In a worrying development for the IT industry, leading software firm TCS has posted one of its biggest drops in quarterly profits in the last two years. The profit after tax (PAT) for June quarter fell almost 10% to reach Rs 5,950 crore. This is far below what analysts were expecting. As per earlier estimates, the PAT for Q1 for TCS was supposed to be above Rs 6,200 crore. This is the biggest quarterly drop for the company in the last two years. The company said that the profits were significantly affected by the wage hike. The company maintains that this is a short term loss and does not impact its long-term profitability.
CEO and MD of TCS Rajesh Gopinathan said that the company has witnessed steady growth across various domains and client additions have also been good. He said that the company gained from increased digital adoption by its clients. “We have had excellent wins across markets and have a good deal pipeline across industries that positions us well for growth in FY18,” he said. TCS also announced that it has added 8 new clients in the $1 million-plus category, 12 clients in the $10 million-plus category, and one client each in $50 million plus and $100 million plus category. The company’s attrition rate has fallen to 11.60 percent in Q1 and its headcount was 3,85,809.