Posts Tagged ‘TCS’

TCS net up 13.5 percent for fiscal 2015

April 23rd, 2015

Tata Consultancy Services (TCS) posted net profit of Rs.21,696 crore for the just-concluded fiscal 2014-15, registering a 13.5 percent year-on-year (YoY) growth as per the Indian accounting standards.Outsourcing32

In a regulatory filing to the stock exchanges on Thursday, the IT bellwether said revenue for the fiscal under review (FY 2015) increased 15.7 percent YoY to Rs.94,648 crore under the Indian financial reporting standards.

Under the International Financial Reporting Standards (IFRS), gross income grew 15 percent YoY to $15.5 billion and net income 12.8 percent YoY to $3.5 billion.

Earlier, the global software major reported net profit of Rs.5,906 crore for fourth quarter (January-March) of the fiscal under review, registering 11.5 percent YoY and 8.5 percent sequential growth.

Revenue for the quarter under review (Q4) increased to Rs.24,220 crore, reflecting 12.4 percent YoY and 1.6 percent sequential growth.

Under IFRS, gross income grew 11 percent YoY to $3.9 billion and net income 10.5 percent YoY to $951 million.

“Operating profit was Rs.25,424 crore for fiscal and Rs.6,591 crore for quarter, while operating margin increased to 26.9 percent for fiscal and 27.2 percent for quarter and volume growth was 16.9 percent YoY and 1.4 sequentially.”

“We are living in a world where technology is not just becoming integral to business but to our daily lives. We are playing a leading role in this ongoing revolution, helping our clients navigate and leverage digital to help grow their businesses,” TCS chief executive N. Chandrasekaran told reporters here later.

Though the IT outsourcing major hired a whopping 67,123 people last fiscal, a record 47,931 employees left the company during the last 12 months, resulting in net addition of 19,192 techies, taking the total headcount to 319,656 at the end of March 31.

Similarly, in fourth quarter, gross addition was 14,395 and net addition 1,031, as 13,364 techies left the company between January and March, resulting in its attrition rate touching 14.9 percent on annualised basis.

On the outlook for the new fiscal (2015-16), the chief executive said a strong foundation had been laid for growth and investments in platforms, digital and automation were gaining traction with clients.

“We are upbeat on seeing more opportunities in the ensuing quarters to partner with customers across multiple industries in the US, Europe and Japan where we have invested substantially in tools and people,” Chandrasekaran asserted.

To mark the company’s 10 years of going public, the board announced a special reward to all its employees who completed one year service.

“Employees completing one year of service will be eligible for the special reward, which will be equivalent to a week’s salary for every year of service,” the company said in a statement.

The reward will cost the IT sourcing major Rs.2,628 crore ($423 million)

“We have maintained our profitability in a challenging operating environment, where currency has been a strong headwind for some time,” chief financial officer Rajesh Gopinathan said on the occasion.

Noting that there was holistic growth across markets and industries during the fiscal under review, Gopinathan said Europe led growth in major markets, while Britain and North America grew in line with the company average.

“All major industry verticals grew in double digits led by retail, manufacturing, life sciences & healthcare and BFSI (banking, financial services and insurance) in the fiscal,” Gopinathan added.

The company made 25,000 offers on engineering campuses for trainees who will join from second quarter (July-September) of this fiscal (2015-16).

“Our attempts to build a next-gen organisation that is social, mobile, engaged and collaborative continues. We are also extending the model of using social and platform-based collaboration tools to connect with students from colleges across India and globally,” TCS’ human resources head Ajoy Mukherjee said.

TCS also crossed the milestone of employing over 100,000 women, with gender diversity of 33 percent and 122 nationalities represented in its global workforce.


TCS Bids ‘Ta-Ta’ to Fast Growth

April 17th, 2015

Shares in Tata Consultancy Services are priced for perfection. Little wonder that investors rush to part ways at the slightest sign of trouble.Outsourcing29

The information technology outsourcer posted mildly disappointing earnings on Thursday evening. In the three months to March, revenue in U.S. dollar terms fell 0.8% from the previous quarter; analysts had expected a slight increase.

That might not seem like a big miss, but investors took the news hard, sending TCS shares down 4% in morning Mumbai trading. This follows a similar episode two quarters ago, when a slight miss on top-line estimates for the September quarter sent shares down 9% in a single session.

TCS is the first of India’s major IT companies to report earnings for the March quarter. As the country’s biggest outsourcer by revenue, it is also an industry bellwether. The entire sector faces challenges from the strong dollar, as well as declining spending by energy companies in the wake of the oil-price bust.

