Tata Consultancy Services (TCS) reported 4.1% sequential growth in constant currency in the third quarter. This, it said, was its best performance in nine years in a seasonally weak quarter, as demand from clients remained strong during the pandemic. Compared to the same quarter in the previous year, the growth was 0.4%.
On a reported basis, revenue was up 2.1% year-on-year to $5.7 billion helped by growth in life sciences and the banking, financial services & insurance (BFSI) sector. This more than offset dips in retail and manufacturing. Net profit was up 3.7% to $1.1 billion. “We are pleased to draw a line under the year, which has been challenging. For the next fiscal, we are confident to be back to double-digit growth and getting back to normalcy trajectory,” CEO Rajesh Gopinathan said.
A large part of the revival is due to winning mega deals from clients who are looking for vendor consolidation as they undertake digital transformation, a necessity in the post-pandemic world. That means customers are spending more on newer technologies like cloud and cyber security to support their shift to remote work. TCS said its total contract value at the end of the third quarter was $6.8 billion, which excludes the acquisition of Postbank Systems from Deutsche Bank.
Life sciences and healthcare business was up 18.2% in constant currency and BFSI 2.4%. “Banking is strong in North America, while retail continues to consolidate,” Gopinathan added. Operating margin was up 160 basis points to 26.6% in a period when the company also introduced wage hikes. This shows that its deal wins, and especially digital ones, are yielding better margins along with minimum travel, which is saving costs. Growth in North America and the UK remained in the red, but the losses tapered.
