TCS reports slowest pace of customer acquisition in 4 years

TCS faces a volatile global economy that could slow client spending, and posted its slowest pace of quarterly customer acquisition in at least four years.

FP Editors July 14, 2011 19:21:48 IST
TCS reports slowest pace of customer acquisition in 4 years

Tata Consultancy Services, the largest software services exporter, reported a 7.8 percent decline to Rs 2,415 crore in the net profit for the quarter ended June 2011 in comparison to the March 2011 quarter. The revenue grew 6 percent to Rs 10,797 crore.

This was better than the street estimate. The company was expected to report a net profit of Rs 2,158 crore over revenue of Rs 10,600 crore, according to analyst estimates.

However, according to Reuters, the company warned on Tuesday that it faces a volatile global economy that could slow client spending, and posted its slowest pace of quarterly customer acquisition in at least four years. The company added 24 new customers during the quarter.

TCS reports slowest pace of customer acquisition in 4 years

Profit margins in the June quarter dropped 64 basis points, mainly due to wage hikes. AFP

This shows that companies have to work hard to get business.

The company's operating profit margin was 26.2 percent for the June 2011 quarter against 28.3 percent reported in March 2011 quarter.

"We have been able to limit the erosion in operating margins by using various levers like utilisation and productivity," S Mahalingam, CFO and executive director of the company said.

The company reported a net addition of 3,576 employees during the June 2011 quarter.

Shares in TCS, valued at about $50 billion, closed down 2.2 percent ahead of the earnings announcement, in a positive Mumbai market.

Click here for a detailed presentation by the company.

(With inputs from Reuters)

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