Q2 Revenue +4.8% QoQ in CC, +7.2% in USD, +4.7% in INR
Growth led by BFSI (+6.2% QoQ) and Retail (+8.8% QoQ)
Salary Increases to be Rolled Out, Effective October 1st
Industry-leading Operating Margin at 26.2%*
Very Strong Deal Closures: Total Contract Value of $8.6 Bn
Board Announces $2.18 Bn buyback
MUMBAI, October 7, 2020: 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
* 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™, Vision 25 x 25™ and Location Independent Agile™ 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
Research and Innovation
TCS BaNCS™ 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™, 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™ 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.
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 1st. 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™ 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.”
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 AgileTM 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.
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