TCS US Gaap growth accelerates in Q2
October 15, 2007

• Q2 revenues at $1.42bn; up 45.2 per cent Y-o-Y, up 10.8 per cent Q-o-Q
• Q2 net income at $313m up 45.1 per cent Y-on-Y, up 7.5 per cent Q-o-Q
• Full services play: Over 50per cent of Q2 revenues from new services
• First India-based IT firm to cross landmark of 100,000 employees

Tata Consultancy Services (BSE: TCS.BO, NSE: TCS.NS) reported its consolidated financial results according to US GAAP for the quarter ended September 30, 2007.

Highlights for quarter ended September 30, 2007

• EPS at $ 0.32 in Q2
• 51 new clients added in Q2
• 12,523 employees joined the company in Q2
• Attrition steady at 11.5 per cent LTM (including BPO)
• Quarterly dividend of Rs3 per share

Chief executive officer and managing director, S Ramadorai said: We have underlined our leadership position by earning revenues of $2.7 billion during the first half of this financial year by accelerating our growth rate and improving our profitability in Q2." He added: Our strategic investments in new services like consulting, infrastructure and platform-based BPO as well as new markets are helping accelerate growth and diversify our revenue base, thereby reinforcing our full service capability.

"S Mahalingam, chief financial officer, said: "Our focus remains on twin pillars of growth and profitability. In Q2, we have absorbed the impact of the rupee appreciation and improved our profitability. We remain confident that our hedging program and cost management levers will help us expand margins during the rest of the year."

TCS continued to drive its program of long-term financial management with a strong focus on countering the impact of the appreciating Indian rupee and keeping a strong handle on costs. As at the end of Q2, TCS had about $2.6 billion outstanding in hedges. In addition, it continues to drive margin expansion through rate and productivity efficiencies and a movement of work off-shore.

"This has been a landmark quarter with our full services strategy coming of age and more than 50 per cent of the revenue in Q2 coming from non-ADM services including consulting, BPO and infrastructure services, which are all growing at double digit rates," said N Chandrasekaran, chief operating officer. "In terms of markets, our full services play is driving strong growth in North America and there is strong deal flow in UK and Europe across financial services, technology, and transportation sectors."

In dollar terms, TCS revenues grew by 10.8 per cent during Q2 driven by strong growth in banking and financial services, telecom and manufacturing verticals, which grew faster than the average company growth rate. Travel and hospitality is also fast emerging as a key vertical contributing 4.4 per cent of revenues, up from 2.8 per cent in Q1 as a result of significant client additions.

S Padmanabhan, executive director, human resources said, "We remain on target to meet our annual hiring plans and have added over 12,000 employees during Q2. Our ability to keep the attrition rate stable underscores our robust employee management programmes to look after the welfare and global career aspirations of our 100,000-strong employee base.

During Q2, TCS became the first Indian IT company to cross the 100,000 employee-mark. There was a gross addition of 12,523 employees in Q2 of which 5,899 were trainees and 5,658 were lateral recruits in India. The net addition of employees was 9,268. TCS also added 966 employees in overseas subsidiaries and branches.

TCS’s attrition rate in Q2 remained steady at 11.5 per cent overall with 10.9 per cent attrition rate in the IT services business and 17.9 per cent attrition rate in BPO. Foreign nationals formed 8.5 per cent of the total employee base and 28 per cent were women.

Phiroz Vandrevala, executive director, corporate affairs said: "Our global branding campaign around the theme of 'Experience Certainty' continues to be recognised and resonate among our customers, prospects and partners and is helping create a leadership position for us globally."

(INR numbers of Q2 FY08 are converted to USD on convenience translation basis @ Rupees 39.843 per USD)