In Charts: How TCS And Infosys Fared In March Quarter

The operating margin contracted for Tata Consultancy Services Ltd. and Infosys Ltd. in the quarter ended March due to higher costs of training and reskilling employees as India’s largest information technology companies by market value continue to focus on digital services.

TCS stayed ahead of Infosys on almost all parameters. Both companies indicated that their revenue met expectations and the deal momentum continued in the fourth quarter as well.

Here’s how TCS and Infosys fared in the March quarter:

Revenue Growth

Sequential revenue growth in constant currency for TCS and Infosys remained steady and met consensus estimates, but TCS grew at a faster pace.

Operating Margin

Rising costs of acquiring talent and strengthening of rupee against the dollar put pressure on the operating margin of TCS and Infosys. The contraction in margin for Infosys, however, was higher than TCS.

Key Business Segment

The recovery in financial services is evident for TCS. But after two quarters of growth, Infosys hit a rough patch.

Geographical Presence

Infosys outpaced TCS in their largest market—North America—for the second straight quarter.

Digital Services

The share of digital services in the companies’ revenue increased over last year, but TCS registered higher growth than Infosys.

Guidance

TCS maintained its target of achieving operating margin of 26-28 percent. (It does not give guidance). Infosys raised its revenue growth guidance for the ongoing financial year to 7.5-9.5 percent from 6-8 percent in 2018-19. Infosys, however, lowered its guidance for operating margin to 21-23 percent for 2019-20 from 22-24 percent in the previous financial year.