TCS Q1 dollar revenue dips 7.8% YoY; firm expects growth revival in second half

Key Highlights

• Q1 constant currency revenue de-grows -6.3% YoY to $5.06 billion
• All verticals see negative growth except life sciences & healthcare which grew 13.8% YoY
• IT major hopes to get to flat YoY growth in constancy currency by Q4 FY21  

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India's largest software exporter Tata Consultancy Services (TCS) reported a dollar revenue decline of 7.8 per cent year-on-year in the first quarter of FY21. In constant currency terms, the decline was 6.3 per cent year-on-year (YoY).

During the quarter under review, the company's operating margin stood at 23.6 per cent, while it clocked deals whose total contract value stood at $6.9 billion dollar, adding 4 more customers in a $100 million bucket.

Except for the life sciences and healthcare the rest of the verticals also registered a dip in revenues.

The pain of the COVID-19 pandemic and the performance of the company is broadly in line with what was envisaged, said the management.  

During last quarter results (Q4 FY20), the company had indicated that the impact of COVID-19 on revenues would be comparable to the global financial crisis and its peak impact is going to be felt in Q1 of FY 21. Outlining the trajectory of the company here on, Rajesh Gopinathan, CEO and MD said, "We are quite confident from the rupee terms we should be able to get back to the same year on year flat by the time we get to Q3, on constant currency terms we expect to come close to flat growth by Q3 and by Q4 we should be able to get to YoY flat growth".

The company also saw its headcount dip by 4,788. TCS would continue to freeze new hiring, it will honour the offers already made and also would look at hiring only need based lateral hiring.

Speaking on the recent proclamation by the Donald Trump administration banning H1B visas, Milind Lakkad, Global HR head, termed it unfortunate and unfair. "From a business perspective we will have some impact," he said. But with the company's widely secure borderless workplace (location agnostic model) and also the strong supply and delivery ecosystem in the US, Milind said, the company will be able to manage the situation in the short term. However, in the long term,  any changes to regulations around the Stem or Optional practical training (OPT) will not just hurt companies but would also be detrimental to the development of technology in the US.

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