Strong Revenue Growth and Margin Expansion Mark TCS Q2
NEW YORK and MUMBAI, India, Oct. 7, 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 September 30, 2020.
Highlights of the Quarter Ended September 30, 2020
-- Revenue at $5.424 Bn, +7.2% QoQ, -1.7% YoY
-- Constant Currency revenue growth: +4.8% QoQ, -3.2% YoY
-- Net Income at $1.14 Bn*, +23.4% QoQ, +0.2% YoY
-- Operating Margin expands 2.2% YoY to 26.2%*; Net Margin at 21%*
-- Strong Cash Conversion: Net Cash from Operations at $1.44 Bn | 125.9% of
Net Income*
-- Consolidated headcount: 453,540 | Net addition: 9,864 | Women in the
workforce: 36.4%
-- 352K+ employees trained in new technologies; 427K+ on Agile methods
-- Already a global benchmark, IT Services attrition rate hits an all-time
low at 8.9% LTM
-- Capital Allocation:
-- Interim Dividend per share: `12.00 | Record date 15/10/2020 |
Payment date 03/11/2020
-- The Board has approved a proposal to buy back up to 5,33,33,333
equity shares of TCS, being 1.42% of the total paid up equity share
capital, at `3,000 per equity share for an aggregate amount not
exceeding `16,000 crore (excluding taxes and related expenses), on
proportionate basis under the tender offer route using the stock
exchange mechanism, subject to approval of the members by means of a
special resolution through a postal ballot.
* Excludes provision of $ 165 Mn towards legal claim
Commenting on the Q2 performance, Rajesh Gopinathan, Chief Executive Officer and Managing Director, said: "Driving accelerated business value realization of our customers' digital investments has resulted in broad-based revenue growth. The strong order book, a very robust deal pipeline, and continued market share gains give us confidence for the future."
He added: "What we are witnessing right now is the start of the first phase of a multi-year technology transformation cycle. In the current phase, enterprises are building a cloud-based foundation that will serve as a resilient, secure and scalable digital core. In subsequent phases, we will see the native capabilities of these platforms being utilized to create innovative new business models and differentiated customer experiences. Our investments in building deep expertise on these platforms, in research and innovation and in industry-specific solutions leveraging our contextual knowledge, position us very strongly to benefit fully from this secular demand driver."
N Ganapathy Subramaniam, Chief Operating Officer & Executive Director, said: "Our all-round performance this quarter is a huge endorsement of the increased relevance of our services and solutions to our clients as they pivot from risk mitigation to long-term resilience powered by cloud, digital and simplification of working methods. Clients are partnering us to leverage our thought leadership in SBWS(TM), Vision 25 x 25(TM) and Location Independent Agile(TM) to build a resilient, adaptable and future-proof operating model."
He added: "Accessibility and Touchless are becoming important attributes for solution design, and our products and platforms continue to gain traction. Besides core systems transformation, our Quartz Blockchain Solution is the choice of a leading bank and a market infrastructure player for inter-bank lending, crypto assets and for enabling real-time settlements."
V Ramakrishnan, Chief Financial Officer, said: "We have always maintained that growth is the best margin lever, and that is very evident in our numbers this quarter. It is very gratifying to see every financial metric precisely where we would like it to be, with a stellar operating margin despite neutral currency, strong cash conversion, and lowest ever DSO. We continue to invest in our people and are doubling down on building newer capabilities to power the next leg of our growth and market share expansion."
Q2 Segment Highlights**
Industries: BFSI (+6.2%), Retail and CPG (+8.8%) and Life Sciences and Healthcare (+6.9%) led the growth. Technology & Services grew 3.1%, Manufacturing +1.4% while Communications & Media de-grew by 2.4%.
Markets: All markets showed good sequential growth, with North America growing 3.6%, UK +3.8%, and Continental Europe +6.1%. Emerging markets also grew well, with India growing 20%, MEA +8%, Latin America +5.5% and Asia Pacific +2.9%.
Services: A surge in future-focused discretionary investments for growth and transformation drove a strong, broad-based rebound in growth across industry verticals and geographies, led by Cloud & Security, Analytics and Cognitive Business Operations.
-- Consulting & Services Integration: With customers looking beyond the
pandemic and adapt to the new realities, location independent execution,
contactless customer experiences, M&A and consolidation of enterprise
group functions are gaining momentum. There was strong growth in
enterprise agility, M&A services, and Finance and Shared Services.
