Tata Consultancy Services Profit Fell 5.8% Last Quarter -- Update

By Newley PurnellFeaturesDow Jones Newswires

Tata Consultancy Services Ltd., India's largest outsourcer by revenue, on Thursday reported a 5.8% drop in net profit amid a changing technology landscape that is forcing a shift in its services.

Mumbai-based TCS said profit in the three months ended June 30 stood at 59.5 billion rupees ($923 million), compared with 63.17 billion rupees a year earlier.

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That was lower than the 61.73 billion rupees projected by analysts surveyed by Thomson Reuters. Revenue grew 1% from a year earlier to 295.84 billion rupees.

"Technology change is the lifeblood of our industry," Chief Executive Officer Rajesh Gopinathan told reporters. "We are re-skilling," he said, referring to training being given to staff in new kinds of offerings that customers are increasingly demanding.

TCS and its competitors are trying to move away from a business model based largely on using inexpensive labor to write custom code and manage databases. TCS said revenue from digital services, which refer to technologies like cloud computing and big data analytics, rose 26% from a year ago.

Another challenge for Indian IT firms is the increased scrutiny on their use of the skilled worker H-1B visa program following U.S. President Donald Trump's election.

TCS has been applying for fewer such visas in recent years and hiring more in the U.S., Ajoyendra Mukherjee, the company's head of human resources, told media.

Write to Newley Purnell at newley.purnell@wsj.com

(END) Dow Jones Newswires

July 13, 2017 08:54 ET (12:54 GMT)