Continued Demand Drives Strong Growth for TCS in Q2
Revenue at $6,877 million| Growth of 8.6% YoY, +15.4% in CCNorth America (+19.1% CC), Retail (+25.1% CC) lead among segments
Growth broad-based across verticals, led by Retail (+22.9% CC) and CMI (+18.7% CC
Major markets shine: North America (+17.6% CC), UK (+14.8% CC) & Europe (+14.1% CC)
Operating Margin at 24%; Net Margin at 18.9%
MUMBAI, October 10, 2022: Tata Consultancy Services (BSE: 532540, NSE: TCS) reported its consolidated financial results according to Ind AS and IFRS, for the quarter ending September 30, 2022.
Highlights of the Quarter Ended September 30, 2022
Rajesh Gopinathan, Chief Executive Officer and Managing Director, said: “Demand for our services continues to be very strong. We registered strong, profitable growth across all our industry verticals and in all our major markets. Our order book is holding up well, with a healthy mix of growth and transformation initiatives, cloud migration and outsourcing engagements. As clients prepare for a more challenging environment ahead, technologies like cloud that have been embraced now have to be fully leveraged to realize the promised value. TCS has the combination of contextual knowledge, technology expertise and execution rigor to deliver on this imperative.”
N Ganapathy Subramaniam, Chief Operating Officer and Executive Director, said: “This was another quarter of excellent execution that saw us delivering several transformational projects like the largest migration of 2.3 million policies to our TCS Insurance platform in one go in the UK, or the trading platform at the Gift City. Our delivery leadership congregated during the quarter and are raising the bar further on execution excellence with frameworks like Rigor in Transformation. We are pleased that our office facilities are becoming once again the place of buzz with more and more of our employees and clients celebrating togetherness to realize their full potential.”
Samir Seksaria, Chief Financial Officer, said: “We are steadily making our way towards achieving our operating margin priority for the year, aided by leverage from good growth, the flattening of the workforce pyramid, steadily improving productivity and currency support. Very importantly, the headwinds from the supply-side challenges are abating, so that sets us up well for the seasonally weak second half of the year.”
Milind Lakkad, Chief HR Officer, said: “Reflecting our culture of being committed to our employees, we have honored all the job offers we had made. Our investments in capacity building and organic talent development have allowed us to substantially grow our business ahead of headcount addition this quarter. We believe our quarterly annualized attrition has peaked in Q2 and should see it taper down from this point, while compensation expectations of experienced professionals moderate.”
Q2 Segment Highlights**
Industries: Growth was led by Retail and CPG (22.9%), Communications & Media (+18.7%), and Technology & Services (+15.9%). Manufacturing as well as Life Sciences & Healthcare verticals grew +14.5%, while BFSI grew +13.1%.
Markets: Among major markets, North America led with +17.6% growth; Continental Europe grew +14.1% and UK grew +14.8%. In emerging markets, India grew +16.7%, Latin America grew +19%, Middle East & Africa grew +8.2% and Asia Pacific grew +7%.
Services: There was strong, broad-based growth for all services in Q2, led by Cloud, Enterprise Application Services, and Cyber Security.
** Year on Year Growth in Constant Currency terms
Key Highlights
Customer Speak
“In our first year of partnership, TCS’ Cognitive Business Operations and our Xerox Centers of Excellence embarked on multiple transformation initiatives across various business functions to drive process improvement and business value. In particular, we leveraged TCS Cognix powered advanced analytics solution alongside business contextual knowledge to provide growth and transformation. We are encouraged for the future as this transformation initiative helped us realize a positive impact in cash flow.”
– Xavier Heiss, Chief Financial Officer, Xerox
“TCS has been a valuable partner in delivering a transformed platform to drive our integrated enterprise growth strategy,” said. “We look forward to strengthening our relationship with TCS as we adopt cloud and enable continuous innovation to become a digital-first healthcare enterprise.”
