In a strange coincidence, India’s top three software services companies – Tata Consultancy Services, Infosys and Wipro – announced their results for the October-December quarter on the same day.
The three companies recorded growth for the quarter and had a healthy deal pipeline, but employee attrition remains a major concern.
Tata Consultancy Services reported a net profit of 97.63 billion rupees (US$1.33 billion) for the third quarter, 12.2% higher than the year-ago period. On a sequential basis, its net profit grew 1.4%.
The Mumbai-headquartered company reported revenue of 489 billion rupees, up 16.3% from last year and 4.3% from the second quarter. The company’s total contract value for the quarter was $7.6 billion, compared with $6.8 billion last year.
Tata Group added 10 new clients in the $100 million-plus bracket during the quarter, taking the total to 58. It also added 21 clients in the $50 million-plus bracket, taking the number to 118, and 98 new clients were added in the $1 million range.
Chief Executive Officer and Managing Director Rajesh Gopinathan attributed the company’s growth to its “collaborative, inside-out approach to our customers’ business transformation needs. Customers love our engagement model, our end-to-end capability and our can-do approach to problem-solving.”
Employee numbers up
The company also announced a buyback worth 180 billion rupees at 4,500 rupees per share. During this quarter, it also gave promotions to 110,000 employees and added 28,238 employees, the highest number added to date.
However, the attrition rate was higher at 15.3%, when compared with the preceding quarter (11.9%). But it was lower than its competitors.
India’s second-largest IT services major posted a net profit of 58.09 billion rupees, up 11.8% from last year, and met street expectations.
The Bangalore-based company has now increased its guidance for FY 22 to a growth of 17.5% from 16.5%. Revenue for the quarter grew by almost 23% at 319 billion rupees and sequentially was up 7.6%.
Its digital revenues continue to grow at a brisk pace. For the October-December quarter, it grew 42.6% in constant currency, compared with last year. It is now 58.5% of total revenues.
Infosys CEO Salil Parekh said: “Our strong performance stems from four years of sustained strategic focus on areas of relevance for our clients in digital and cloud, continued re-skilling of our people and deep relationships of trust that our clients have with us.”
However, retaining talent remained a major challenge as the attrition rate swelled to 25.5%, up from 20% in the last quarter.
Wipro, another Bangalore-based IT major, posted consolidated revenue of 203.14 billion rupees, a 29.6% year-on-year growth and 3.3% higher than the preceding quarter, aided by growth across most of the key segments.
The company reported 3% sequential growth in revenue on a constant currency basis to $2.64 billion for the quarter ended December 2021. Wipro claims it has a deal pipeline of $2.85 billion.
However, Wipro also reported a spike in attrition to 22.7% for the quarter ended December, significantly higher when compared with 15.5% and 20.5% reported in the first two quarters respectively.