Analyzing the Impact of Corporate Social Responsibility (CSR) on the financial performance of Tata Consultancy Services Limited

Abstract

In this article, we undertake an analysis of the influence of Corporate Social Responsibility (CSR) on the financial performance of a prominent Indian software company. Our case study focuses on Tata Consultancy Services Limited (TCS) during the period from 2019 to 2023. While traditional success metrics like profitability and market leadership remain vital, today’s stakeholders also evaluate companies based on their commitment to community service. CSR holds the potential to enhance a company’s competitiveness, reduce financing costs, and bolster financial performance, contributing to overall economic value. This study unveils the CSR initiatives embarked upon by TCS and delves into their impact on the company’s financial performance. Our research relies on secondary data derived from TCS’s annual reports and CSR reports spanning five years. We have formulated hypotheses to investigate the correlation between CSR expenditures and key financial performance indicators, including Profit before Tax, Return on Assets, Return on Equity, and Return on Capital Employed. Employing correlation analysis, we seek to uncover the connections between CSR endeavors and financial outcomes. Through this study, we aim to shed light on how CSR practices have affected TCS’s financial standing, providing insights into the broader relationship between corporate social responsibility and economic performance in the software industry.