TCS: Strong Share Gains in Europe Stand Out in Seasonally Weak Q3
MUMBAI, India, Jan. 17, 2020 /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 December 31, 2019.
Financial Highlights for Quarter Ended December 31, 2019
-- Revenue at $5,586 million, +6.4% YoY
-- Constant currency revenue growth: +6.8% YoY
-- Operating Margin at 25%; Net Margin at 20.4%
-- Net Income at $1,138 million; Earnings Per Share at $0.3
-- Net Cash from Operations at 116.4% of Net Income
-- Dividend per share: ` 5.00
Record date 25/01/2020; Payment date 31/01/2020
Business Highlights for Quarter Ended December 31, 2019
-- Life Sciences & Healthcare continues to outperform, growing +17.1% YoY;
Manufacturing grew +9.2% YoY and Communications & Media grew +9.5%
-- Europe grew +15.9% YoY
-- Net addition of 22,390 employees YTD
-- 93% of the 30K freshers onboarded in H1 deployed in projects
-- Continued investments in organic talent development:
-- 327K+ employees trained in digital technologies
-- 404K+ employees trained in Agile methods
-- Industry-leading talent retention: IT Services attrition rate at 12.2%
LTM
Commenting on the Q3 performance, Rajesh Gopinathan, Chief Executive Officer and Managing Director, said: "We saw the sectoral trends of the first half of the year continue to play out in the third quarter. Our robust order book during the quarter reflects our ability to pitch innovative technology solutions to address the business needs of different stakeholders in the enterprise, and participate in our customers' enterprise-wide transformation initiatives. This is also helping deepen and broaden our customer relationships, and make the business more resilient."
He added: "Our participation in the growth and transformation spends of our customers is most evident in our sustained success in Continental Europe where our revenues have more than doubled in the last five years. Our thought leadership in areas like the Business 4.0(TM) framework, Enterprise Agility and the Machine First Delivery Model, our domain and technology consulting expertise, investments in research and innovation, and our ability to design complex solutions leveraging multiple capabilities from across TCS, have made us the preferred partner for CEO-level initiatives at progressive organizations."
N Ganapathy Subramaniam, Chief Operating Officer & Executive Director, said: "In a seasonally weak quarter characterized by furloughs across multiple industry verticals, we focused on execution, while continuing to invest for future growth. Having onboarded over 30,000 trainees in the first half of the year, we worked on driving up utilization in Q3 and had good outcomes. Our client metrics were also very good, with additions across most revenue buckets."
He added: "Our large core transformation engagements are all progressing very well. At M&G Prudential as well as at Scottish Widows, we crossed important transformation milestones, successfully migrating hundreds of thousands of policies from legacy systems onto our platform, significantly enhancing the customer experience for those policy holders. These are industry-defining engagements, closely watched by other insurance companies. Our achievement of these key milestones adds further impetus to their own transformation plans."
V Ramakrishnan, Chief Financial Officer, said: "Our ability to expand our margins in a volatile environment speaks of the strength of our business model, strong execution focus and the higher quality revenues we are getting on account of our strong positioning in our customers' growth and transformation spends."
Q3 Segment Highlights
Industries: Revenue growth was led by Life Sciences & Healthcare (+17.1%), Communications & Media (+9.5%) and Manufacturing (+9.2%). Other verticals - BFSI (+5.3%), Retail & CPG (+5.1%) and Technology & Services (+3.3%) - showed more modest growth.
Markets: Growth was led by Europe (+15.9%) and MEA (+10.8%). and UK (+7.5%). North America and Asia Pacific grew 4.1% and 5.7% respectively. India grew 6.4% while Latin America grew +6.2%.
Services:
-- Consulting & Services Integration: Saw strong growth in Q3, led by
next-gen enterprise transformation services, M&A, divestiture and Supply
Chain as a Service.
-- Digital Transformation Services: The MFDM(TM) framework which integrates
Automation, Analytics and AI has been central to many core
transformation deals. Growth in Q3 was led by Enterprise Intelligent
Automation, Cyber Security, IoT and Enterprise Application Services.