-- Cognitive Business Operations: TCS' Zero Touch model, leveraging
AI/ML-enabled process mining for 100% remote execution, saw strong
traction and recognition from the market as an industry-leading
offering. Growth in CBO was broad-based, led by Intelligent Process
Automation, Digital Service Desk, Finance & Supply Chain cognitive
operations.
-- Digital Transformation Services: There was strong growth momentum in
public and private cloud services, spanning applications, infrastructure
migration, modernization, and digital workplace services. Likewise,
cybersecurity services such as enterprise vulnerability management,
identity and access management and managed Services grew strongly,
driven by the need for cyber resilience and a standardized posture
across estates. Heightened focus on providing enhanced customer
experiences on digital channels drove a strong rebound in demand for
interactive design, digital marketing and content services. Another area
that benefited is data and analytics, especially customer analytics,
data estate modernization, and risk, regulatory and compliance
analytics, all of which are critical for product differentiation,
business agility, customer segmentation and targeting, and boundaryless
collaboration within the enterprise and across ecosystems.
** Growth in QoQ CC
Key Highlights
-- Albertsons, a leading food and drug retailer in the United States,
selected TCS to advance its transformation journey by modernizing and
migrating critical mainframe-based legacy systems to a public cloud.
-- Selected as the digital transformation partner to help build a
greenfield IT ecosystem for maurices, a women's fashion-apparel retail
chain in the US and Canada. TCS will help maurices strategize, create
and operationalize a new secure, future-proof architecture that will
drive synergy and agility across its enterprise.
-- TPG Telecom, a full-service telecommunications provider in Australia,
selected TCS as its IT Managed Services partner to help achieve its
transformational roadmap. The engagement covers Application Managed
Services, Infrastructure Services, End User Management Services and
Cyber Security Services.
-- Selected by a global electrical appliances company, to transform its
global supply chain processes through intelligent planning, leveraging a
world-class integrated business planning platform, across multiple
countries in Asia Pacific. The objective of this transformation program
is to improve efficiency, reliability and resilience in operations.
-- Selected by a US-based multinational food processing company, for the
integration of a recent acquisition. TCS is establishing an Integration
Management Office to oversee all aspects of the integration including
coordinating, managing, allocating resources and reporting on the
complex systems associated with each.
-- Selected by a global leader in credit ratings and research, to help
enable their aggressive acquisition strategy. TCS will leverage an
adaptable integration framework, to support the on-boarding and
integration of the acquired entities onto their next generation digital
ERP platform. This effort will result in a repeatable framework for all
future integrations for greater business agility.
-- Selected by a leading bank headquartered in Australia, to strengthen its
risk management frameworks. TCS will facilitate end-to-end traceability
of transactions from origination to fulfillment and leverage its
AI-powered Smart Quality Engineering platform, to enable faster time to
market and higher first time right, in compliance with financial crime
and fraud management regulations. TCS will also implement a Financial
Assurance Service Platform to drive improvements in the collections
process for their retail banking business.
-- Engaged by Travelport, a leading travel and tourism technology company,
for transforming the overall customer experience by simplifying the
product and technology stack.
-- A global leader in beverages industry has chosen TCS Enterprise Cloud as
a part of their next generation hybrid cloud strategy. This will enable
a standardized IT solution for all their Global business subsidiaries,
bringing in complete transparency and consumption efficiencies.
-- Selected by a financial services company headquartered in the United
States, as the strategic partner for the design and development of a
wealth management platform on a leading public cloud. This microservices
and serverless architecture-based platform will deliver superior
customer experience with enterprise-wide, omni-channel, digital
collaboration for the client and partner ecosystem.
-- Engaged by a North American healthcare major, to build a microservices
based platform leveraging cloud-native technologies to support business
growth. The modernized applications will remediate existing
vulnerabilities and enable the client to better support patients
throughout their wellness journey.
-- Engaged by a North American insurance major, to transform their
mainframe-based legacy policy administration system into a modern,
microservices-based architecture on a leading cloud hyperscale platform,
to reduce technical debt, increase efficiency and ensure quicker
response to market volatility for the company.
-- Engaged by a large Nordic insurance company, to modernize and manage
their integration platforms. This will make the company more agile and
responsive in bringing new products and services much faster to market
by integrating in-house applications and back end services rapidly.
-- Selected by one of the largest global gift cards and financial services
provider, to provide managed services support for ERP and CRM solutions
on a hyperscale cloud platform. TCS will leverage MFDM(TM) based test
automation to improve productivity and customer engagement.
