Mumbai : Country’s largest software exporter Tata Consultancy Services Ltd (TCS) said the digital segment is the fastest-growing revenue stream, accounting for 12.5% of overall sales of the IT giant which sounded confident of surpassing the $5- billion target in the segment over the next five years.
“Digital is the fastest-growing business vertical now; we have got a huge traction. It occupies for 12.5% of overall revenue on a ‘conservative basis,” TCS Chief Executive and Managing Director N Chandrasekaran said after announcing June quarter results.
Net profit rises 2% to Rs 5,684 cr
TCS reported a meagre 2.1% growth in its June quarter net profit at Rs 5,684 crore, with revenue growth trailing street expectations on difficulties from the Japanese and Latin American markets.
The city-headquartered software major reported a consolidated revenue of Rs 25,668 crore under Indian Gaap accounting, which is up 16.1 % on yearly basis and 6 % sequentially. Under the IFRS system, revenue grew 3.5 % sequentially to $4.03 billion, slower than the street’s 4 % estimate.
The Tata Group company, which is the first major player to report its June quarter earnings, faced difficulties in the Japanese and Latin American markets, and also from its British acquisition Diligenta, resulting in a shortfall of up to USD 25 million.
The software industry counts social media, mobile, analytics and cloud as the key revenue streams for this fast growing digital segment. This is the first time that TCS has divulged any revenue figure from the digital front. During the quarter, there were 38 client additions in the digital segment for the company, he said.
attrition spurts to 15.9%
In spite of the wage hike and Rs 2,628-crore bonus doll-out to employees, the company reported a spurt in attrition at 15.9 %, which was attributed by its global human resources head Ajoy Mukherjee to seasonal movement where workers leave to pursue higher education and also due to effects of the past three quarters.
Chandrasekaran also played down the attrition level saying this is not a major cause of concern as the company is confident of getting it down in the next few quarters. He, however, declined to give any additional data on the digital front, but promised to share more details as the year progresses.
The company is set to breach the USD 2-billion revenue mark from the digital front in the current fiscal. Asked about last year’s statement of clocking USD 5-billion revenue from the digital segment in five years, and if the company will surpass that, Chandrasekaran said, “in all likelihood”.
On the possibilities of creating a special vertical for this segment, he replied in the negative, saying digital pervades all the existing revenue streams and in a few years, it will be difficult to distinguish digital work from the rest. He reiterated that the IT major is training 1 lakh employees, just under a third of its workforce, in digital skills this year. Global worries like Greece and China will not impact the company, Chandrasekaran said, adding its revenue from Europe were up 19% over the year ago period.
