TCS Delivers Steady Growth in Q2

MUMBAI, India, Oct. 10, 2019 /PRNewswire/ -- Tata Consultancy Services (BSE: 532540, NSE: TCS), the leading global IT services, consulting and business solutions organization, reported its consolidated financial results according to Ind AS and IFRS, for the quarter ending September 30, 2019.

Financial Highlights for Quarter Ended September 30, 2019

    --  Revenue at $5,517 million, +5.8% YoY
    --  Constant Currency revenue growth: +8.4% YoY
    --  Net Income at $1,139 million, +1.8% YoY
    --  Operating Margin at 24%; Net Margin at 20.6%
    --  Earnings Per Share at $0.3, +3.8% YoY
    --  Net Cash from Operations at 108% of Net Income

    --  Total Dividend per share of `45 per share including `40 as special
        dividend Record date 18/10/2019; Payment date 24/10/2019

Business Highlights for Quarter Ended September 30, 2019

    --  Digital revenue: 33.2% of total, +27.9% YoY
    --  Life Sciences & Healthcare continues to outperform, +16% YoY;
        Communications & Media grew +11.8%
    --  UK and Europe lead growth: +13.3% YoY and +16% YoY respectively
    --  Net addition of 14,097 employees: highest ever number of employees
        onboarded in a quarter
    --  Continued investments in organic talent development:
        --  322K+ employees trained in digital technologies
        --  391K+ employees trained in Agile methods
    --  Industry-leading talent retention: IT Services attrition rate at 11.6%
        LTM

Commenting on the Q2 performance, Rajesh Gopinathan, Chief Executive Officer and Managing Director, said: "We ended the quarter with steady growth despite increased volatility in the financial services and retail verticals. We remain confident as the medium and longer term demand for our services continues to be very strong, as evidenced by our Q2 order book - the highest in the last six quarters."

He added: "Digital disruption across multiple industries is making rapid, scalable innovation a critical imperative in the Business 4.0(TM) world. In the auto sector, our scale in advanced engineering R&D skills and depth in digital technologies like AI and IoT are making us the preferred innovation partner to leading OEMs, embedding us deeply into their product R&D value chain. Our strategic partnership with General Motors for their next generation mobility initiatives is a powerful illustration of this."

N Ganapathy Subramaniam, Chief Operating Officer & Executive Director, said: "Our point of view on anchoring or participating in digital ecosystems, and the Business 4.0(TM) framework, are clearly helping clients in their growth and transformation journeys. We continue to make significant investments in differentiating digital capabilities that are helping us participate in key growth areas of our clients technology spend - be it their cloud transformation, data maturity or in advancing their automation agenda."

He added: "Our products and platforms are seeing increased client adoption and market coverage. During the quarter, we launched a unified TCS BaNCS Asset Servicing platform for asset managers, broker-dealers and custodians and a comprehensive Site Feasibility Assessment platform within our Advanced Drug Development platform suite. Our diversified industry and geography presence, and largest Agile Ready workforce, together with our Machine First(TM) approach to continuous improvement and innovation augurs well for our future growth."

V Ramakrishnan, Chief Financial Officer, said: "We have been gearing up for growth despite the volatility. Our margins in Q2 reflect our continued investments in our people, and in building the capacity we need to fulfill our strong order book."

Q2 Segment Highlights

Industries: Revenue growth was led by Life Sciences & Healthcare (+16%) and Communications & Media (+11.8%). All the other verticals - BFSI (+8%), Manufacturing (+7.8%), Technology & Services (+5.6%) and Retail & CPG (+4.8%) - continued to grow.

Markets: Growth was led by Europe (+16%) and UK (+13.3%). North America and Asia Pacific grew 5.3% and 6.5% respectively. Emerging markets showed steady growth - India (+7.7%), MEA (+7.3%) and Latin America (+7.3%).

Services:

    --  Consulting & Services Integration: Strategic Offerings around enterprise
        agility, mergers, acquisitions and divestitures, as well as Supply Chain
        as a Service saw increased traction in Q2.
    --  Digital Transformation Services: Cloud services, IoT and cybersecurity
        services led the growth this quarter. The strategic partnership with
        General Motors for future global vehicle engineering highlighted TCS'
        depth and scale in advanced automotive engineering R&D services.
    --  Cognitive Business Operations: Secure hybrid cloud, along with AI and
        Machine Learning, are playing a pivotal role in our clients' digital
        transformation journey and sustainable business operations. We saw
        strong demand for hybrid cloud transformation services and digital
        customer experience transformation services.