-- Selected by a large global private trading group, to manage its
infrastructure and security solutions. The TCS solution, consisting of
Cloud Exponence services and Digital Service Desk will accelerate
digital adoption, improve agility and increase efficiencies.
-- Selected by Toyota Motors North America, as a strategic partner to
transform its IT infrastructure leveraging cognitive operations
platform, ignio(TM) for increased efficiency and superior customer
experience.
-- Chosen by a UK retail and financial services major, to streamline its IT
landscape and operations. TCS ignio-led automation will help achieve
significant operational efficiency gains. TCS has also been chosen as
their security partner to achieve increased cyber security resilience in
a managed services model.
-- Engaged by a leading British multinational retailer, as transformation
partner for HR functions with a leading enterprise cloud suite across
all their stores and offices in UK. This transformation will ensure
enhanced employee experience, operational efficiency, retention of
talent, as well as faster talent acquisition with reduced time to
onboard.
-- Engaged by a multinational automotive corporation, for transforming
their business process in compliance with NAFTA, onto a leading service
cloud platform. The transformation will enable them to fortify risk
mitigation and customer retention programs.
-- Chosen by a leading European retail company, to transform the business
operations into a next-gen model leveraging TCS MFDM powered by ignio.
This will help the customer continually adopt best practices, accelerate
time to market and improve efficiency.
-- Selected by a Middle Eastern multinational conglomerate, to transform
its Finance & Accounting operations spanning procure to pay, customer to
cash, record to report, master data management, financial planning &
analysis and payroll services. TCS ignio will be leveraged as part of
the engagement for delivering with a Machine First approach.
-- Chosen by a large global pharma company for its digital marketing
transformation, leveraging TCS' expertise in design-led experience
transformation. The TCS solution will streamline its multi-brand,
multi-market marketing structure, standardize brand communication in
compliance with regulatory requirements, coupled with the flexibility to
localize communications across various country operations through
digital channels.
-- Selected by a European consumer products company, for the continuous
improvement of their global marketing technology landscape. TCS will
enable intelligent automation and leverage its Digital Asset Management
framework to enable personalization capabilities leading to enhanced
user experience.
-- Engaged by a prominent Australian real estate services company, for
realizing the value of enterprise content management by bringing
together various enterprise systems. TCS will design and implement an
industry-leading Information Management solution to enhance user
experience, organizational agility and scalability.
-- Selected by a European railway company, as their marketing
transformation partner to help personalize the connected customer
experience. This partnership will help them achieve growth objectives
such as increased customer acquisition and conversion, increased travel
frequency, and accelerated digital shift from offline to online
channels.
-- Selected by a leading global bank, for its data warehouse modernization
program leveraging a leading cloud hyperscale platform, to drive
organizational efficiencies across business functions including its
international and retail operations and reduce capital expenditure.
-- Selected by a leading European wholesale distributor of groceries, to
modernize its data lake leveraging TCS' DAEzMo(TM), to drive business
insights at scale and stay ahead of the curve. TCS will undertake
transformation of their Data & Analytics capabilities to maximize
operational efficiency, flexibility, and competitiveness in the areas of
recruitment, operations, and supply chain.
-- Chosen by a leading North American bank, as its strategic partner to
enhance its data governance and data quality, thereby enabling it to
stay agile and respond to fluctuating market demands. The TCS solution,
built on the strengths of DATOM(TM) and ignio, will put in place an
integrated data strategy and governance framework.
-- Selected by a leading US-based travel and financial services firm, to
build a financial relief program for the economic downturn for its
credit and collections functions. TCS will create a 360-degree customer
view for designing contextual programs, thereby improving client's
customer engagement and driving business growth.
-- Selected by a leading American multinational consumer goods corporation,
to modernize its existing Product Information Management System, to
provide a single place to collect, manage, and enrich product
information; standardize product catalog across multiple channels,
thereby helping enhance its business operations and take data-driven
decisions to stay agile and quickly respond to market demands.
-- Selected by a European retailer, to develop a leading hyperscale
cloud-based IoT platform. The enterprise IoT platform will provide a
unified view of all IoT applications and operations in real time and
enable them to take data-backed business decisions with higher agility.
-- Engaged by a USA-based biotechnology subsidiary of a multinational
healthcare company, for their personalized healthcare program leveraging
a unique combination of data at scale, advanced analytics and digital
technologies for personalized diagnosis, care, treatment access, and
monitoring. TCS' solution will glean insights by mining multiple data
sources hosted on a hybrid environment. The solution aims to transform
the healthcare provider's ability to ensure timely and appropriate
treatment.
