India’s largest software exporter Tata Consultancy Services on Monday reported higher earnings in the December quarter, but missed expectations and warned of a “cautious” business environment in the new year.
TCS is India’s second-most-valuable company by market capitalisation and earns more than 80 percent of its revenues from Western markets.
It has been at the forefront of an IT boom that has seen India become a back office to the world as firms in North America and Europe subcontract work, taking advantage of a skilled English-speaking workforce.
More recently, technology companies have benefited from a boost in demand for digital services since the pandemic.
But fears of an impending recession in key Western markets have hit business sentiment in recent months as software clients turn cautious, the company said.
“Europe is a market where client decision-making is getting impacted by the ongoing geopolitical challenges there and requires close watching,” chief executive officer Rajesh Gopinathan told a media briefing.
Gopinathan added that North America, which contributes half of its business, remained “vibrant” even as clients are expected to remain “cautious” and watchful of inflation in the early part of the year.
Net profit at the IT giant rose to 108.46 billion rupees ($1.3 billion) in the three months ended December 31, 11 percent higher than in the same period last year.
Sustained demand across business segments pushed revenue from operations 19 percent higher year-on-year to 582.29 billion rupees, crossing $7 billion for the first time in any quarter.
The revenue figures beat expectations but profits missed slightly, media reports said.
The Mumbai-headquartered company said the value of its order book declined to $7.8 billion at the end of December, compared to $8.1 billion at the end of September, albeit within the $7-9 billion guidance range.
The company, one of India’s largest private employers, saw its employee headcount fall in the quarter as it continued to slow hiring.
Employee attrition — a key metric for the industry — fell to 21.3 percent, compared to 21.5 percent in the previous quarter.
Operating margins rose 0.5 percentage points compared to the September quarter to 24.5 percent, but contracted 0.5 percentage points year-on-year.
The company’s board approved an interim dividend of 8 rupees per share and a special dividend of 67 rupees per share.
Shares in the firm closed 3.35 percent higher in Mumbai ahead of the results announcement.
EU wants to know how Meta tackles child sex abuse
The EU on Friday demanded Instagram-owner Meta provide more information about measures taken by the company to address child sexual abuse online.
The request for information focuses on Meta’s risk assessment and mitigation measures “linked to the protection of minors, including regarding the circulation of self-generated child sexual abuse material (SG-CSAM) on Instagram”, the European Commission said.
Meta must also give information about “Instagram’s recommender system and amplification of potentially harmful content”, it added.
The investigation is the first step in procedures launched under the EU’s Digital Services Act (DSA), but does not itself constitute an indication of legal violations or a move towards punishment.
Meta must respond by December 22.
A report by Stanford University and the Wall Street Journal in June this year said Instagram is the main platform used by paedophile networks to promote and sell content showing child sexual abuse.
Meta at the time said it worked “aggressively” to fight child exploitation.
The commission has already started a series of investigations against large digital platforms seeking information about how they are complying with the DSA.
It has sought more information from Meta in October about the spread of disinformation as well as a request for information last month about how the company protects children online.
The DSA is part of the European Union’s powerful regulatory armoury to bring big tech to heel, and requires digital giants take more aggressive action to counter the spread of illegal and harmful content as well as disinformation.
Platforms face fines that can go up to six percent of global turnover for violations.
US judge halts pending TikTok ban in Montana
A federal judge on Thursday temporarily blocked a ban on TikTok set to come into effect next year in Montana, saying the popular video sharing app was likely to win its pending legal challenge.
US District Court Judge Donald Molloy placed the injunction on the ban until the case, originally filed by TikTok in May, has been ruled on its merits.
Molloy deemed it likely TikTok and its users will win, since it appeared the Montana law not only violates free speech rights but runs counter to the fact that foreign policy matters are the exclusive domain of the federal government.
“The current record leaves little doubt that Montana’s legislature and attorney general were more interested in targeting China’s ostensible role in TikTok than they with protecting Montana consumers,” Molloy said in the ruling.
The app is owned by Chinese firm ByteDance and has been accused by a wide swathe of US politicians of being under Beijing’s tutelage, something the company furiously denies.
Montana’s law says the TikTok ban will become void if the app is acquired by a company incorporated in a country not designated by the United States as a foreign adversary.
TikTok had argued that the unprecedented ban violates constitutionally protected right to free speech.
The prohibition signed into law by Republican Governor Greg Gianforte is seen as a legal test for a national ban of the Chinese-owned platform, something lawmakers in Washington are increasingly calling for.
The ban would make it a violation each time “a user accesses TikTok, is offered the ability to access TikTok, or is offered the ability to download TikTok.”
Each violation is punishable by a $10,000 fine every day it takes place.
Under the law, Apple and Google will have to remove TikTok from their app stores.
State political leaders have “trampled on the free speech of hundreds of thousands of Montanans who use the app to express themselves, gather information, and run their small business in the name of anti-Chinese sentiment,” ACLU Montana policy director Keegan Medrano said after the bill was signed.
The law is yet another skirmish in duels between TikTok and many western governments, with the app already banned on government devices in the United States, Canada and several countries in Europe.
Meta sues US regulator to stop privacy settlement change
Meta filed a lawsuit late Wednesday arguing that US regulators planning to change the terms of a 2020 privacy settlement are overstepping their authority and should be stopped.
The Silicon Valley tech giant, known as Facebook when the $5 billion settlement was made, said that aspects of the Federal Trade Commission’s very structure violate the US Constitution, making its proceeding against Meta unlawful.
Meta contended in a filing to a federal court in the US capital that the situation amounted to it being “subjected to an illegitimate proceeding led by an illegitimate decision maker.”
The FTC in-house actions make it both prosecutor and judge, denying Meta due process under the law and usurping the power of the courts, the company argued in its filing.
In May the agency proposed changes to its 2020 privacy order with Facebook, accusing the company of failing to live up to the terms.
“Facebook has repeatedly violated its privacy promises,” FTC’s bureau of consumer protection director Samuel Levine said in a release at the time.
“Facebook needs to answer for its failures.”
The 2020 privacy order required Facebook to pay a $5 billion civil penalty, expand children’s privacy protections and have an independent third party assess the effectiveness of its efforts.
Proposed changes to the settlement include prohibiting Meta from profiting off data it collects, including through virtual reality products, from users younger than 18 years old, according to the FTC.
Another proposed change would bar Meta from launching new products or services without an assessor confirming in writing that its privacy program is in full compliance.
Meta urged the court to stop the FTC from proceeding with the changes.
“Meta respectfully requests that this court declare that certain fundamental aspects of the commission’s structure violate the US Constitution,” the tech firm said in the filing.
The FTC is seeking to impose broad restrictions on how companies such as Meta use their intellectual property, the lawsuit contended.
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