July 13, 2017

Tata Consultancy Services reports consolidated financial results for quarter ended June 30, 2017

  • Demand from major markets drives 3.1 percent growth in dollar terms
  • Strong deal closures during Q1 signal annual momentum
  • Digital revenue at 18.9 percent, up 7.6 percent Q-o-Q; 26 percent Y-o-YVolume growth at 3.5 percent
  • CC growth at 2 percent

Mumbai: Tata Consultancy Services (BSE: 532540, NSE: TCS), the leading IT services, consulting and business solutions firm, reported its consolidated financial results according to IFRS and Ind AS, as on June 30, 2017.

Financial highlights for quarter ended June 30, 2017

  • Revenue at Rs29,584 crore + 1.0 percent Y-o-Y; (0.2) percent Q-o-Q
  • Net Income at Rs5,945 crore (5.9 percent) Y-o-Y and (10.0 percent) Q-o-Q
  • Net cash from operations at 104 percent of net profit
  • Operating margin at 23.4 percent
  • Earnings per share at Rs30.40; dividend per share of  Rs7.00
  • Proposed record date July 25, 2017; payment date August 1, 2017

Business highlights for quarter ended June 30, 2017

  • IT attrition rate at 11.6 percent LTM
  • Total employees: 3,85,809; gross addition: 11,202 employees
  • Eight clients added in $1 million+ band; 12 clients added in $10 million+ band
  • One new client in $50 million+ and $100 million+ bands

Commenting on the Q1 performance, Rajesh Gopinathan, CEO and MD, TCS, said, “We have seen steady growth across industries in Q1. Robust volumes from major markets, driven by good client additions across revenue bands and accelerating digital adoption among customers, have given us the right start to the year.  We have had excellent wins across all markets and have a good deal pipeline across industries that positions us well for growth in FY18”.

Mr Gopinathan added, “As we go through the early stages of Business 4.0, enterprises are reimagining themselves as leaner, responsive, data-centric organisations by embracing agile, cloud, analytics and automation. We have retooled our organisation structures and go-to-market teams to remain relevant to customers and have introduced new service lines, like cognitive business operations and digital transformation services, to capture these new opportunities”.

N Ganapathy Subramaniam, chief operating officer and executive director, TCS, said, “Holistic growth across all industry segments in Q1, a strong order pipeline, as well as the closure of large platform-based transformation opportunities gives us the confidence that overall growth momentum will increase in the coming quarters”.

V Ramakrishnan, chief financial officer, TCS, said, “During the quarter, high currency volatility, including sharp rupee appreciation against the dollar, resulted in Rs650 crore loss in reported revenues. We remain disciplined in our financial management, stay focused on generating strong cash flows and invest in our digital business. Despite the impact of wage hikes in Q1, we continue to drive profitability to our targeted range”.

Q1 segment highlights

Note to editors: changes in industry data reporting format

Over 82percent of TCS’s revenues come from major markets such as the Americas, the UK, Europe and Australia, where our business has a fair share of annuity-based revenues and therefore are less volatile. Our revenues from rest of the world or businesses tend to be more volatile on account of their project-centric nature. To provide investors and analysts with a clearer picture of our core performance in industry verticals, the volatile markets have been clubbed into a single group called Regional Markets and Others in our quarterly investor factsheet. This segmentation is to assist in a more accurate discussion of our business performance. The official definition of our business segments in our financial statements remains unchanged and is available as part of the Statement of Accounts.

Industries: Strong revenue growth was visible across verticals in the June quarter. All industry verticals except Retail and BFSI exhibited strong growth at over 3.5 percent sequentially.

Markets: All major markets grew in CC terms with Europe leading the way (5.9 percent Q-o-Q), followed by North America and the UK. Among growth markets, Latin America led the pack at (2.8 percent Q-o-Q) followed by India, APAC and MEA.

Services: During Q1, TCS reorganised its service lines, adding new lines like Cognitive Business Operations and Digital Transformation Services. All the new service lines are seeing good market traction, have a robust pipeline and witnessing secular growth.

  • Cognitive Business Operations saw over 5percent Q-o-Q growth, led by transformation offerings for the back-office, cloud adoption, regulatory compliance and TCS Platform based services
  • IoT-based services saw high client traction with 20+ initial engagements in the areas of connected  home, mobility, energy management and remote monitoring.
  • Cyber security services saw double-digit Q-o-Q growth, with strong demand in compliance requirements, privileged access management and cyber security
  • Digital interactive services saw multi-million-dollar wins with two insurance clients and an energy client

India's Goods & Services Tax (GST)

A key event in the India market was the launch of GST on July 1, 2017. TCS played a pivotal role in the country’s largest tax reform initiative on multiple fronts:

  • Central Board of Excise and Customs (CBEC): TCS provided the Systems Integration and Infrastructure Management Services for GST process and launch.
  • State governments: TCS has delivered solution adapters for integrating with GSTN and important tax analytics for efficient financial management.
  • Large corporates: TCS’s corporate customers in India are engaging with  the company on GSP (GST Suvidha Provider) solution that provides comprehensive capabilities for tax determination, filing of tax returns and tax analytics.
  • SMEs: In addition to TCS’s GST-ready ERP for SMEs on the iONTM platform, the company has rolled out a GST Shiksha Hub that drives awareness and knowledge on GST.

