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GLOSSARY

Some commonly used financial and operational terms are explained in the Glossary below. These explanations are not intended to be technical definitions and if they are found to differ from those provided in the Company’s periodic, certified financial statements (not limited to Notes to Accounts), then the latter will prevail.

Traditional methods of software development, which work in phases and are milestone focused, make it hard to keep up with today’s time-to-market demands. Agile represents a collaborative approach for IT and business teams to develop software incrementally and faster. TCS is pioneering the Location Independent Agile, that allows for deployment at scale, and helps customers whose own organizations are globally distributed to execute large transformational programs quickly while ensuring stability and quality.

Agile workspaces are key enablers of TCS’ Location Independent Agile model, and represent the next generation work environments that facilitate greater collaboration amongst teams. It is characterized by partition-less open offices, informal seating, interactive surfaces for information capture, and modern collaboration devices for increased productivity.

 

Amortization is an accounting concept similar to depreciation, but used to measure the consumption of intangible assets.

 

In the enterprise context, this is the discovery, interpretation, and communication of meaningful patterns in business data to predict and improve business performance.

 

Acronym for Asia Pacific

 

The process of exposing a discrete business function or data within an enterprise's systems through APIs.

 

Design, development, and deployment of custom software; ongoing support, upkeep, and enhancement of such software over its lifetime.

APIs are a set of easily accessible protocols for communication among various software components.

AI is technology that appears to emulate human performance typically by learning, coming to its own conclusions, appearing to understand complex content, engaging in natural dialogs with people, augmenting human effort or replacing people on execution of non-routine tasks. Also known as Cognitive Computing.

 

Assets Under Custody is a measure of the total assets for which a financial institution, typically a custodian bank, provides custodian services.

See Assets Under Custody

Attrition measures what portion of the workforce left the organization (voluntarily and involuntarily) over the last 12 months (LTM).

Attrition (LTM) = Total number of departures in the LTM / closing headcount

Augmented Reality is a technology that superimposes a computer-generated image on a user's view of the real world to enrich the interaction.

 

Automation is the execution of work by machines in accordance with rules that have either been explicitly coded by a human or ‘learned’ by the machine through pattern recognition of data. Popular types include Robotic Process Automation and Cognitive Automation

 

A basis point is one hundredth of a percentage point, that is, 0.01 percent.

Acronym for Banking, Financial Services and Insurance

Big Data is high volume, high velocity, and/or high variety information assets that require new forms of processing to enable enhanced decision making, insight discovery, and process optimization.

Blockchain is a distributed database that maintains a continuously growing list of records, called blocks, secured from tampering and revision.

See Basis Point

 

Business 4.0 is TCS’ thought leadership framework that helps enterprises leverage technology to further their growth and transformation agenda. Successful enterprises in the Business 4.0 epoch are ones which use technology to deliver mass personalization, leverage ecosystems, embrace risk and create exponential value. Such enterprises are agile, intelligent, automated and on the cloud.

 

BPaaS refers to the delivery of BPS over a cloud computing model. Whereas traditional BPS relies on labor arbitrage to reduce costs, BPaaS aggregates demand using the cloud, servicing multiple customers with a single instance, multi-tenant platform and shared services, thereby delivering significant operating efficiencies. The pricing model is usually outcome based.

Designing, enabling, and executing business operations including data management, analytics, interactions and experience management.

Buyback is a corporate action in which a company returns excess cash to shareholders by buying back its shares from them and subsequently extinguishing those shares. The number of shares outstanding in the market correspondingly reduces.

Chatbots are computer programs designed to simulate conversation with human users, especially over the internet. They are typically used in dialog systems for various practical purposes like customer service or information acquisition.

Cloud computing is the delivery of easily provisionable computing resources – servers, storage, databases, networking, software, analytics and more – over the Internet, consumed on a pay-as-you-go basis.

Acronym for Communication, Media and Technology

 

Cognitive Automation is the use of AI and Machine Learning to automate relatively more complex tasks that require reasoning capability and contextual awareness. TCS’ ignio™ is one of the leading cognitive automation software products in the market today.

CBO refers to an integrated offering where TCS takes responsibility for the outcome of an entire slice of the customers’ operations, and uses cognitive automation to transform the key elements of that operational stack.

 

TCS uses COIN to harness the innovation taking place within the start-up ecosystem, including venture capitalists and academia globally, and incorporate it into business solutions for customers.

 

CAGR is the annual growth rate between any two points in time, assuming that it has been compounding during that period.

 

Constant Currency is the basis for restating the current period’s revenue growth after eliminating the impact of movements in exchange rates during the period

Contract assets are recognized when there is excess of revenue earned over billings on contracts.

Core banking system is a back-end system that processes daily banking transactions and posts updates to accounts and other financial records. Core banking systems typically include deposit, loan and credit processing capabilities, with interfaces to general ledger systems and reporting tools.