-- Cognitive Business Operations: Continuing to see strong growth in
managed hybrid cloud services. TCS' new operating models leveraging
service reliability engineering, AIOps powered by ignio(TM) and Agile
are seeing strong traction. Q3 order book was the strongest in the last
several quarters.
Key Highlights
-- Walgreens Boots Alliance , a leading North American pharmacy retailer,
selected TCS as trusted partner to accelerate the work on transforming
its critical pharmacy operating system leveraging TCS contextual
knowledge. The solution will be cloud native with modern architecture
enabling business agility and improved customer's experience.
-- Petco, America's leading pet specialty retailer, selected TCS
Optumera(TM), the award-winning AI-powered merchandize optimization
suite, to hyper-localize and optimize its store products and space
strategies in an integrated way, with greater speed and precision in
decision-making, and deliver an improved end-to-end customer experience.
-- IAG Tech, part of International Airlines Group, has extended its
strategic technology partnership by selecting TCS to support existing
datacenter infrastructure and services. This multi-year managed services
contract will optimize and support datacenter operations, standardize
processes and technologies, and reduce the legacy IT footprint to enable
IAG's datacenter transformations across all operating companies.
-- Chosen by Bayer, a leading life sciences company, as a strategic partner
to provide IT transformation services across the pharmaceuticals and
consumer health business, as well as in the area of corporate functions
and HR across the enterprise. TCS was selected for its capabilities in
research and development, as well as track record in delivering large
and complex engagements.
-- Selected by a France-based global pharmaceutical company, for end to end
transformation of the user experience, enabled by Digital Workplace
Services, leveraging the combined strengths of next gen analytics and
cognitive automation with robust global service delivery capability.
-- Selected by one of the largest pan-Asian life insurance groups to
deliver a major cloud transformation and modernization program,
leveraging Agile techniques, to enable hyper personalized customer
experience and to support future growth.
-- Engaged by a UK-based multinational pharmaceutical company to deliver an
Agile/Dev-Ops transformation of its IT Research and Development
operating model. This value-driven Agile culture will enable the company
to deliver "medicines that matter" and change patient's lives by
focusing on a unique equation combining Science x Technology x Culture.
-- Chosen by a global banking and financial services holding company as its
partner for transforming its FDIC compliance regulatory reporting.
-- Selected by CSL Behring, a leading rare diseases biotech company, as a
strategic business technology partner to help consolidate and transform
its operations and business enablement model and support its accelerated
growth plans.
-- Chosen by a major UK-based financial services company, to re-imagine and
transform the employee experience by implementing a persona-centric,
modern and collaborative Digital Workplace to dramatically improve
workplace productivity, co-ordination, agility and innovation. TCS will
also transform the security ecosystem to provide superior protection
against major cyber threats.
-- Selected by a leading UK-based multinational energy and utilities
company as their strategic innovation-ecosystem partner for transforming
their product portfolio and innovating at scale. The engagement includes
building capabilities for legacy modernization, cloud transformation,
integration of acquisitions, and AI-based data security compliance with
GDPR/CCPA regulations.
-- One of Australia's leading banks is expanding its strategic partnership
with TCS to drive service management transformation in its Consumer
Banking, Business Banking, Institutional Banking businesses and
corporate functions. As the single partner of choice, TCS will enable
this transformation leveraging TCS' Run-the-Bank framework and assets,
Machine First(TM) Delivery Model and its cognitive automation product,
ignio(TM).
-- Chosen by a pioneering high-end luxury fashion group based in France, to
transform their global finance and supply chain functions for better
customer experience and efficient operations. TCS will lead the design
and deployment of the enterprise resource planning template to
rationalize applications for their North America operations to ensure
faster time to market, streamlined fashion management supply chain cycle
and greater efficiency.
