Net profit for the final quarter of the fiscal year through March was 24.0 billion rupees ($531 million) on revenue of 101.6 billion rupees ($2.2 billion), the company said.
Analysts surveyed by FactSet had expected net profit of 23.6 billion rupees.
“There has been an increase in spending over last year,” said chief executive Natarajan Chandrasekaran.
“We are seeing growth across markets and industries.”
Volumes have grown in each of the last four quarters, and TCS has been able to raise prices by nearly two percentage points over the last two quarters.
The company said it added 39 new clients from January through March.
TCS’s growth comes amid grave global uncertainties arising from the devastating March quake and tsunami in Japan and Europe’s mushrooming debt crisis, which Infosys said had delayed client decision making during the quarter.
Indian software services firms have also struggled with a rising rupee and higher employee costs, as inflation and competition drive up local salaries.
TCS’s robust earnings come on the heels of better-than-expected results from India’s fourth largest outsourcer, HCL Technologies, and suggest that Infosys’s fumble was company specific rather than indicative of general weakness in India’s $60 billion outsourcing sector.
Outsourcing companies like TCS have become tightly entwined with their multinational clients, handling everything from customer help calls and payroll to engineering design, customer analytics, and regulatory compliance.
Chandrasekaran said clients are spending more to increase efficiency, chase growth through new product development and global expansion, and on regulatory compliance.
“They want to be prepared should there be any shocks in the system,” he said.
TCS plans to hire 60,000 people this fiscal year — 90 percent of them in India — and offer employees in India a 12 to 14 percent wage hike, both signs of confidence in future growth. TCS also plans to ramp up hiring in the US and Latin America.
Kotak Securities analyst Dipen Shah said the results were roughly in line with his expectations.
“The salary hikes reflect the confidence management has in next year’s revenue growth,” he said.
“They need to give salary hikes to attract good people. I think it’s a good strategy.”
Profit margins slid 1.5 percentage points from a year earlier under US accounting standards because of higher taxes.
The company said it expects its tax rate to rise from between 17 and 18 percent last fiscal year to 22 to 23 percent this fiscal year.
Shah said the slide was largely due to the unwinding of speculative positions that had built up in advance of the earnings announcement.
