie dipping to 6.1 per cent from 9.8 per cent in year-ago period.
     It seemed to be a mixed bag from a geopolitical shifts lens, with North America showing a 1.3 per cent increase on year, but the same from the UK declining 3.2 per cent in constant currency terms.
     Krithivasan said decision-making cycles on deals have reduced compared to the past and the company is optimistic of North America returning to better growth going ahead, and added that he sees no impact of the US administration's decision on capping credit card interest rate at 10 per cent.
     The company's board recommended a dividend of Rs 57 per share, including a special dividend of Rs 46 at its meeting on Monday, it said.
     The TCS scrip closed 0.86 per cent up at Rs 3,235.70 apiece on the BSE on Monday as against 0.36 per cent jump on the benchmark.

(This story has not been edited by THE WEEK and is auto-generated from PTI)