-- Selected by a US-based multinational pharmaceutical company for enabling
real-time analytics to optimize their business functions including
manufacturing, sales, transportation, scrap & raw materials inventory,
and quality metrics analysis. TCS will develop a solution on a leading
public cloud platform using state-of-the-art data analytics and
visualization technologies.
-- Selected by a global leader in the transportation and storage of
specialty chemicals, to stay ahead of changing markets by modernizing
its big data platform on the cloud. This will help unlock the power of
data, accelerate the growth and transformation journey for
organizational agility, and deliver enhanced business ROI.
-- Engaged by an American Fortune 100 energy company, for enhancement and
managed services for their IoT-based mobile field management suite of
applications. This application is used to track their real time field
problems, relevant maintenance service, resource planning, outage
management and periodic inspections.
-- Engaged by one of the largest telecom service provider in USA, to
implement an online device registration portal leveraging a leading IoT
platform to enhance their connectivity management API with real time
inputs, provisioning, monitoring, usage management, reporting &
analytics integrated with messaging, location services and firmware
management features.
-- Engaged by a leading US-based automated pool accessories manufacturer as
partner in their connected pool IoT solution for its line of residential
pool equipment to generate additional revenue streams and increased
market share from hi-tech value-added services.
-- Engaged by one of the largest American multinational technology
companies, to transform their current legacy and home-grown HR systems
and processes, and enable their transition to a unified cloud platform
for seamless employee onboarding, superior engagement and experience.
-- Selected by a leading American health insurer to improve engagement of
customers and partners, while creating new efficiencies in related
business functions. A leading cloud-based health insurance CRM platform
will replace the legacy front and back-office systems, reimagining how
business is done and provide a unified experience across business
functions.
-- Engaged by a US-based bank to streamline its customer engagement
channels and operations, migrating its legacy technology applications to
a leading cloud-based financial services CRM solution. This move will
consolidate business processes and systems across its retail, wealth,
and commercial lines of business, to increase customer wallet-share.
-- Selected by a leading networking company based in the US to manage
onboarding, migration, and integration of its most recently acquired
company to its operations and enterprise platforms on the cloud. This
integration will ensure that the investment made in the acquisition is
maximized through cross-selling solutions across the respective customer
segments.
-- Chosen by a British semiconductor and software design company for its
employee experience transformation program designed to consolidate its
diverse HR portfolio into a harmonized platform which will help improve
employee experience.
-- Engaged by a global pharmaceutical giant based in Germany to deliver
digital content production services for its global marketing needs as
part of its renewed go to market strategy.
-- Selected by a global medical devices company, to prepare for scaling
blockchain solution for tracking movement of surgical supplies. The
pilot solution that has been deployed to improve visibility from
manufacturing through distribution would be evolved to scale up
transaction volumes in 2020.
-- Selected by a global leader in airline catering, retail-on-board and
hospitality products and services, to host their ERP and Analytics
applications on the TCS Enterprise Cloud Platform, and provide ongoing
support for ERP administration.
-- Selected by a major UK insurer for transforming its IT infrastructure to
meet dynamically growing business requirements, leveraging the TCS
Enterprise Cloud Platform.
-- Engaged by a leading global financial services firm, as the strategic
partner to modernize their application portfolio, currently on legacy
mainframe systems, to a leading public enterprise cloud platform by
leveraging TCS' Cloud Migration & API factory model.
-- Chosen by a leading multinational bank based in Europe to govern and
manage their risk and assurance process for security infrastructure. TCS
will enable it to transform to a new operating model leveraging its
Machine First approach, and migrate their SOC to a cloud to optimally
support increased demand with real-time analysis and visualization of
machine data.
-- Engaged by a Netherlands-based global semiconductor manufacturer as a
delivery and innovation partner to transform their overall security
posture, by setting up a robust security operations center with
contextualized threat intelligence and orchestration, leveraging
intelligent automation technologies.
-- Engaged by a leading American coffee company and coffeehouse chain to
support their security operations including Public Key Infrastructure,
privileged identity management, web single sign on and federation,
virtual directory, external identity management and automated
provisioning.
