Tata Consultancy Services Ltd.’s revenue rose for the second straight quarter as clients continued to spend on digital services during the pandemic and on deal wins. That has helped it guide for double-digit revenue growth in the next financial year.
Chief Financial Officer V Ramakrishnan said the margin growth despite a wage hike from Oct. 1, 2020, was the result of better utilisation and efficiency.
Gopinathan said deal momentum will ensure that the company will post a double-digit growth in the year ending March 2022. The year-on-year growth will be in double digits on a calendar year or financial year basis, he said, while refusing to comment on growth trajectory for FY21.
TCS’ third quarter performance means it needs to achieve 2.7% sequential revenue growth in revenues in the fourth quarter to exceed FY20 revenue in dollar terms, according to BloombergQuint’s estimates.
Technology companies were among the worst hit after the Covid-19 pandemic stalled trade and forced employees to work from work, raising costs. The firms even lost billings as they generate most of their business overseas. The sector, however, rebounded in the second quarter, aided by large deal wins and client spending on cloud computing, artificial intelligence and internet of things as businesses moved online.
That worked for TCS even in the quarter ended December as the company reported deal wins worth $6.8 billion. Among others, TCS in November had agreed to acquire the employees and select assets of Pramerica Systems from insurance giant Prudential Financial Inc. The same month it also acquired Deutsche Bank AG’s technology services business.
All the sectors, including banking, financial services and insurance; and manufacturing, saw revenue growth over the preceding three months.
The company’s BFSI segment has been doing well although it’s facing challenges in U.K.
Shares of TCS closed 2.97% higher before the results were announced, compared with a 1.48% gain in the benchmark Nifty 50 Index.
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