TCS expects margin benefits as BSNL deal tapers; to create 25K-seat capacity in Bengaluru: CFO

Tapering off in the BSNL deal expected over the next few quarters will aid TCS to expand profit margin, a senior company official has said. The country’s largest software exporter is also looking at creating a capacity of over 25,000 seats in Bengaluru over the long term on a land parcel acquired recently, Chief Financial Officer Samir Seksaria told PTI.

“The same program (BSNL) as it tapers down at a portfolio level, at an overall level, there would be a benefit which would come in (on margins),” Seksaria said replying a specific question on the impact of BSNL deal’s tapering down on margins.

He, however, declined to share a number on the positive impact on the operating profit front. For the December quarter, it reported operating profit margin at 24.5 per cent for December quarter and made it clear that it aims to expand on it.

Seksaria added that there would be a tapering down in the BSNL contract till the September quarter of FY26.

It can be noted that the over Rs 15,000-crore deal to help BSNL roll out a countrywide 4G network has had a significant contribution in the Tata group company’s revenue growth over the last few quarters.

Seksaria said the company will make up for the tapering BSNL revenue from other sources across all markets it serves.

Asked if it will enter the aspirational profit margin band of 26-28 per cent, which has been elusive for some time, in FY26, Seksaria refrained from a specific comment but added that levers exist for expanding the number from current levels. The company was able to post a sequential margin expansion of 0.4 per cent and maintain it on a year-on-year basis despite the 1.70 per cent wage hikes earlier in the fiscal year.

The ongoing rupee depreciation against the dollar helps profitability, but the appreciation of the local currency against other world currencies has resulted in no margin gains, Seksaria said.

He explained that its receivables are in multiple currencies and has an active hedging programme to limit any impact of currency volatilities on its finances.

On the Rs 1,625-crore land buy deal from a Tata group company announced last week, Seksaria said the company is planning to put the capacity to expand in Whitefield, a prime area of the IT capital.

The company already has about 70,000 employees in various offices across Bengaluru.

Seksaria said the company adopts a mix of lease and build approach when it comes to setting up its units, and the effort in Bengaluru is part of the latter.

It is building campuses or facilities across various pockets of the country, and the last of such centre to be inaugurated was in Coimbatore, the CFO added.