-- Selected by Aptiv PLC, a global technology company, as a strategic
partner to continue to advance their IT Infrastructure Operations by
bringing in business aligned, scalable, secure, digitally automated
operations using cognitive tools powered by the MFDM(TM) framework.
-- Selected by one of the largest agricultural products firms, to provide
end to end infrastructure services with a new engagement model
leveraging service reliability engineering & digital technologies. The
scope includes cognitive technology powered service desk, field
services, digital workplace services, client experience and unified
collaboration services, cloud and on-premise hosting services, security
and global network services. The proposed solution and operating model
will prime their Global IT Infrastructure for the future, ensuring
business continuity and transformation.
-- Selected by a global pharmaceutical company headquartered in USA, to
enhance and transform their end user experience through TCS' futuristic
Digital Workplace Services Solution that is based on zero touch, nextgen
technology and experience-focused services. TCS' intuitive, immersive
and intelligent UX solution, leveraging MFDM(TM)-based service delivery,
cognitive automation capabilities, and persona-based analytics, will
deliver a hyper-personalized, reimagined experience to their
customer-facing workforce.
-- Selected by a financial software and risk solutions to render digital
workplace services on a hybrid cloud solution leveraging a leading
public cloud platform and TCS Enterprise Cloud Platform. TCS' Machine
First design, leveraging automation and chatbots, security and support
services, will result in improved customer experience, reduced
onboarding timelines and higher user productivity.
-- Chosen by a US-based global fashion retailer to improve the customer
experience and drive online business growth by implementing a leading
enterprise CRM platform with a Machine First approach leveraging chat
bots for enhanced response times and enriched contextual customer
conversations. TCS will also drive the consolidation of multiple contact
centres into a single digitally enabled multi-lingual center to enable
better call handling, customer up-sell and cross-sell.
-- Selected by a leading US-based multinational technology company, to
transform its procurement operations, deployment engineering, network
deployment services. TCS will leverage its Machine First approach to
automate and expedite hardware deployment and procurement functions to
bring in agility and efficiencies to one of the largest and widely
spread global cloud operations.
Research and Innovation
As on December 31, 2019, the company has applied for 5,006 patents, including 132 applied during the quarter, and has been granted 1,211 patents.
Human Resources
Following the unprecedented levels of hiring in H1 FY20, headcount addition moderated in Q3. The company continues to be the industry benchmark in talent retention, with the IT Services attrition rate (LTM) at 12.2%. Net of attrition, the headcount stood at 446,675 as of December 31, 2019.
The workforce is young and very diverse, comprising 146 nationalities and with women making up 36.2% of the workforce. TCS' investments in organic talent development continue to deliver superior outcomes. At the end of Q3, over 327,000 employees had been trained on multiple new technologies, and over 404,000 had been trained on Agile methods.
"Our standing as an innovation partner for our customers has been enabled by the incredible energy of our people, their creativity and their ability to bring together their digital expertise and their deep contextual knowledge to reimagine how business is done," said Milind Lakkad, Global Head, Human Resources. "Our culture of life-long learning, world-class learning infrastructure, a vibrant workplace and exciting work opportunities across various industries, coupled with progressive policies and systemic collaboration in the TCS ecosystem; all these enable and empower our associates to realize their potential."
Awards and Recognition
Business Leadership:
-- Won the Intellectual Asset Management's Asia IP Elite award in the
category 'Internet and Software Team of the Year' at the Intellectual
Property Business Congress Asia 2019 in Tokyo.
-- Recognized with the Best Patents Portfolio Award in the Large
(Engineering) Enterprises category at the Confederation of Indian
Industry (CII) Industrial Intellectual Property Awards 2019.
-- Won the ITSMA 2019 Marketing Excellence Diamond Award in the 'Building
Reputation Through Brand and Differentiation' category.
