Assessing the Financial Impact of CSR Initiatives in Indian IT Companies

Abstract

Corporate Social Responsibility (CSR) is increasingly recognized as a vital component of modern business strategy, particularly in the IT sector. CSR initiatives reflect a company’s commitment to ethical practices, environmental sustainability, and social welfare, thereby enhancing its reputation and stakeholder trust. This study explores the financial health and the impact of CSR on the financial performance of Tata Consultancy Services Limited (TCS) and Infosys Limited over a five-year period from 2018-19 to 2022-23. In this study ratio analysis and regression techniques have been used to analyses the financial health of these leading IT companies and examining the impact of CSR spending on financial performance such as net profit margins and Return on Assets (ROA). The comparative analysis highlights that while both companies have shown a strong commitment to CSR, there is no direct impact of CSR spending on their net profit margins or ROA. TCS has consistently demonstrated higher CSR spending, net profit margins, and ROA compared to Infosys, reflecting superior financial management and asset utilization. This study underscores the importance of CSR as a strategic component for reputation and sustainability, even though its direct financial impact remains indeterminate.