– Pankaj Tiwari, EVP and Chief Information Officer, Penumbra Inc
“TCS’ transformation readiness-led approach helped us prepare, plan and successfully deliver our HR transformation programme and improve the employee experience. TCS has a deep understanding of M&S’s business, and this helped us to meet the business objectives of our HR transformation,” said
– Mark Dickson, CTO, M&S.
“TCS’ Cognitive Business Operations (CBO) has helped Telstra reimagine the order-to-activate operations covering onboarding and the retention value chain to enhance customer experience. They leveraged the concepts of Integrated Operations, Machine First™, Agile methodology, and Process reengineering coupled with their deep contextual and industry knowledge, resulting in management of peak order volumes and enablement of value-added services. The transformation helped improve the NPS by 16.1 points…”
– Rhondda Rumler, Principal, Mass Market Operations, Telstra
“TCS is a key enabler in supporting Nokia’s digitalization and transformation. We look forward to strengthening our relationship with TCS as we transform our HR tools and practices and improve employee experience for our teams around the world.”
– Alan Triggs, Chief Digital Officer, Nokia.
Research and Innovation
As on September 30, 2022, the company had applied for 6,922 patents, including 170 applied during the quarter, and been granted 2,560 patents.
Human Resources
TCS’ workforce was at 616,171 as on September 30, 2022, a net addition of 9,840 during the quarter. The workforce continues to be very diverse, comprising 157 nationalities and with women making up 35.7% of the base.
TCS has been meeting demand for services around new technologies by continually investing in organic talent development. In Q2, TCSers clocked 11.7 million learning hours, resulting in the acquisition of 1.5 million competencies.
IT services attrition was 21.5% on the last twelve months’ basis. With normalizing wage expectations and talent supply catching up across the industry, the company expects attrition to start to taper down in H2.
Awards and Recognition
Business Leadership:
Innovation and IP
Partner
Industry Analyst Assessments
TCS was ranked a Leader in 42 competitive assessments published by leading research firms in Q2. In 5 of these, marked with an asterisk in the table below, TCS was positioned the foremost leader or ranked #1.
Firm |
Report Type |
Title |
TechMarketView |
Ranking Report |
FSV Suppliers, Trends and Forecasts 2022-2025* |
Gartner |
Magic Quadrant |
Magic Quadrant for Public Cloud IT Transformation Services |
Everest |
PEAK Matrix |
Multi-cloud Application Development Services PEAK Matrix® Assessment 2022* |
IDC |
MarketScape |
IDC MarketScape: Worldwide Industry Cloud Professional Services 2022 Vendor Assessment |
Everest |
PEAK Matrix |
System Integration (SI) Capabilities on Amazon Web Services (AWS) PEAK Matrix® Assessment 2022 |
Everest |
PEAK Matrix |
System Integration (SI) Capabilities on Microsoft Azure PEAK Matrix® Assessment 2022 |
ISG |
Lens |
ISG Provider Lens™ Google Cloud Partner Ecosystem* |
NelsonHall |
NEAT |
End-to-End Cloud Infrastructure Management Services 2022* |
ISG |
Lens |
ISG Provider Lens™ Next-Gen Private Hybrid Cloud - Data Center Solutions & Services |
IDC |
MarketScape |
IDC MarketScape: Worldwide Managed Cloud Security Services in the Multicloud Era 2022 Vendor Assessment |
HFS |
Top 10 |
HFS Top 10: Cybersecurity Service Providers, 2022 |
Everest |
PEAK Matrix |
IT Security Services PEAK Matrix® Assessment 2022 – Europe |
Everest |
PEAK Matrix |
