TCS revenues cross $4 billion in 9 months, up 41 per cent in dollar terms propelled by growth across sectors
January 16, 2008

Biggest ever quarter for the Indian IT firm: revenues at $1.5billion

Tata Consultancy Services reported its consolidated financial results according to Indian GAAP for the quarter ended December 30, 2007.

Highlights:

• Revenues at Rs5,923 crore up 22 per cent Y-o-Y; up 5 per cent Q-o-Q
  
• Profit after Tax at Rs1,327 crore up 19 per cent Y-o-Y; up 6 per cent Q-0-Q
  
• EPS at Rs13.56 in Q3
  
• 54 new clients added in Q3
  
• 7,522 employees joined the company in Q3
  
• Quarterly dividend of Rs3 per share

Commenting on the performance, chief executive officer and managing director, S Ramadorai said: "Our diversified business model continues to sustain the growth momentum despite several external challenges. There is growth momentum across geographies with contributions from all business units." He added: "The ability to deliver sustained growth in this dynamic environment requires agility, innovation and flawless execution. We are cautiously confident that our geographical footprint, full service offerings and innovative customer engagement models will help us stay on a growth trajectory."

S Mahalingam, chief financial officer, said: "We are delivering growth without compromising on margins even though the Indian rupee appreciated by 12 per cent over the last one year. The company continues to drive margins through rate and productivity efficiencies and keep a strong handle on costs."

The company is focused on long-term financial management and TCS improved its operating margins despite a 2.3 per cent appreciation in the rupee against the US dollar during Q3. As part of its mature, proactive and comprehensive foreign exchange management programme, the company had about $3.1 billion outstanding in hedges at the end of Q3.

"Big deal wins across sectors and strong traction for our services are providing the growth momentum. We have a strong qualified pipeline across geographies and verticals to sustain our growth," said N Chandrasekaran, chief operating officer. "Our investments in Latin America, India, APAC have given us pole position in these emerging markets, while our full services play and global network delivery model drives growth in established markets like USA, UK and Europe."

Despite external challenges, the banking and financial services vertical witnessed strong growth in Q3 with the revenue share increasing sequentially. The travel and hospitality as well as the energy and utility verticals also grew faster than the average company growth rate.

The TCS full services strategy continues to gain traction in large accounts and emerging services continue to be engines of growth. Large IT outsourcing engagements are gaining strength in established and newer geographies like Asia Pacific, India, Middle East and Africa as well as Latin America.

Strong performance across markets has helped TCS close a number of significant deals in Q3 across geographies and sectors. Some of the significant deal wins include:

• Full services deal for The Nielsen Company delivered through a Global Network Delivery Model in a contract valued over $1.2 billion.
  
• Social Security Institute of Mexico for end-to-end IT services in a multi-year contract valued at over $ 200 million.
  
• Transformation engagement for a leading global insurance major in a deal worth over $100 million.
  
• Strategic partner for a leading automotive OEM worth $120 million.
  
• Engineering globalisation programme for a North America-based leading manufacturing company in a deal worth over $50 million.
  
• Transformation partner for one of the largest manufacturers of healthcare products in a deal worth over $50 million.
  
• A large European steel manufacturer to provide ADM services valued at over
  $65 million.
  
• Large deal with a leading Australian bank for developing and maintaining its business applications worth $30 million.
  
• Leading Indian public sector general insurer has selected TCS for an integrated, end-to-end platform with a contract value is in excess of USD 40 million.

"We remain on target to meet our annual hiring plans and have added over 28,000 employees in the current financial year," said S Padmanabhan, executive director, human resources. "In line with our outlook for continued growth, we have already made over 22,000 campus offers for next year."

TCS is the largest IT employer in India with 108,229 employees at the end of Q3. During Q3, there was a gross addition of 7,522 employees in Q3. The company continues to maintain the lowest attrition rate in the industry at 12.2 per cent. Foreign nationals formed 8.3 per cent of the total employee base and 28 per cent were women. Forty nine per cent of the employees have over three years of experience.

(INR numbers of Q3 FY08 are converted to USD on convenience translation basis at Rupees 39.415 per USD)