TCS India growth declines 14% on account of COVID-19 second wave in Q1 FY22

India’s largest IT firm TCS lost Rs 350 crore in India business on the back of the second wave for the quarter ending June. While there are signs of recovery, the company is watchful about the situation, said CEO Rajesh Gopinathan.

Announcing the company's first quarter results on July 8, Gopinathan said, “If you look at our results, it is the story of two markets. We have core markets like North America that are growing strongly. Our challenges in emerging markets are primarily led by India,” Gopinathan said.

While its core market such as North America grew 4.1 percent sequentially on the constant currency basis in Q1 FY22, India revenues declined 14 percent for the quarter ending June 2021. This translates to a loss of Rs 350 crore in revenues.

"I think we were not alone in not anticipating the viciousness of the second wave in India,” Gopinathan said.

While the company’s work-from-home model, termed SBWS, allowed it to work with the customers effectively, businesses that were local and required presence like the TCS iON, were impacted. That dragged down the overall business performance by declining 14 percent, he added.

TCS iON is a strategic business unit of TCS with a focus on educational institutions, exam boards and manufacturing industries. Apart from TCS iON, businesses that were impacted include public sector businesses like Passport Seva, which is maintained by the company, and other private sector businesses.

“We have seen recovery in India business towards the end of June. If this continues, we are hoping for a strong bounce back,” he said. However the company is staying vigilant, he added.

Apart from the India market, the company is confident about achieving double-digit growth on the back of the strong demand environment led by North America and in verticals like banking and financial services. The company continues to see robust deal momentum as well, a mixture of small, medium and large deals. TCS signed deals worth $8.1 billion in the quarter.

TCS registered Rs 45,111 crore in revenues for the quarter, up 18.5 percent year-on-year (YoY) and Rs 9008 crore in net profits, a 28.5 percent YoY growth. TCS added 20,409 employees in the quarter ending June 2021, the highest ever in a quarter, taking the total employees to over 5 lakh.

The company has also reported an attrition rate of 8.6 percent, the lowest in the industry. The IT services major will hire 40,000 freshers in FY22, the same as that of FY21.