Cyber Security is the body of technologies, processes and practices designed to protect networks, computers, programs and data from attack, damage or unauthorized access. In a computing context,security includes both cyber security and physical security.

 

Days’ Sales Outstanding is a popular way of depicting the Trade Receivable relative to the company’s Revenue.

DSO = Trade Receivable * 365 / LTM Revenue

 

Depreciation is a method of allocating the cost of a tangible long-term asset over its useful life. It is a non-cash accounting entry found in the statement of profit and loss.

DevOps represents a new way of working to rapidly deploy new releases of a software in production using high levels of automation and tooling. TCS recommends adoption of DevOps, along with Agile for speed to market

Digital is used to represent new age technologies such as Social Media, Mobility, Analytics, Big Data, Cloud, Artificial Intelligence and Internet of Things. Increasingly, with these technologies becoming mainstream, this word is becoming redundant.

 

Discretionary spend, also known as Change the Business (CTB) spend, is that portion of the IT budget which is used to fund projects that are not, strictly speaking, essential for day to day operations, but are more transformational in nature. In uncertain economic times, when businesses are forced to cut spends in response to decline in income, discretionary spend is often the first to be scrutinized. What is considered discretionary is subjective and may differ considerably amongst businesses.

Dividend is one form of distribution of profits earned by the Company and is usually declared as an amount per equity share held by the Shareholders. TCS has a policy of declaring quarterly interim dividends and the final dividend is approved by the shareholders in the Annual General Meeting.

EPS for any period is the amount of that period's Net Income attributable to a single share after deducting any preference dividend and related taxes.

EPS = [Net profit attributable to Shareholders of the Company – Preference dividend, if any] / Weighted average number of equity shares outstanding during the period

ETR is the proportion of the Profit Before Tax that is provided towards income taxes.

ETR = Tax expense / Profit Before Tax

Engineering and Industrial Services consists of next generation product engineering, manufacturing operations transformation, services transformation, embedded software and Internet of Things.

Enterprise Agile is the adoption of Agile methods across all the business functions of the enterprise, designed to empower employees, foster collaboration and drive a culture of continuous innovation at scale.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

This is a form of services contract where the vendor takes a turnkey responsibility for delivering a solution for a certain price and within a mutually agreed timeframe. The customer is billed on completion of key project milestones and related deliverables. This arrangement gives the vendor considerable flexibility in the staffing and execution of the project. On the other hand, it also means bearing the project risk.

A Forward Contract is a hedging instrument wherein two parties agree to buy or sell a particular currency at a pre-determined rate (OR Forward Currency rate) on a specific future date.

For e.g. TCS enters into a forward contract to sell USD 1 million after 3 months @ ₹72. Irrespective of the prevailing USD-INR spot rate, TCS will be obliged to sell USD 1 million @ ₹72 at the end of 3 months.

A software framework is a kind of intellectual property, consisting of software which provides generic functionality for a certain business use case, and which is customized for a specific customer’s needs with additional code. Use of such pre-built code reduces time to market and results in more stable, reliable solutions.

Gamification is the process of adding games or game-like elements to any activity in order to enrich experiences and encourage user participation.

A hybrid cloud is an enterprise IT infrastructure model that combines Private Cloud, Public Cloud and on premise data centers, to meet the compute and storage needs of the business.

 

Inorganic growth arises from growth in revenue due to mergers, acquisitions or takeovers rather than an increase in the Company's own business activity.

IoT is a network of interconnected machines or devices which are embedded with sensors, software, network connectivity, and necessary electronics to generate and share run-time data that can be studied and used to monitor or control remotely, predict failure, and optimize the design of those machines / devices.

 

Invested funds are funds that are highly liquid in nature, and can be readily converted into cash.

Invested funds = Cash and bank balances + Investments + Deposits with banks + Inter-corporate deposits

 

KMP at TCS refers to the Chief Executive Officer and Managing Director, Chief Operating Officer, Chief Financial Officer, and the Company Secretary. Please refer to the Company's policy on KMP: http://www.tcs.com/ir-corporate-governance

 

Acronym for Latin America

Location Independent Agile is a method to orchestrate globally distributed stakeholders and talent into Agile teams for improved speed to market in large transformational programs. It comprises processes, structure, and the technology that allows enterprises to overcome location constraints and embrace Agile methods on a global scale.

TCS’ Machine First Delivery Model is a way of integrating analytics, AI and Automation deep within the enterprise to redefine how humans and machines work together and to effectively deliver superior outcomes.

 

Machine learning is a type of artificial intelligence that provides computers with the ability to learn behaviors without being explicitly programmed.

 

Total market value of a Company's total outstanding equity shares at a point in time.