-- Selected by a leading global Automotive OEM headquartered in Asia
Pacific, as a design partner for implementing infotainment systems for
its electric and hybrid vehicles. TCS has also been selected for their
connected car telematics operations and monitoring for multiple vehicles
for North America and Europe.
-- Selected by a USA-based global analytical instrumentation manufacturing
company for their engineering application maintenance and support
services leveraging Agile, cloud-based project lifecycle management
platform, in a managed services model. TCS' dedicated support services
will help their engineering business community to work seamlessly from
new product introduction to services, and improve overall efficiency.
-- Selected by an American insurance group as the delivery partner to
assess all of its agent facing digital web content for compliance to the
Web Content Accessibility Guidelines. TCS leveraged its Customer
Experience Assurance Platform for automated assessments and its rich
contextual knowledge to deliver quick results in agile iterations.
-- Engaged by a global pharmaceutical company headquartered in Japan, as
their quality transformation partner. TCS will leverage its TASE and CX
Assurance platforms to test ERP systems for improved product quality and
faster time to market.
Research and Innovation
-- TCS BaNCS(TM) was ranked by IBS Intelligence as the #1 best-selling
Investment and Fund Management System and among the top two in the
Universal Banking and Pure-play Digital Banking category globally in the
IBSI Sales League Tables 2020.
-- ignio(TM), TCS' closed-loop, autonomous enterprise platform, won the AI
Breakthrough Award, 2020, in the category Best Overall AI Platform. An
independent panel of AI experts recognized ignio for its advanced
machine learning and AI capabilities as well as rapid growth and market
leadership.
-- TCS OmniStore(TM) won the ICX Association's Elevate award for Best
OmniChannel Interactive Customer Experience. TCS' unified commerce
platform was recognized for creating unified journeys using interactive
technologies to help retailers create an engaging shopping experience
across multiple channels, such as mobile, web, and in-store.
-- As on September 30, 2020, the company has applied for 5,500 patents,
including 176 applied during the quarter, and has been granted 1,593
patents.
Human Resources
TCS' consolidated headcount stood at 453,540 as of September 30, 2020, with a diverse workforce comprising 147 nationalities, and women constituting 36.4% of the base.
TCS' continued investments in organic talent development, focus on upskilling and innovative training methods have resulted in industry-leading outcomes. TCSers logged in 10.2 Mn learning hours in Q2, a 29% increase over the prior quarter. Over 352,000 employees have been trained on multiple new technologies, and over 427,000 have been trained on Agile methods.
Investments in people, progressive HR policies and an empowering culture have made TCS the global industry benchmark in talent retention. In Q2, its IT services attrition rate (LTM) was at 8.9%, an all time low.
"We want to thank all TCSers for the incredible resilience they have shown during these trying times. We are happy to announce that we will be rolling out salary increases, effective October 1(st). We started onboarding freshers, and increased our recruitment globally in Q2, in anticipation of the growth trajectory we see ahead," said Milind Lakkad, Global Head, Human Resources.
He added: "We continue to focus on the physical and emotional wellbeing of our employees. With increasing caseloads, we are enabling TCSers and our clients to continue working remotely, with our SBWS(TM) model. To support employees and their families during the pandemic, we have invested in setting up medical helplines, ambulance services and first-line COVID isolation centers within TCS premises at 11 cities across the country. We have also ramped up our employee engagement and outreach. Our OneTCS channel has hosted inspirational leaders, mental health experts, virtual town halls and global talent hunt competitions, all designed to reduce stress and the feeling of isolation, and to boost morale. We are also providing self-help and counseling services which were availed by nearly 8,000 TCSers in Q2."
Awards and Recognition
Business Leadership:
-- Won two Stevies® at the seventh annual Asia-Pacific Stevie® Awards, a
Silver Stevie in the Innovation in Entertainment Apps category for its
Standard Chartered Singapore Marathon 2019 Official Race App, and a
Bronze Stevie in the Excellence in Innovation in Technology Industries
category for driving growth and transformation through technological
excellence and innovation within TCS.
-- Awarded 18 Stevies® at the 2020 Great Employers Awards; six Gold
Stevies, eight Silver Stevies and four Bronze Stevies in recognition of
TCS' talent management, CSR and business practices that have helped it
attract retain the best talent to build a global, diverse workforce, and
a vibrant workplace.