Key Highlights

    --  TCS and General Motors established a strategic partnership for future
        global vehicle design and development including vehicle styling, EV
        battery, motor design & advanced virtual simulations to pioneer world
        class vehicles that set new benchmarks in driving experience, safety and
        emissions.
    --  Engaged by a leading US based healthcare company as their strategic
        partner for enterprise operating model transformation and cybersecurity
        services, to be enabled by automation, analytics and AI. TCS will
        leverage MFDM(TM) and cloud technologies to drive extreme automation and
        mass customization, with agile product-based teams to drive agility,
        improve reliability, and enhance the value delivered.
    --  Chosen by a leading pan-Asian insurance group, in their partner
        distribution system modernization and customer experience transformation
        program. TCS will help deliver hyper-specialized omni-channel customer
        experience for exponential business growth and improve productivity
        through effective customer engagement. TCS will also deliver a complete
        business model transformation to successfully harness the digital
        opportunity and foster innovation with the partners, including
        non-traditional ones.
    --  Chosen by a Japanese tractor and heavy equipment manufacturer to design,
        build and deploy a leading modern ERP system covering Finance, Sales,
        Manufacturing, Procurement, Warehouse Management & Distribution for
        their North America operations.
    --  Engaged by a premier brand in the hospitality industry to improve
        business user satisfaction with end-to-end services management services
        covering Incident management, problem management, monitoring and
        capacity management services of all enterprise applications across
        multiple technologies.
    --  Engaged by North America's leader in packaging choice and sustainability
        to drive business transformation with a world class modern ERP platform
        and services. This transformation will drastically reduce monthly and
        quarterly closing timelines, improve manufacturing productivity, and
        increase sales margins and pricing effectiveness.
    --  Chosen by a leading Swiss energy management products company, to help
        them meet stringent European quality and compliance standards for their
        smart meters. TCS will help them improve the resilience and robustness
        of their meters with technological advancement and feature upgrades in
        their embedded firmware design and development.
    --  Engaged by a leading US-based multinational technology company, as its
        strategic partner in driving its customer analytics program to generate
        actionable insights and drive business growth. TCS' solution will help
        the client proactively track its products usage and adoption by its
        customers segments, and recommend next best actions. TCS will execute a
        world class omni-channel digital marketing program to provide a
        personalized, unified user experience by creating a consistent content
        strategy and operations across divisions.
    --  The Reserve Bank of India has chosen TCS as its strategic partner to
        implement a state-of-the-art Centralized Information & Management
        System, comprising end-to-end data collection to data dissemination
        platform, enabling data-driven business decision making. TCS will create
        a next-generation AI platform for better regulation of financial markets
        and better tracking of the country's economic growth parameters. This
        includes the creation of a regulatory sandbox for FinTechs and other
        organizations that wish to subscribe to reliable and current economic
        data.
    --  Chosen by Jurassic Fibre Limited, a UK-based telecommunications company,
        as the strategic partner in building a new fiber optic broadband network
        in UK. TCS' HOBS will power Jurassic's operations. In addition, TCS will
        implement an ERP solution for its finance, supply chain, talent
        management and field service operations.
    --  Engaged by a leading US insurance company as its innovation, growth and
        transformation partner for enhancing employee experience and
        productivity through automation and optimization. TCS will help leverage
        digital technologies for transforming and managing its enterprise
        applications portfolio.
    --  Selected by a US-based global consumer products leader, to drive
        modernization and technology transformation across their global
        environment. TCS is helping the customer in its journey to a
        products-based Business 4.0 organization, by transforming its core
        systems & processes with a Machine First approach to improve the
        employee experience, business scalability & availability in global
        markets with modern, cognitive technologies & public cloud platforms.
    --  Engaged by a European Pharma major to provide end-to-end
        pharmacovigilance services globally for the Global Drug Safety Group,
        including safety agreement processing.
    --  Selected by Pandora, a Danish jewellery manufacturer, to transform and
        secure the experience for their global users and retail stores, with a
        technology transformation initiative. TCS is enabling this
        transformation with its Digital Workplace Studio offering, leveraging
