Tata Consultancy Services Ltd.’s first-quarter profit beat analysts’ estimates after the IT services provider won orders in a tough climate for information-technology services.
(Bloomberg) — Tata Consultancy Services Ltd.’s first-quarter profit beat analysts’ estimates after the IT services provider won orders in a tough climate for information-technology services.
Net income rose 17% to 110.7 billion rupees ($1.3 billion) in the quarter through June, TCS said in a statement Wednesday. Analysts estimated 109.36 billion rupees on average. Sales climbed 13% to 593.8 billion rupees.
India’s more than $245 billion software services sector, led by TCS, is facing a slowdown as customers across industries curb spending on software services to cope with higher interest rates and elevated levels of inflation. TCS is among companies trying to expand to higher-margin services powered by technologies such as artificial intelligence to keep fueling growth.
“The softness comes because some of the programs which are not very business critical or where the ROI is not very high are getting paused or delayed,” Chief Executive Officer K. Krithivasan said in a press conference after the earnings. “Our clients are still very confident of investing long-term” especially in newer technologies, he said.
Various industries want to engage with TCS to explore use cases for generative AI around areas such as improvements in productivity and content creation, the Mumbai-headquartered company said. It now has an advisory offering to help clients plan for the adoption of generative AI across their business, and also plans to train 25,000 engineers on the technology.
In a surprise announcement in March, former CEO Rajesh Gopinathan said he would step down from his post and depart from the company in September. Krithivasan, who previously lead its banking and financial services business, took over at the start of June.
TCS shares ended 0.4% lower in Mumbai before the earnings were announced.
Smaller rival HCL Technologies Ltd. missed estimates to report a net income of 35.3 billion rupees in the three months to June, a rise of 7.6% over the same period last year.
(Updates with fresh CEO comment in fourth paragraph.)
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