Tata gives employees anniversary bonus, cuts into profits

India's largest outsourcer said its business had grown well in the first quarter

India's outsourcing industry needs to hire and retain staff in big numbers to keep business humming, so for the 10th anniversary of its initial public offering, Tata Consultancy Services announced a one-time "special reward" for its employees.

As a result, Tata took a dip in profits in the first quarter to give out a large bonus.

TCS said all its employees worldwide, who have completed at least one year of service, would be eligible for the special bonus, with each employee paid one week's salary for every year of service in the company.

At the end of the quarter TCS had 319,656 employees. The bonus will cost the company about US$423 million.

The reward to employees acknowledges their role "in building TCS into one of the most respected and valued technology services companies in the world," CEO N. Chandrasekaran said Thursday.

India's largest outsourcer, TCS went public in 2004 on Indian stock exchanges. It now has the highest market capitalization on local stock markets.

The company added clients across all sectors in the quarter, while business from all industry verticals that it addresses grew by double digits. Revenue for the quarter was $3.9 billion, up 11.3 percent from the same quarter last year. Excluding the cost of the bonus, net profit grew 10.45 percent to $951 million. Actual profit dropped 28 percent to $621 million as a result of the bonus.

North America accounted for over 52 percent of TCS' revenue in the quarter, followed by the U.K. which made up for nearly 16 percent of the revenue.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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