Select key wins in Q1

  • Selected as a strategic partner by large global Audit and Advisory firm to transform and manage their enterprise IT across five business groups using Agile and DevOps methodology
  • Chosen by a large UK life insurance company to transform its customer service and policy administration by leveraging TCS BaNCS Insurance platform
  • Engaged by a European global paints company to transform their applications landscape to drive optimization through automation and continuous improvement
  • Selected by a leading natural gas and utility company in North America to transform into a digital utility with focus on speed to market and enhancing customer experience
  • Engaged to simplify the non-core business applications, transform customer experience through digital technologies and use analytics to predict customer behavior for a North American mortgage institution
  • Chosen by a large life insurance firm in Asia Pacific to transform its core systems for policy administration, claims and reinsurance business functions using TCS BaNCS insurance platform and delivered in a ‘Software as a Service’ model
  • Selected as strategic partner by North America-based global bio-pharma company to provide IT, networks and security services
  • Chosen by a global leader in innovative workforce solutions as their strategic partner to provide technology managed services for their global IT and infrastructure
  • Engaged by a North American metals major to completely transform its IT environment to cloud and hosted services model
  • Selected by an European based producer of environment-friendly fertilizers to transform their end-user computing architecture and service delivery model and support their digitalization agenda
  • Chosen as a strategic partner to Implement TCS BaNCS as a multi-asset class clearing and settlement solution for a Market Infrastructure provider in North America

Key wins in digital services and solutions in Q1:

  • Chosen by a European global engineering company to develop an IoT platform for predictive maintenance and monitoring of remote machinery across geographies
  • Selected by a North American retail firm to ensure customer centric shopping experience on its channels using Enterprise Cloud technologies
  • Engaged by a global finance services organization to consult on cloud strategy and roadmap
  • Selected by a North American consumer products conglomerate to drive their data centre transformation program using TCS proprietary IoT solutions
  • Selected by a European food and health retail major to empower customers by using real-time spend analytics solution using Big Data technologies
  • Engaged by a European financial services corporation to consult and create a blue print for a futuristic analytics platform using TCS proprietary Big Data methodology
  • Chosen as a strategic partner by a North American manufacturing firm to build an Industry 4.0 IoT platform to help predict and deliver personalized offerings for their end customers
  • Engaged by a European multinational clothing retail company as a strategic partner for their digital marketing program
  • Selected by a UK based global insurance company to transform customer on-boarding using digital interactive services

Innovation and intellectual property:

As of June 30, 2017, the company has applied for 3402 patents, including 43 applied during the quarter. Till date the company has been granted 541 patents.

Human resources:

The total employee strength at the end of Q1 was 3,85,809 on a consolidated basis, with gross addition of 11,202 and net addition of (1,414 employees) during the quarter. The total attrition rate (LTM) was at 12.4 percent, including BPS, with IT attrition at only 11.6 percent. The percentage of women in TCS rose to an all-time high of 34.8 percent while the number of nationalities increased to 134.  

“We continue to hire talent across markets and help TCSers gain new digital skills so they can participate successfully in the digital economy. Over 2,15,000 TCSers have been trained as digital champions and the accumulated contextual knowledge of the customer’s business together with our unparalleled execution capabilities positions us well in today’s competitive context,” said Ajoy Mukherjee, executive vice president and global head, human resources.

Awards and recognition:

Business leadership:

  • Ranked as a leader in 22 technology analyst surveys during the past quarter
  • Ranked as a top employer of US Talent in the IT Services sector by The Cambridge Group
  • Named as One of America's Civic 50
  • Named as Achievers 50 Most Engaged Workplaces in the US and Canada
  • Retained number 1 position in Europe for customer satisfaction for fourth consecutive year
  • Bagged multiple awards at the Asian Banker Technology Innovation Awards 2017
  • Editor’s Choice Award for Best Learning Execution in 2017 Learning Elite Awards
  • Retained Maturity Level 5 in the CMMI®-SVC Enterprise-wide Appraisal
  • Multiple awards at the Annual ATD Conference 2017

Partner:

  • Best Supplier Award from Ericsson: 
  • Oracle Integrated Cloud Partner of the Year Award in the UK and Ireland
  • Adobe System Integrator Partner of the Year Award for India
  • Pega 2017 Partner Excellence Award

Sustainability:

  • Won  the prestigious ISC-FICCI Sanitation Award 2017 - Best Corporate Initiative in Sanitation