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'We believe COVID-19 has bottomed out,' says Rajesh Gopinath. Key takeaways from TCS Q1 results

TCS CEO Rajesh Gopinathan said: After an initial period of disruption, customers have now stabilized their operationsPremium
TCS CEO Rajesh Gopinathan said: After an initial period of disruption, customers have now stabilized their operations

  • Pandemic affected all verticals, with the exception of Life Sciences and Healthcare, with varying levels of impact, said TCS CEO Rajesh Gopinathan
  • TCS reported 13.81% year-on-year fall in net profit at 7,008 crore for the June quarter

Tata Consultancy Services (TCS), India's biggest Information Technology (IT) company, announced the results for quarter ended in June. The company reported 13.81% year-on-year fall in net profit at 7,008 crore for the June quarter. "The revenue impact of the pandemic played out broadly along the lines we had anticipated at the start of the quarter," TCS Chief Executive Officer and Managing Director Rajesh Gopinathan said. The revenue in constant currency terms witnessed a drop of 6.3% cent on year-on-year basis. The board recommended an interim dividend of 5 per share.

Here are key takeaways:

Pandemic has bottomed out: TCS CEO

"Pandemic affected all verticals, with the exception of Life Sciences and Healthcare, with varying levels of impact. We believe it has bottomed out, and we should now start tracing our path to growth," said Rajesh Gopinathan.

We now embarking on new beginnings to adapt and thrive in a post-pandemic world: TCS CEO

"After an initial period of disruption, customers have now stabilized their operations and are now embarking on new beginnings to adapt and thrive in a post-pandemic world. We are seeing many customers focus on front-end transformation, resulting in significant traction for our products and services. The other big investment themes are around driving operational resilience, adaptability and optimization," he added.

Grwoth

Life Sciences & Healthcare continued to grow strongly at 13.8% year-on-year basis. Other than that, all other industry verticals showed declines of varying degrees: BFSI (-4.9%), Retail & CPG (-12.9%), Communications & Media (-3.6%), Manufacturing (-7.1%) and Technology & Services (-4%).

Demand contraction in Q1

Demand contraction was broad-based by geography. Other than Europe (+2.7%) and Latin America (+0.2%), growth declined in all other markets: North America (-6.1%), UK (-8.5%), India (-27.6%), Asia Pacific (-3.2%), and MEA (-11.7%).

Around 1% of TCS workforce is working from office

Around 1% of our workforce is currently working from our facilities and we are looking to increase this steadily during this quarter, said Milind Lakkad, Global Head, Human Resources.

On remote working facility

"The location independent way of working is gaining traction. Our customers are quite comfortable integrating the remote workforce, using new collaborative technologies to get work done. Our Secure Borderless Workspaces™ model has been institutionalized. We have been able to seamlessly adapt and extend it to prospect for new business, sell, contract and execute programs, said N Ganapathy Subramaniam, Chief Operating Officer & Executive Director, said.

Headcount

The company said its consolidated headcount stood at 4,43,676 as of June 30, compared to 4,48,464 as of March 31. TCS said around 1% of its workforce is currently working from the company’s facilities and it is looking to increase this steadily during this quarter.

On patents

The TCS Innovation Forum, which brings together customers, prospects, start-ups and academic partners every year, was reimagined into a series of 10 webinars. The first three editions, which have already taken place, drew over 1300 customers from all over the world. These digital events will continue all summer, deliberating on topics of current relevance such as the re-opening of workplaces, making supply chains resilient and future business models for industries like banking, retail, life sciences and media.

As on June 30, 2020, the company has applied for 5,324 patents, including 108 applied during the quarter, and has been granted 1,471 patents.

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