-- Won four Stevies® at the 2020 International Business Awards; two Gold
Stevies in the categories 'IT Department of the Year' and 'Mobile Site &
App - Sports'; a Silver Stevie for TCS Optumera(TM) in the category
'Artificial Intelligence/Machine Learning Solution', and a Bronze Stevie
for the 'Most Exemplary Employer'.
-- Won three awards for talent management and excellence in learning at the
2020 Brandon Hall Group Awards; two Gold awards for 'Best Advance in
Creating a Talent Strategy' and 'Best Learning Program Supporting a
Change Transformation Business Strategy' and a Silver award in the
category 'Best Use of Games and Simulations for Learning'.
-- Digitate, a software venture of TCS, was ranked #37 among the Top 100
Software Companies of 2020 by The Software Report, recognized for the
rapid growth and market leadership of its ignio suite within five years
of launch.
Partner:
-- Awarded the 2020 Canada IMPACT Award for Datacenter Migration by
Microsoft Corporation for driving strong business outcomes for its
customers, including enhanced security, increased agility, more
resiliency, strong TCO benefits and improved governance through both
repeatable solutions and transformational wins.
-- Recognized by Amazon Web Services (AWS) as the 2020 AWS Migration
Success Partner of the Year in India, for TCS' commitment to excellence
in helping customers successfully migrate and manage their core
applications on the cloud.
Individual:
-- Dr Sundeep Oberoi, Global Head - Cybersecurity Services, was re-elected
as Chairperson, ISO SC7, the group responsible for over 200 ISO
standards governing processes and supporting tools and technologies for
the engineering of software products and systems.
-- Dr Anand Kumar, Principal Scientist, has been nominated as Chair of the
INCOSE Architecture Working Group from Jan 2021 and also as Chair for
the India Agile Standards at the Bureau of Indian Standards.
-- Dr Harrick Vin, Chief Services Innovation Officer and Dr Sharmila S
Mande, Distinguished Chief Scientist, have been elected as Fellows of
the Indian National Academy of Engineering.
-- Karthik Kumar, Global Head - Mortgage Practice, BFSI Business Group, was
honored with the 2020 HousingWire Vanguard Award for helping drive
digital transformation and the adoption of cognitive technologies in the
home lending industry.
IFRS Financial Statements
Consolidated Statements of Comprehensive Income
For the three-month periods ended September 30, 2019, and September 30, 2020
(In millions of
$
, except per share data)
Three-month Three-month
period ended
period ended
September 30, 2019 September 30, 2020
---
Ex Adj* Reported
--- ---
Revenue 5,517 5,424 5,424
--- ---
Cost of
revenue 3,264 3,205 3,205
--- ---
Gross margin 2,253 2,219 2,219
--- ---
SG & A
expenses 927 797 962
--- ---
Operating
income 1,326 1,422 1,257
--- ---
Other income
(expense),
net 166 101 101
--- ---
Income before
income taxes 1,492 1,523 1,358
--- ---
Income taxes 350 378 342
--- ---
Income after
income taxes 1,142 1,145 1,016
--- ---
Non-
controlling
interests 3 4 4
--- ---
Net income 1,139 1,141 1,012
--- ---
Earnings per
share in $
0.30 0.30 0.27
--- ---
Consolidated Statements of Financial Position
As of March 31, 2020, and September 30, 2020
(In millions of
$
)
As of March 31, As of September 30,
2020
2020
---
Assets
---
Property and equipment 1,583 1,610
---
Right-of-use Assets 1,060 1,044
---
Intangible assets and
Goodwill 547 577
---
Accounts Receivable 4,057 3,836
---
Unbilled Revenues 1,398 1,358
---
Investments 3,494 4,961
---
Cash and Cash equivalents 1,146 860
---
Other current assets 1,976 3,095
---
Other non-current assets 1,048 1,026
---
Total Assets 16,309 18,367
---
Liabilities and Shareholders' Equity
---
Shareholders' Funds 11,433 13,180
---
Other current liabilities 3,587 3,921
---
Other non-current
liabilities 1,204 1,178
---
Non-controlling interests 85 88
---
Total Liabilities 16,309 18,367
---
*excludes legal claim provision (refer note 19 to Financial Statements)
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 over 50 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(TM) 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 453,000 of the world's best-trained consultants in 46 countries. The company generated consolidated revenues of US $22 billion in the fiscal year ended March 31, 2020, 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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