        the combined strengths of next gen analytics, cognitive automation
        driven platform and end user security control with its unparalleled
        global service delivery capability.
    --  Engaged by one of UK's largest water and wastewater services companies
        for transforming the management of large water events and improving the
        customer experience. TCS solution will provide actionable insights based
        on real-time data which allows quick identification of an affected
        customer and better field force deployment to enhance customer
        experience.
    --  Selected by Symcor, a leading provider of Financial Services in Canada,
        as the preferred partner consolidating the entire portfolio in
        applications and technology.
    --  Engaged by a leading British multinational aerospace and engineering
        company, as their IOT partner for an aviation digital hub initiative for
        airlines customers. TCS will create a new business revenue model for the
        manufacturer, lead the application development for better analytics and
        insights about the engine's operational and service parameters and also
        help reduce their engine build cycle time by transforming various
        functions in the engine build process, leveraging cloud platforms and
        microservices.
    --  Selected by a leading semiconductor and computer components
        manufacturing company, for validating their IoT platform development
        kits to increase their market competitiveness, reference solutions
        implementation and support base for customers. This will help to
        increase wide spread use of their IoT based Edge products, increase
        customer experience and position them as the market leader.
    --  Selected by a British multinational electricity and gas utility company,
        as the quality assurance transformation partner across UK and US. TCS
        will leverage its modern TCS Quality Engineering Transformation
        platforms for release acceleration, non-functional assurance and data
        validation to enable higher quality systems with faster time to market.
    --  Chosen by a Dutch multinational banking and financial services
        corporation, as strategic partner to rapidly scale up multiple
        blockchain initiatives. The bank will collaboratively work with TCS to
        enrich solutions that aim to bring much needed transparency,
        hyper-efficiency and trust across banking platforms in the custody and
        trading domains.
    --  Chosen by Loblaw Inc, a leading Canadian retailer, to execute their
        hybrid multi-cloud strategy as part of their cloud adoption initiative.
        TCS will modernize over 120 critical applications and migrate them to
        public cloud platforms as part of this program to increase the
        scalability, flexibility and agility of business operations.
    --  Chosen by an American drug wholesale company, to administer and operate
        the current key management infrastructure and improve data security. TCS
        will also ensure a wider implementation and uniform deployment of
        encryption policies supported by centralized key management to reduce
        the risk of sensitive data breach.
    --  Chosen by a leading UK supermarket chain as the strategic partner for
        the modernization of the retail application portfolio. TCS will help the
        customer achieve better scalability, a more agile core retail business
        and better customer satisfaction by implementing a cloud based
        microservices digital architecture.
    --  Engaged by Givaudan International SA, the global leader in fragrances
        and flavor to modernize and manage their global data centre operations
        leveraging MFDM, powered by Ignio(TM) and create a scalable, resilient
        foundation for its future growth and transformation.
    --  Chosen by a leading Australian grocery store chain to move over 100
        applications to a multi-cloud platform to improve operational agility,
        reduce real estate overheads, and achieve hyper scalability of
        seasonality-sensitive applications.
    --  Selected by a leading European logistics and postal services company as
        its 'Design Agency of Record' to design new digital experiences,
        solutions, and enhancements to the web, desktop and iOS mobile platforms
        for enhanced omni-channel experience for customers and employees.
    --  Selected by Lufthansa Group, one of the largest European Airlines, as
        the strategic partner for a large multi-year program where TCS will
        provide end to end Quality assurance services to their Digital
        transformation.
    --  Engaged by a global Fortune 500 insurance and investment services firm,
        as the strategic partner for its claims processing transformation. The
        engagement will enhance multi-channel customer engagement while
        streamlining contact center operations. Key areas of focus are customer
        and employee engagement, delivering consistent service across channels
        and creating a frictionless customer experience.
    --  Engaged by a leading US drugstore chain to redesign their corporate
        portal using industry leading UX-UI Design capabilities to improve
        associate engagement and enhance experience. TCS will help the client
        achieve the business objectives of simplified navigation and quick
        access to information through an easily maintainable, responsive design
        that is compatible across devices and browsers.