TCS reports revenue in dollars, but gets around a quarter of its revenue from the U.K. and continental Europe. In the first three months of 2015, the pound fell 5% against the U.S. dollar, and the euro dove 12%, making revenue look worse in dollar terms. Costs are mostly in rupees, which have been stable against the dollar.

Longer term, the weaker euro will boost the competitiveness of Europe’s own IT providers such as Capgemini and Atos, notes Jefferies analyst Atul Goyal, lessening the appeal to European companies of going offshore.

Research firm Gartner sees total world-wide IT outsourcing spending falling slightly this year due in part to the drag from technology-expense cutbacks in the fossil-fuel industry. The impact on TCS won’t be huge, as energy and utility companies together account for just 4% of revenue, but it is another headwind.

The bigger issue is where TCS will find growth to underpin investor’s lofty expectations. From fiscal year 2011 to 2014, its annual profit growth averaged 21%. Those days are gone. For fiscal year 2015, which ended in March, the pace slowed to 13%.

Even that excludes the impact of a generous one-time employee bonus. Including the bonus, profit for the year was up just 2.3%. While the current fiscal year may not see such a magnanimous outlay, compensation costs are rising. TCS’s employee-attrition rate has worsened as developers increasingly hopscotch from firm to firm.

Analysts see profit growth excluding bonuses slowing to 9% for the current fiscal year. Despite this, TCS’s shares are still trading at 20 times forward earnings, in line with their five-year average. That may have made sense at one time, but not anymore.


TCS sees FY revenue growth beating industry estimates

April 17th, 2015

India’s largest software services exporter Tata Consultancy Services (TCS.NS) posted a better than expected rise in net profit led by strong worldwide client spending and said it expected revenue growth in the year starting in April to top industry estimates.An employee of Tata Consultancy Services (TCS) works inside the company headquarters in Mumbai

TCS, which has been growing revenues faster than rivals Infosys Ltd (INFY.NS) and Wipro Ltd (WIPR.NS), will benefit from investments in newer digital technologies and automation, Chief Executive N. Chandrasekaran said.

“We have laid a strong foundation for growth in FY 16,” Chandrasekaran said, adding that the company’s revenue will likely beat an industry lobby group’s estimates for the current fiscal year.

Exports by India’s IT outsourcing sector are expected to rise 12-14 percent in the current fiscal year, according to the National Association of Software and Services Companies.

TCS, which posted a 30.7 percent fall in net profit for the fourth quarter due to a one-off bonus paid to employees, had in March warned that currency fluctuations would affect its operating margins by 40 basis points.

The dollar’s biggest quarterly rise against other major currencies since 2008 has undermined sales of India’s IT services firms in non-U.S. markets, including Europe, in what is already a seasonally slow period.

TCS, part of India’s diversified Tata Group, makes about 18 percent of its revenue from Europe.

However, excluding the employee bonus payment of 26.28 billion rupees, TCS reported a net profit for the period of 57.73 billion rupees ($927.37 million). That was up 7.7 percent compared to the year-ago quarter helped by strong client spending in a seasonally slow period.

Analysts, on average, had expected the company to report profit of 54.15 billion rupees.

Shares in TCS, the largest company in India by market value, closed down 1.5 percent ahead of the results on Thursday, while the broader market closed 0.46 percent lower.


Indian outsourcing is booming in the Nordic countries

April 13th, 2015

Indian IT service providers are securing more and more high-profile outsourcing deals in the Nordics, involving the likes of Nokia, DNB and ABB. And with companies such as HCL Technologies and Wipro announcing further investments in the region, their presence is expected to grow.Outsourcing23

Gartner research analyst Mika Rajamäki said: “Based on 2013 figures, Indian IT suppliers have been growing faster in the Nordic market than the traditional service providers. If the annual growth of the traditional suppliers has been 2-3%, Indian companies have been growing by almost 20% a year.”

Indian IT companies have not yet hit the Nordics’ top 10 IT suppliers list, but this is likely to change. Because Indian service providers focus mainly on the biggest fish in the manufacturing, finance and telecoms industries, one major deal can boost their market share significantly.

“Sweden has the largest market, but Indian companies seem to have the highest market share in Finland, around 4%,” said Rajamäki. “In Denmark, Sweden and Norway, their market share is around 1%, but these figures are from 2013 and there were some major deals last year, so the figures have definitely grown. Average market share for Indian companies in the Nordics is probably around 4-5%, closer to 5%, and in Finland it will grow to 6-7% this year.”

Some Indian IT suppliers have been operating in the Nordics since the 1990s, but the real challenge has begun over the past five years. Their aim is to shake up a static market dominated by local and multinational suppliers such as Tieto, Evry, KMD, IBM and Accenture.

