TCS: Strong Share Gains in Europe Stand Out in Seasonally We
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™ 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%.
- 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™ 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™ and Agile are seeing strong traction. Q3 order book was the strongest in the last several quarters.
- 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™, 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™ Delivery Model and its cognitive automation product, ignio™.
- 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™ 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™-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.
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
- 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™ 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.
- 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)
Dec 31, 2018
Dec 31, 2019
Cost of revenue
SG & A expenses
Other income (expense), net
Income before income taxes
Income after income taxes
Earnings per share in $
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
Property and equipment
Intangible assets and Goodwill
Cash and Cash equivalents
Other current assets
Other non current assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Long term borrowings
Short term borrowings
Other current liabilities
Other non-current liabilities
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.
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