"On behalf of the entire Nationwide IT team, I would like to recognize TCS for their outstanding performance. Over the course of 2019, TCS has delivered on critically key initiatives. The work done on Commercial Lines Transformation Program stands out. This is a display of true partnership that we value and want to see continue between our two companies."
- James Fowler,
EVP & CIO, Nationwide

"Through our strategic partnership with TCS, we are building a digital workspace for our teams that is intuitive, flexible and frictionless, using the best of digital technology and service design to transform people's experience, improve productivity and support collaboration. The digital workspace powered with new tools, ways of working and services will help us support our customers and stakeholders better."
- Mark Hall,
Group IT Director, L&G

"Jurassic Fibre was conceived as a digital, consumer centric, disruptive challenger to the incumbent operators. We see TCS' cloud-based HOBS platform, combined with the expertise and commitment of the TCS team, as the right foundation to realize our vision."
- Michael Maltby,
CEO, Jurassic Fibre.

"Our agreement with TCS marks an important milestone for Pandora. Now we have our future-ready IT setup fully in place to support the Programme NOW objectives. And I am convinced that TCS with its global scale, retail expertise and cutting-edge solutions in relation to automation and AI will prove a perfect match for Pandora."
- Peter Cabello Holmberg,
CIO, Pandora

"For the last 18 months, TCS has enabled successful delivery of programs and initiatives deemed critical from an organizational perspective - ranging from client onboarding to those targeted at internal operational efficiency - integrated seamlessly as one team.
Symcor is expanding this partnership for improved governance, more effective demand-supply management and greater access to digital skills - all of which are expected to drive incremental benefit realization and enhance business value in a Business 4.0 paradigm."
-Paul MacDonald,
CIO, Symcor.

Research and Innovation

As on September 30, 2019, the company has applied for 4,874 patents, including 192 applied during the quarter and has been granted 1,121 patents.

Human Resources

Hiring continues to be very strong to fulfill the order book. Net addition in Q2 was 14,097, the highest ever number of employees to be on-boarded in a quarter. Consolidated headcount stood at 450,738 as of September 30, 2019.

The company's localization initiatives continue apace, with 146 nationalities represented in the workforce. The percentage of women in the workforce rose further to 36.3%.

TCS' continued investments in organic talent development have resulted in unmatched scale and depth in emerging technologies. At the end of Q2, over 322,000 employees had been trained on multiple new technologies, and over 391,000 had been trained on Agile methods.

The company continues to be the industry benchmark in talent retention, with the IT Services attrition rate (LTM) at 11.6%.

"By valuing our employees for the contextual knowledge they possess, and continually investing in equipping them with newer technology skills, we have established an industry benchmark in our ability to attract and retain talent across the world. Their can-do attitude coupled with our progressive, performance-oriented culture is giving us a competitive edge in the market," said Milind Lakkad, Global Head, Human Resources.

Awards and Recognition

Business Leadership:

    --  Voted the Overall Most Outstanding Company in India by investors across
        the region in Asiamoney's 2019 Asia's Outstanding Companies poll.
        Additionally, TCS was recognized as the most awarded company of the
        decade in India, for topping Asiamoney's investor polls the most number
        of times over the last 10 years
    --  Won the prestigious Red Dot: Best of the Best - Brands and
        Communications Design 2019 Award for its game, Marathon City: Sprint to
        Win, an inclusive, 3D simulation of the final stretch of the
        world-famous TCS New York City Marathon
    --  TCS BaNCS(TM) Network Solution powered by Quartz(TM) Blockchain was
        named the Best Blockchain Breakthrough of the Year at the 2019 FTF News
        Technology Innovation Awards
    --  Digitate won the Best Overall AI Company of the Year award from AI
        Breakthrough, competing with 2,500 companies and startups in the AI
        sector from all over the world
    --  Digitate and ignio(TM) won four silver Stevies(®) at the 2019
        International Business Awards, in the categories: Software Company of
        the Year, Most Innovative Tech Company of the Year and Fastest Growing
        Software Company of the Year. ignio(TM), won in the Software Defined
        Infrastructure product category
    --  TCS' New York City Marathon App won Gold in the App of the Year category
        at the Best in Biz Awards 2019 International
    --  TCS won one Gold Stevie(®) and two Silver Stevies(®) for its
        innovative and highly popular Virgin Money London Marathon App, and
        related promotional campaigns in the community, at the 16th Annual
        International Business Awards
    --  TCS LATAM was named the Nearshore Trendsetter of the Year at the 2019
        Nexus Illuminate Awards

Partner:

    --  TCS Enterprise Cloud Platform won the Best Innovation Award in Australia
        at the 2018 Equinix Partner Awards
    --  TCS Colombia won 2019 Microsoft Partner of the Year for DevOps and
        Alliance Global SI in Colombia
    --  TCS was recognized as Oracle's HCM Cloud Partner of the Year for The
        Netherlands



