Tata Consultancy Services (TCS), India's largest IT services company, reported a consolidated net profit of ₹12,075 crore for the second quarter, marking a 5.4% decline from the previous quarter. The company also addressed concerns about the new $100,000 annual H-1B visa fee and reported its first constant currency revenue growth in three quarters.

Financial Performance

TCS's Q2 results show a mixed picture:

The company's revenue grew by 3.7% quarter-on-quarter, reaching ₹65,799 crore. However, the net profit declined by 5.4% compared to the previous quarter's ₹12,760 crore.

Key Highlights

• Constant currency revenue growth of 0.80% sequentially, marking the first growth after two quarters of decline.
• TCS reported a one-time restructuring expense of ₹1,135 crore.
• Total contract value increased to $10 billion from $9.4 billion in the previous quarter.

Workforce Reduction

TCS reported a significant decline in its workforce, with the total number of employees falling below 600,000. The company reduced its workforce by 1% at mid and senior levels due to skills mismatch, with 20,000 headcount reduction from voluntary and involuntary resignations.

H-1B Visa Concerns

TCS dismissed concerns about the new $100,000 annual H-1B visa fee, stating it has only 500 associates in the US on H-1B visas. The company emphasized that its business model can adapt to immigration policy changes.

Market Response

TCS shares closed 1.14% higher at ₹3,061.70 but have declined 29% over the past 12 months.

Outlook

While TCS has shown its first constant currency revenue growth in three quarters, the impact of global economic uncertainties may continue to pose challenges. The company's ability to maintain this growth trajectory and improve profitability will be closely watched by investors and industry analysts in the coming quarters.

As the IT services landscape evolves, TCS's performance in navigating these changes and maintaining its market leadership will remain a key focus for stakeholders. The significant workforce reduction and the company's stance on H-1B visa changes indicate a strategic shift in its operational approach, which may shape the company's future growth and efficiency.

Tata Consultancy Services (TCS), India's largest IT services company, has announced the cancellation of its scheduled press conference for the second quarter earnings results. The decision comes as the originally planned date, October 9, coincides with the anniversary of Ratan Tata, the former chairman of Tata Group.

Key Points

• TCS will proceed with its analyst call as planned, where financial performance and management commentary will be shared.
• This marks the second consecutive year TCS has cancelled its Q2 press conference, following a similar decision last year after Ratan Tata's passing.
• The Q2 results are highly anticipated as they are expected to provide insights into global IT sector demand.

Market Implications

The cancellation of the press conference comes at a crucial time for the IT sector, with several factors influencing market sentiment:

1. US H1-B Visa Price Hikes: Recent increases in H1-B visa prices could impact IT companies' operational costs and strategies.
2. Recovery in Discretionary Spending: Investors are keenly watching for signs of recovery in discretionary spending from US and European markets.
3. Staffing Challenges: The company's approach to managing staffing issues in a competitive talent market remains a point of interest.
4. Cautious Client Spending: How TCS navigates the current environment of cautious client spending will be a key focus for analysts and investors.

While the press conference has been cancelled, the upcoming analyst call is expected to address these critical points and provide valuable insights into TCS's performance and outlook.

Significance of Q2 Results

The second quarter results of TCS are viewed as a significant indicator for the global IT sector. As one of the leading players in the industry, TCS's performance often sets the tone for the sector and provides clues about overall demand trends.

Investors and analysts will be paying close attention to the analyst call to gauge:

• The impact of global economic conditions on IT services demand
• TCS's strategies for growth in a challenging market
• Any shifts in client behavior or spending patterns
• The company's outlook for the remainder of the fiscal year

While the cancellation of the press conference may limit some immediate media exposure, the analyst call is expected to provide the necessary information for stakeholders to assess TCS's position and the broader IT sector outlook.