TCS Reports Sharpest Quarterly Revenue Fall In Five Years On Weak Demand

Tata Consultancy Services Ltd. posted a 1.6% sequential decline in consolidated revenue for the June quarter, marking its sharpest quarter-on-quarter fall in five years, as global macroeconomic and geopolitical pressures continued to hurt discretionary IT spending.

Consolidated revenue fell to ₹634.37 billion, down 3.1% on year in constant currency terms. TCS attributed the decline to a broad-based weakness in demand, particularly in North America and across key verticals such as consumer business, manufacturing, and healthcare.

Despite the revenue pressure, net profit rose over 4% sequentially to ₹127.60 billion, supported by a 30-basis-point expansion in operating margin to 24.5%.

Deal wins for the quarter came in at $9.4 billion—down nearly 23% from the March quarter but higher than $8.3 billion a year ago. The drop was mainly due to a fall in North America deal value, which declined by $2.4 billion on quarter.

Among geographies, revenue in North America slipped 2.7% on year in constant currency terms. Continental Europe and the UK saw declines of 3.1% and 1.3%, respectively, while revenue from India slumped 22%. North America's share in total sales dipped to 48.7% from 49.5% a year ago, while the UK and India contributed 18.0% and 5.8%, respectively.

In terms of verticals, lifesciences & healthcare reported the sharpest revenue fall at 9.6% on year, followed by regional markets and manufacturing. The BFSI vertical—TCS’ largest—grew just 1% on year but increased its share in total sales to 32.0% from 31% last year. The consumer business, the company’s second-largest vertical, saw a 3.1% decline in revenue.

TCS net added 5,090 employees during the quarter, taking its headcount to 613,069—the highest in six quarters. The 12-month attrition rate rose to 13.8% from 13.3% in the previous quarter, while employee costs were up nearly 3% sequentially to ₹377.20 billion.

The company also declared an interim dividend of ₹11.00 per share, with a record date of July. 16.