-- TCS' IoT solutions won two awards at ASSOCHAM's Emerging Digital
Technologies Awards 2019, in the 'Most Innovative Use of Emerging
Digital Technology - IoT' category for its Remote Monitoring and
Predictive Maintenance solution, and in the 'Intelligent Enterprise
Award for Most Innovative Application - Developed for Government'
category for using TCS DigiFleet(TM) to transform public transportation
in India.
-- TCS Advanced Drug Development (ADD) won an award in the category
Excellence in Ancillary Pharma Services at the India Pharma Awards 2019.
-- TCS Optumera won the IT Innovation Award in the Large Enterprise
category at the Express IT Awards 2019.
-- TCS' Intelligent Urban Exchange City Command Center software won the
Channel Innovation Award in the category Big Data and Analytics
Innovation at an event organized by Channel Partner Insight.
-- TCS New York City Marathon App named the `Best Sports Mobile
Application' at the 2019 MobileWebAwards for excellence in mobile web
development.
-- Won Community Business' 2019 D&I Pioneering Initiative Award for the
Allies of Diversity Conclave.
-- Named the Number One Top Employer in Asia Pacific for 2020 by the Top
Employers Institute for the second year in a row. Additionally, TCS was
recognized as the Number 1 Top Employer in Australia and a Top Employer
in China, India, Philippines, Singapore, Malaysia and Hong Kong.
-- Presented with Three Stevies® for Workforce Development and Community
Initiatives in Canada - a Gold Stevie for Best CSR Strategy, a Silver
Stevie for Best Learning and Development Strategy, and a Bronze Stevie
for Achievement in Workforce Development and Learning.
-- The SMU-TCS iCity Lab's SHINESeniors project won Constellation
Research's 2019 SuperNova Award in the category AI & Augmented Humanity.
-- Won the US Chamber of Commerce Foundation's 2019 Citizens Award in the
category of Best Commitment to Education Program for the Ignite My
Future in School (IMFIS) program.
-- Won the Organization for International Investment's CSR Award in
partnership with Discovery Education for the Ignite My Future in School
(IMFIS) program.
Partner:
-- Won the Salesforce Partner Innovation Award in the `Emerging Product'
category.
-- Won the UiPath Automation Excellence Award in the category 'Fastest and
Most Efficient Scaling'.
IFRS Financial Statements
Unaudited Condensed Consolidated Statements of
Comprehensive Income
For the three-month periods ended Dec 31, 2018 and Dec
31, 2019
(In millions of
$
, except per
share data)
Three-month period Three-month period
ended ended
Dec 31, 2018 Dec 31, 2019
---
Revenue 5,250 5,586
---
Cost of
revenue 3,056 3,275
---
Gross margin 2,194 2,311
---
SG & A
expenses 849 913
---
Operating
income 1,345 1,398
---
Other income
(expense),
net 161 83
---
Income before
income taxes 1,506 1,481
---
Income taxes 364 340
---
Income after
income taxes 1,142 1,141
---
Minority
interest 2 3
---
Net income 1,140 1,138
---
Earnings per
share in $
0.30 0.30
---
Unaudited Condensed Consolidated Statements of Financial Position
As of Mar 31, 2019 and Dec 31, 2019
(In millions of $)
As of Mar 31, 2019 As of Dec 31, 2019
---
ASSETS
---
Property and equipment 1,685 1,654
---
Right-of-use Assets 0 926
---
Intangible assets and
Goodwill 581 576
---
Accounts Receivable 3,969 4,092
---
Unbilled Revenues 1,298 1,456
---
Investments 4,243 3,679
---
Cash and Cash equivalents 1,045 739
---
Other current assets 2,908 2,467
---
Other non current assets 1,207 1,106
---
Total Assets 16,936 16,695
---
LIABILITIES AND SHAREHOLDERS' EQUITY
---
Shareholders' Funds 13,243 11,949
---
Long term borrowings 6 0
---
Short term borrowings 3 0
---
Other current liabilities 3,192 3,497
---
Other non-current
liabilities 423 1,170
---
Minority Interest 69 79
---
Total Liabilities 16,936 16,695
---
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 446,000 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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