       
              IFRS Financial Statements


                                                 
           
            Unaudited Condensed Consolidated Statements of Comprehensive Income


                                            
            
           For the three-month periods ended September 30, 2018, and September 30, 2019


                                                           
            
              (In millions of $, except per share data)


                                                                                   
            
              Three-month period                 
     
              Three-month period
                                                                                                    ended                                           ended
                                                                                             September 30, 2018                              September 30, 2019

                                                                                                                                                                             ---


       
              Revenue                                                                                                 5,215                                            5,517

    ---


       Cost of revenue                                                                                                    3,000                                            3,264

    ---


       
              Gross margin                                                                                            2,215                                            2,253

    ---


       SG & A expenses                                                                                                      832                                              927

    ---


       
              Operating income                                                                                        1,383                                            1,326

    ---


       Other income (expense), net                                                                                           85                                              166

    ---


       
              Income before income taxes                                                                              1,468                                            1,492

    ---


       Income taxes                                                                                                         345                                              350

    ---


       
              Income after income taxes                                                                               1,123                                            1,142

    ---


       Minority interest                                                                                                      4                                                3

    ---


       
              Net income                                                                                              1,119                                            1,139

    ---


       
              Earnings per share in                                                               $
            
              0.29                                             0.30

    ---

                                                
           
            Unaudited Condensed Consolidated Statements of Financial Position


                                                         
          
              As of March 31, 2019, and September 30, 2019


                                                                    
            
              (In millions of $)


                                                                                     
            
              As of March 31,                  
     
              As of September 30,
                                                                                                                            2019                                             2019

                                                                                                                                                                             ---


       
              ASSETS

    ---


       Property and equipment                                                                                             1,685                                            1,625

    ---


       Right-of-use Assets                                                                                                    0                                              898

    ---


       Intangible assets and Goodwill                                                                                       581                                              573

    ---


       Accounts Receivable                                                                                                3,969                                            3,918

    ---


       Unbilled Revenues                                                                                                  1,298                                            1,596

    ---


       Investments                                                                                                        4,243                                            4,332

    ---


       Cash and Cash equivalents                                                                                          1,045                                              717

    ---


       Other current assets                                                                                               2,908                                            3,475

    ---


       Other non-current assets                                                                                           1,207                                            1,171

    ---


       
              Total Assets                                                                                           16,936                                           18,305

    ---


       
              LIABILITIES AND SHAREHOLDERS' EQUITY

    ---


       Shareholders' Funds                                                                                               13,243                                           13,737

    ---


       Long term borrowings                                                                                                   6                                                0

    ---


       Short term borrowings                                                                                                  3                                                0

    ---


       Other current liabilities                                                                                          3,192                                            3,370

    ---


       Other non-current liabilities                                                                                        423                                            1,122

    ---


       Minority Interest                                                                                                     69                                               76

    ---


       
              Total Liabilities                                                                                      16,936                                           18,305

    ---

About Tata Consultancy Services Ltd (TCS)

Tata Consultancy Services is an IT services, consulting and business solutions organization that has been partnering with many of the world's largest businesses in their transformation journeys for the last fifty years. TCS offers a consulting-led, cognitive powered, integrated portfolio of business, technology and engineering services and solutions. This is delivered through its unique Location Independent Agile delivery model, recognized as a benchmark of excellence in software development.

A part of the Tata group, India's largest multinational business group, TCS has over 450,000 of the world's best-trained consultants in 46 countries. The company generated consolidated revenues of US $20.9 billion in the fiscal year ended March 31, 2019, and is listed on the BSE (formerly Bombay Stock Exchange) and the NSE (National Stock Exchange) in India. TCS' proactive stance on climate change and award winning work with communities across the world have earned it a place in leading sustainability indices such as the Dow Jones Sustainability Index (DJSI), MSCI Global Sustainability Index and the FTSE4Good Emerging Index. For more information, visit us at www.tcs.com.

To stay up-to-date on TCS global news, follow @TCS_News.



       
     For more information please contact:




          Media: +91 22 6778 9999                Investor Relations: 91 22 6778 9999

    ---                                    ---

          arushie.sinha@tcs.com            
       
     Kedar.shirali@tcs.com

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