TCS and Infosys: They couldn't be more different

TCS and Infosys. It’s impossible not to make a comparison between two of India’s biggest software service providers, especially when their results provide such a striking study in contrasts.

While Infosys upset investors with its poor results and even poorer revenue estimates, TCS, India’s largest software company, cheered investors with its upbeat results and outlook. It seems like the sun is shining for TCS, while for Infosys, the weather is still fraught with dark clouds and thunder.

Here’s how each company has performed on certain key parameters and their respective outlooks.

Net profit and revenues:

Tata Consultancy Services’ consolidated fourth-quarter net profit rose 1.6 percent from the previous quarter and 23 percent from a year ago to Rs 2,932 crore.Total revenues from operations stood at Rs 13,259 crore, up 0.5 percent from a quarter ago and 30 percent higher from a year ago.

Infosys, in contrast, announced net profit of Rs 2,316 crore for the January-March quarter, down 2.4 percent lower from the previous quarter but 27 percent higher from a year ago.Revenues totalled Rs 8,852 crore, down 4.8 percent from a quarter ago and up 22 percent from a year ago. The company missed its own revenue guidance for 2011-2012, after downgrading it twice.

Nasscom projections:

TCS struck a highly confident note as it said it is confident of beating industry body Nasscom’s revenue growth estimate of 11-14 percent for the industry in the financial year ending March 2013.

Infosys, meanwhile, said it expects dollar revenues to grow 8-10 percent in 2012-13, below Nasscom projections. In the current quarter, it expects growth to be flat or marginally higher, which means that it expects the bulk of growth to come in future quarters.

Hiring and wage hikes:

TCS plans to hire 50,000 people in the current financial year. About 43,600 campus recruits have already been given job offers and they are set to join the company from the second quarter of the financial year (July-September). The company is also hiking wages by 8 percent on average.

In contrast, Infosys plans to hire 35,000 people in 2012-2013,but more importantly, it does not plan to hike wages in the current financial year. It said, at most, it would revisit the idea of hiking salaries every quarter.

On growth:

TCS proclaims it is “well prepared” to achieve balanced growth across industries and markets in the current financial year. It says no client or particular set of clients or industry is facing any particular problem. Growth is expected across industries - telecom, manufacturing, high-tech retail, the company’s management said, with deals expected in all these segments. Growth in North American and European markets, including the UK, is expected.

Infosys, however, said confidence among its clients is declining, which have caused delays in scaling up projects. While clients have prepared IT spending budgets, there is no guarantee that actual spending would match projections, it said. It forecast a gloomy outlook, saying the year ahead “looks challenging for the IT services industry, with slow recovery in global markets.”

Stock prices:

Over the past 12 months, TCS’ shares have slipped just half a percent. After its results on 23 April, the stock jumped by an impressive 12 percent to Rs 1,189.In contrast, Infosys’ shares have slumped 21 percent, while the Sensex has shed 13 percent. After the company announced its results on 13 April, the stock tanked 13 percent.