IT Security Services PEAK Matrix® Assessment 2022 – North America |
ISG |
Lens |
ISG Provider Lens™ Cybersecurity - Solutions and Services |
IDC |
Ranking Report |
Worldwide and U.S. Artificial Intelligence Services Market Shares, 2021: Adapting to Evolving Client Needs |
Everest |
PEAK Matrix |
Data and Analytics (D&A) Services PEAK Matrix® Assessment 2022 |
Everest |
PEAK Matrix |
Digital Twin Services PEAK Matrix® Assessment 2022* |
ISG |
Lens |
ISG Provider Lens™ Internet of Things - Services and Solutions |
IDC |
Ranking Report |
Worldwide and U.S. Application Management Services Market Shares, 2021: IDC's Top 10 Vendors |
Everest |
PEAK Matrix |
Digital Workplace Services PEAK Matrix® Assessment 2022 – North America |
Everest |
PEAK Matrix |
Digital Workplace Services PEAK Matrix® Assessment 2022 – Europe |
NelsonHall |
NEAT |
Supply Chain Transformation 2022 |
ISG |
Lens |
ISG Provider Lens™ Network - Software Defined Solutions and Services |
Avasant |
RADAR |
Digital Masters 2022 RADARVIEW™ |
Everest |
PEAK Matrix |
Adobe Services PEAK Matrix® Assessment 2022 |
NelsonHall |
NEAT |
Salesforce Services 2022 |
ISG |
Lens |
ISG Provider Lens™ SAP Ecosystem - SAP S/4HANA System Transformation |
HFS |
Top 10 |
HFS Top 10: Capital Markets Services, 2022—Leaders |
ISG |
Lens |
ISG Provider Lens™ Digital Banking Technology and Platforms - Core Banking Platforms (with DBEH) - Global 2022 |
Everest |
PEAK Matrix |
Financial Crime and Compliance (FCC) Operations – Services PEAK Matrix® Assessment 2022 |
NelsonHall |
NEAT |
Mortgage & Loan Services 2022 |
Everest |
PEAK Matrix |
Life Sciences Digital Services PEAK Matrix® Assessment 2022 |
IDC |
MarketScape |
IDC MarketScape: Worldwide Life Science R&D Decentralized Clinical Trial Technology Solutions 2022 Vendor Assessment |
Avasant |
RADAR |
Life Sciences Digital Services 2022–2023 RADARVIEW™ |
Everest |
PEAK Matrix |
Connected Medical Device Services PEAK Matrix® Assessment 2022 |
Everest |
PEAK Matrix |
Industry 4.0 Services PEAK Matrix® Assessment 2022: Unleashing the Era of Phygital Manufacturing |
Avasant |
RADAR |
Freight and Logistics Digital Services 2022–2023 RADARVIEW™ |
ISG |
Lens |
ISG Provider Lens™ Power and Utilities - Services and Solutions - Next-Gen IT Services |
TechMarketView |
Ranking Report |
UK Operations: BPS Supplier Rankings |
HFS |
Top 10 |
HFS Top 10: CFO F&A Service Providers, 2022 |
Everest |
PEAK Matrix |
Procurement Outsourcing (PO) – Service Provider Landscape with Services PEAK Matrix® Assessment 2022 |
Everest |
PEAK Matrix |
Finance and Accounting Outsourcing (FAO) – Service Provider Landscape with PEAK Matrix® Assessment 2022 |
IFRS Financial Statements
Consolidated Statements of Comprehensive Income
For the three-month periods ended September 30, 2021, and September 30, 2022
(In millions of $, except per share data)
|
Three-month periods September 30, 2021 |
Three-month periods September 30, 2022 |
Revenue |
6,333 |
6,877 |
Cost of revenue |
3,773 |
4,161 |
Gross margin |
2,560 |
2,716 |
SG & A expenses |
938 |
1,065 |
Operating income |
1,622 |
1,651 |
Other income (expense), net |
131 |
102 |
Income before income taxes |
1,753 |
1,753 |
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™ 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 606,000 of the world’s best-trained consultants in 55 countries. The company generated consolidated revenues of US $25.7 billion in the fiscal year ended March 31, 2022, 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 MSCI Global Sustainability Index and the FTSE4Good Emerging Index. For more information, visit www.tcs.com