TCS becomes the most valued company in India by market valuation rivalling Reliance Industries Limited (RIL). Tata Consultancy Services (TCS) reported a profit of around INR 8049 crores as compared to RIL’s 6348 crores. RIL marked a steep fall of 39% due to considerable losses in crude oil prices. Whereas, TCS fell by 1% during the 4th quarter of 2019-2020.
In terms of other financial parameters, RIL is way ahead of TCS being the most profitable company for more than 20 years in the private sector. Recently, RIL marked a great fall in value due to low demand and fall in crude oil prices.
The total market capitalisation of TCS is valued at INR 7.6 trillion as compared to RIL’s value of INR 9.3 trillion in today’s market.
Subcontractors Costs Pinches IT sector
TCS, Infosys, Wipro and Mindtree marked gain in Thursday’s market. But, the subcontracting costs of companies for providing its services to the IT sector is about to fall gradually in the coming months. Indian IT service companies can lower the dependence on subcontracting firms to reduce costs as Coronavirus outbreak has hit hard, slowing the money flow and margins. The subcontracting values around 10-15% of total employee cost to the IT company.
Last financial year, TCS incurred 13% subcontracting cost, while Wipro and Infosys incurred 22% and 12% respectively. The subcontracting costs marked a spike in costs as companies looked for outsourcing the talent-research program for better results. The company’s dependency on subcontractors for fulfilling the job will be optimised. IT firms will look for alternatives like lateral hiring and building up the talent and skills required within the organisation.
There are three cases formed in which IT companies are dealing with such costs during this COVID-19 pandemic:
- By reducing the number of contracts/ suppliers.
- Convincing suppliers/contractors to take rate cuts.
- Making contractors/suppliers take deferred payments for the cost incurred