TCS Q3 highlights: Strong profit gains, but revenue, headcount take a hit

Tata Consultancy Services (TCS) has announced its third-quarter results for the fiscal year 2024-25. The IT major recorded a net profit of ₹12,380 crore, reflecting a 12% year-on-year growth. Revenue rose by 5.6% to ₹63,973 crore, falling short of analysts’ expectations of ₹64,748 crore.

Giri Prakash, The Federal's Business Editor, highlighted the seasonal factors influencing the results. “The October-December quarter is typically sluggish, especially in the US, where most IT services business originates,” he explained. A 0.4% sequential decline in revenue was attributed to seasonal furloughs during the holiday period.

Seasonal Impact and Industry Outlook

Seasonal challenges like the December holiday lull have significantly impacted TCS’s Q3 performance, and similar trends are expected across the IT sector. “There were expectations of sequential revenue growth between 0.5% and 1.4%, but it didn’t materialize,” said Giri Prakash. TCS’s earnings, being the first among IT firms, serve as a bellwether for the sector. Analysts are closely monitoring whether other top companies will follow a similar trajectory or deliver surprises in their upcoming results.

Workforce Trends

TCS witnessed a net decline of 5,370 employees in the third quarter, reversing the workforce growth seen in the previous two quarters. Chief Human Resources Officer Milind Lakkad remarked, “We promoted 25,000 employees during the quarter, bringing the total promotions this fiscal year to over 1.1 lakh.”,Despite the workforce reduction, campus hiring remains on track, and the company plans to recruit more freshers in the next quarter. Upskilling initiatives for existing employees are also being actively pursued, demonstrating TCS’s focus on human capital development.

IT Sector Expectations

As the holiday quarter often sees subdued activity, Giri Prakash noted, “TCS added $2 billion in client accounts compared to the same period last year, which is a positive takeaway.” However, the broader IT sector’s performance in Q3 remains uncertain. Looking ahead, the market will focus on whether seasonal challenges dampen the results of other IT giants or if there are surprises in store. The coming weeks will be critical in shaping the sector's outlook for the year ahead.

(The content above has been generated using a fine-tuned AI model. To ensure accuracy, quality, and editorial integrity, we employ a Human-In-The-Loop (HITL) process. While AI assists in creating the initial draft, our experienced editorial team carefully reviews, edits, and refines the content before publication. At The Federal, we combine the efficiency of AI with the expertise of human editors to deliver reliable and insightful journalism).