Market Cap = Last Trading Price * Total number of outstanding shares

 

Acronym for Middle East and Africa

A Minimum Viable Product is the smallest slice of a new product which can be released to the users at the earliest, followed by subsequent iterative cycles that add incremental functionality. MVPs can be used by teams to learn about user behavior and validate the product value with minimum investment.

Mobility means information, convenience, and social media all combined together, and made available across a variety of screen sizes and devices.

Non-controlling interest is the share of the net worth attributable to non-controlling shareholders of the subsidiaries.

Non-discretionary spend, also known as Run the Business (RTB) spend, is that portion of the IT budget that covers the basic IT activities required to keep a business running

Even in tough economic times, non-discretionary spend remains relatively unaffected.

Organic growth is the revenue growth a company can achieve by increasing its existing business activity. This does not include growth attributable to takeovers, acquisitions or mergers.

 

Segmentation and responding to individual transactions, customized for a single customer in a single instance.

PaaS, is a category of cloud computing that provides a platform and environment to allow developers to build applications and services over the internet. PaaS services are hosted in the cloud and accessed by users simply via their web browser.

 

This is the price charged to the customer for billable effort or turnkey project or a certain process outcome, depending on the nature of the contract. Some use this term interchangeably (and somewhat inaccurately) with the average revenue realized by the company per utilized effort. See Realization.

 

Private cloud refers to a model of cloud computing where IT infrastructure in terms of compute and storage resources are provisioned for the dedicated use of a single organization.

 

Public cloud refers to a computing service model used for the provisioning of storage and computational services to the general public over the internet. Public cloud facilitates access to IT resources on a "pay as you go" billing model.

 

Quality Engineering and Transformation services encompass business requirements validation, static and functional testing, non-functional testing including performance engineering, user experience, security and test automation. With greater adoption of Agile and DevOps, continuous testing and in-sprint test automation have gained traction.

 

This is the revenue received by the company per utilized effort. Pricing varies by service and by market. Consequently, there can be changes in realization compared to a prior period, due to changes in the underlying business or geographic mix during the period. This does not necessarily mean that like-to like pricing has changed. Also, realization doesn’t take into account the costs and therefore, higher realization is not necessarily better or more profitable.

 

Any transaction between a company and its related party involving transfer of services, resources or any obligation, regardless of whether a price is charged.

Please refer the Company's policy on Related Party Transactions: http://www.tcs.com/ir-corporate-governance.

 

Revenue is the income earned by the Company from operations by providing IT and consulting services, software licenses, and hardware equipment to customers.

 

RPA is the use of software to automate high-volume, repeatable tasks that previously required humans to perform. RPA is best suited for relatively simple and stable processes. Dynamic changes in the environment require ongoing upkeep of the robots, diluting the economic benefit of the automation. Increasingly, customers are preferring cognitive automation over RPA.

 

Shareholder Payout Ratio is the proportion of earnings paid to shareholders as a percentage of the Company’s earnings, i.e. Net Income attributable to Shareholders of the Company. Payout can be in the form of dividend (including dividend distribution tax) and share buyback.

 

Simplification is the term used to describe the rationalization of IT architectures through consolidation of systems and elimination of redundant systems and layers. The primary purpose is to shrink the IT footprint and make operations leaner and more efficient.

SEZ in India are designated areas in which business and trade laws are different from the rest of the country, with various benefits and tax breaks to promote exports, attract investments, and create local jobs.

 

STEM is an acronym for education in the fields of science, technology, engineering and math.

See Time and Materials Contract

 

This is a form of services contract where the customer is billed for the effort (in hours, days, weeks, etc.) logged by the project team members. Project risk is borne by the customer. This is in contrast to Fixed Price Contracts.

 

TCV is an aggregation of the value of all the contracts signed during a period, and is a useful indicator of demand.

This is the sum of all the invoices outstanding at the end of the period. To get a complete picture of the total outstanding, one can also add the Unbilled Receivables and subtract the Unearned and Deferred Revenue. Trade Receivable is normally viewed in proportion to the size of the organization’s revenue and so it is expressed as Days’ Sales Outstanding or DSO.

 

Unbilled Receivable is excess of revenue earned over billings on contracts for which the Company has an unconditional right to receive cash, and only passage of time is required for invoicing the customer, as per contractual terms.

 

Unearned and Deferred Revenue is invoice raised in line with agreed milestones for services yet to be delivered. In other words, it is the amount that has been invoiced although the underlying effort is yet to be expended.

 

VR is an artificial, computer-generated simulation or recreation of a real life environment or situation. It engages users by offering simulated reality experiences firsthand, primarily by stimulating their vision and hearing.

Virtualization is the abstraction of IT resources – like a server, client, storage or network – that masks the physical nature and boundaries of those resources from the users of those resources.

 

Volume in any period is the total quantum of services and products sold during that period.

 

Acronym for Year-on-Year

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