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HIGHLIGHTS 

  • TCS Closes FY 22 with Highest Ever Incremental Revenue addition, and All-time High Order Book. Crosses incremental revenue of $3.5b and FY22 TCV of 34.5bn
  • Revenue driven by three factors: increased outsourcing, cloud migration and growth and transformation initiatives
  • Added 10 clients in the $100 Mn+ bucket, 19 in the $50 Mn+ bucket, 40 in the $20 Mn+ bucket and 52 in the $10Mn+ bucket
  • Strong Cash conversion: Operating Cash Flow 111.3% of Net Income
  • Applied for 6,583 patents, including 187 applied during the quarter, and has been granted 2,287 patents
     

  

 

TCS clocks record revenue on higher banking, retail business

Tata Consultancy Services (TCS), the largest IT services company in India, reported 14.3% rise in revenue in constant currency for the fourth quarter helped by strong performance in its banking and retail sector, which contribute more than half to its topline.

On a reported basis, revenue was up about 12% to $6.7 billion compared to the same period last year while net profit was up 3.7% to $1.3 billion. The company added $3.5 billion incremental revenue in the last fiscal, its highest ever as companies embark rapidly on a digital transformation journey accentuated by the pandemic.

“We are closing FY22 on a strong note, with mid-teen growth and adding the maximum incremental revenue ever. Increasing participation in our customers’ growth and transformation journeys and an all- time high order book provide a strong and sustainable foundation for continued growth ahead,” said Rajesh Gopinathan, Chief Executive Officer and Managing Director.

Rajesh, who recently completed five years at the helm, added that here has been a steady growth across geographies with North America leading the pack while growth in banking financial services and insurance (BFSI) has also been good considering it is coming off a large base in the previous year.

Annual revenue stood at $25.7 billion, a rise of 15.4% in constant currency while annual net profit was up 13.3% to $5.1 billion. Operating margin, however, slipped 60 basis points to 25.3%.

The biggest positive, as per TCS, was the strong order book worth $11.3 billion in the fourth quarter and $34.6 billion for the full year. A large part of the order book, about $6.5 billion, was from North America highlighting the growth prospects in the geography. Two deals were worth more than $1 billion each.

“While large deals are difficult to predict, we see a trend of total contract value (TCV) growing to about $8 billion range from $6-7 billion in the days to come,” he said.  

North America, the company’s biggest market, grew 18.7% on constant currency. Constant currency discounts the impact of currency fluctuations, over which the companies have no control. Continental Europe was up 10.1% while UK grew 13%.

BFSI, the bread and butter for all IT companies, was yet again the main growth lever growing at 13%. Retail and CPG, the second largest vertical and which also includes travel and hospitality, was up 22% and reported more than $1 billion in quarterly revenue.

Operating margin for the quarter was also down 180 basis points to 25%. “Operating margins remained flat sequentially but long-term cost structures are well placed to ensure that we double down on the operating lovers to remain close to the margin band of 26-28%,” said Samir Seksaria, Chief Financial Officer.

The company’s attrition rose to 17.4% from 15.3% though it remained below industry levels. TCS added 35,209 people in the quarter, a mix of fresh engineering graduates and lateral hires and more than 100,000 people in the year. “We are keeping a target of hiring 40,000 people from the campuses this year and can ramp up and down based on the demand as the NQT (National Qualifier Test) gives us the opportunity to do so,” said N Ganapathy Subramaniam, Chief Operating Officer.

 

  

   


Hiring at TCS at all-time high

Employee engagement validated by three external awards, recognition as Role Model

The TCS family has grown phenomenally in 2021 as the global IT giant added over 100,000 employees to its rosters. This is the highest ever recruitment in any financial year.

“We have a well-rounded thinking process behind our hiring plan. At the entry level we are looking for technical skills, rigour and process orientation. At a higher level we are looking for contextual masters to align with our vision for growth and transformation deals,” said N Ganapathy Subramaniam, Chief Operating Officer.

At the beginning of the year, TCS had set out to hire 70,000 freshers to tackle the global talent crunch, on the back of the healthy demand pipeline. With 103,546 hirings, TCS has surpassed the target by a large margin. This takes the total headcount to 592,195.

Ganapathy added that with people getting back to work now, team structuring can be improved to increase resource utilization. “The new organization structure also means additional investments on talent,” he said.

“We planned to hire 70,000 freshers at the start of the year. We have remained agile and that has allowed us to hire well beyond that target. We are planning to do the same in the upcoming year,” said Ganapathy.

The workforce continues to be very diverse, comprising 153 nationalities and with women making up 35.6% of the workforce.

In the upcoming year, TCS will add 40,000 freshers to its employee base. The focus will continue to be on organic talent development. Riveting on employee engagement, TCS’ retention strategy is bearing fruit. Although attrition rate has climbed up to 17.4% from 15.3%, the monthly retention rates have plateaued. 

Learning and evolution is another important aspect of TCS’s employee engagement strategy. In the fourth quarter, TCSers logged in 22 million learning hours. For the full year, the company’s investments in learning and development resulted in the workforce acquiring 3.5 million digital competencies. The number of Contextual Masters crossed 50,000 – another key milestone in the journey to scale growth and transformation capabilities within the organization.

The employee engagement efforts of TCS have been validated through three major accolades. TCS ranked number one on LinkedIn’s 2022 Top Companies for maintaining the lowest attrition rate in the industry. In recognition of the mature and sustainable practices across all aspects of Human Resource Management, CII HR Excellence Award 2022 was given to TCS. The trade association also acknowledged TCS as a ‘Role Model in HR Excellence’.