TCS Q4 growth hit by negative sentiment among US customers; CEO Rajesh Gopinathan to exit June 1

Tata Consultancy Services kicked off the Indian IT services sector’s fiscal fourth-quarter earnings yesterday, reporting that clients in the US, the sector’s biggest market, were holding back on discretionary spending and that an expected pickup from the previous quarter didn’t materialise. Growth was led by a strong performance in the UK, and the company ended the fiscal year 2023 with 6,14,795 employees. Also in this brief, pi Ventures gets a commitment from SIDBI for its next early-stage tech startup fund. Notes: Tata Consultancy Services kicked off the IT services sector’s fiscal fourth-quarter earnings yesterday, reporting that clients in the US, the sector’s biggest market, were holding back on discretionary spending and that an expected pickup from the previous quarter didn’t materialise. Overall, the company reported revenues rose to $7.195 billion in the three months ended March 31, 2023, representing a 1.7 percent increase over the previous quarter and 7.4 percent growth over the same quarter in the previous fiscal year. The year-on-year growth was 10.4 percent in constant currency. The company was operating in a “fairly challenging environment,” CEO and MD Rajesh Gopinathan told reporters at a conference in Mumbai yesterday. The sentiment in the US is currently negative, Gopinathan added. The likelihood of a recession in the US remains high, this year and businesses are postponing any expenditure that isn’t immediately necessary. TCS added more than $10 billion in order wins, during Q4, including a $700-750 million contract from the financial giant Phoenix Group. The deal wins also included a larger proportion of contracts worth $50 million or more versus previous quarters, COO NG Subramaniam added. TCS added about 820 employees during the quarter to end the year with about 6,15,000 staff. Attrition on a 12-months basis was just over 20 percent, but the reduction from the previous quarter was 4 percent, chief HR officer Milind Lakkad said. On the tech front, Subramaniam said that conversations with customers are starting and ending with ChatGPT. Customers are asking how TCS is integrating generative AI into its services, and there is keen interest in the area, he said. This isn’t an area that is new to TCS and the company has been working “software that can make software,” for example, for years, he added. One other update is that Rajesh Gopinathan is handing over the CEO’s role to K Krithivasan on June 1, whereas the transition was originally expected to be completed on Sep. 15. Gopinathan said that this was a planned process wherein the first half of the transition he would be the “primary” and Krithivasan the “shadow” and in the second half, the roles would be reversed. And the second half has been advanced by a couple of weeks. Suzlon Group yesterday announced a new order win for the development of a 50.4 MW wind power project for Sembcorp’s renewables subsidiary Green Infra Wind Energy Limited. SimpliContract, a Contract Lifecycle Management platform provider, has raised $3.5 million in series A funding from Emergent Ventures, Kalaari Capital and others.   pi Ventures, an early-stage VC firm that invests in tech startups, has received a commitment of Rs. 100 crore from the fund of funds management by SIDBI. The fund is on track for the final close over the next two months, in the range of Rs. 675-750 crore.