Increasing investments in the region include HCL’s seven-year deal with Norway’s DNB bank, worth $400m. While most services are still offshore, companies such as Tata Consultancy Services (TCS), HCL Technologies, Wipro, Infosys and Tech Mahindra have several offices in Nordic countries and a growing number of local delivery centres.

Johan Hallberg, research manager at IDC Nordic, said: “In the past, Indian IT suppliers were doing lower-level outsourcing and were often invited as subcontractors by medium-size Nordic players. But they have learnt that they can’t sell on price alone. They understand that they need more than a sales force in the Nordics and have started to market themselves in a different way.”

The Nordic appeal
But why the Nordics? Hallberg says the Nordic IT services market has been growing more quickly than in continental Europe, especially in Sweden, which has not been hit as hard by the economic crisis as many other European countries. The Nordics also have a relatively mature market and a large public sector with a major IT budget, he adds.

According to IDC figures, the IT services market in the Nordics was worth $24.4bn in 2014. Outsourcing is worth $12.6bn of that and it remains the main area where Indian suppliers operate.

While it is an attractive market, a key fact about the Nordics is that they still value local presence. A 2013 Ernst and Young study found that most outsourced services remained ‘onshore’ (in the same location or country). This is especially true of Sweden, where 87% of outsourced services were located onshore. Denmark was at the other end of the spectrum with 59% of services onshore, while Finland (74%) and Norway (80%) sat in the middle.

“The Indian suppliers have understood that they need to have local sales forces, local consultants and local datacentres,” said Hallberg. “It has become even more important for Nordic services companies to show their understanding of local business culture, laws and rules. Nordic suppliers have also started to specialise to meet Indian competition.”

The importance of a local presence is echoed by TCS, the biggest Indian IT supplier in the Nordics. Amit Bajaj, the company’s head of North Europe, says TCS has more than doubled the size of its operation in the Nordics since 2010 and has increased local hiring.

“We see the Nordic countries as a very interesting market,” said Bajaj. “This region hosts a number of very innovative and internationally competitive firms – just the kind that are a good match for us.”

Shaking up customer service
Gone are the days when the success of Indian IT suppliers could be measured only in cost savings. In recent years, Indian service providers have shown up well in customer satisfaction surveys. In Whitelane Research’s 2014 Nordic IT Outsourcing Study, TCS led the pack with 83% for contract satisfaction, with Infosys close behind at 79%, both well above the average of 71%. Three out of the top 10 companies in the survey were Indian.

IDC Nordic’s Hallberg added: “Many companies in the Nordics are in their third generation of outsourcing and are often mature in their requests. This has led to services companies needing to be even better in their customer understanding and to be closer to customers.

“The local revenue of some Indian suppliers has grown by more than 30% year-on-year. They are usually in the final selection phase in larger deals, which was not the case just a couple of years ago.”

Gartner’s Rajamäki pointed out that Indian companies can be very agile in their operations and act like small companies.

“Indians are slightly more daring in taking risks [than traditional players] and share the risk of their customers,” he said. “They are also efficient in the transition phase. Most deals today are taken over from competitors, and completely new deals are a rarity. What Indian suppliers do very well is to rapidly take over a customer and invest in the relationship.”

The deals Indian companies are winning are not just focused on one area, but range from help desks and IT infrastructure to application development and modernisation of legacy systems.

Breaking down barriers
Hallberg and Rajamäki both believe competition in the Nordic market can only grow. Indian IT suppliers are starting to gain a foothold in other IT services, such as project services. They are also starting to challenge traditional players for public sector deals as language barriers can be overcome by hiring locally, forming local partnerships or even acquisitions.

“Traditional Nordic and multinational players will increase offshoring where it is viable, such as cloud services, while Indian suppliers have come to the Nordics to stay and will continue to build their presence here,” says Rajamäki.

At the same time, the IT services market is undergoing a wider transformation. Although Bajaj cannot comment on TCS’s future plans in the Nordics, he highlights the internet of things, cloud services, digitisation and BYOD trends as drivers of change in the industry.

“The market is in a state of dramatic and constant change,” says Bajaj. “It has been predicted that in 10 years’ time, 40% of the current Fortune 500 companies will no longer exist.

“In this changing environment, organisations are fighting to get a lead on the digital re-imagining of their business, to simplify their processes and systems and to secure appropriate governance in terms of security, risk management and compliance. As Gartner pointed out, global IT spend will continue to grow at over 3% for this year.”

The changing Nordic market presents both an opportunity and a challenge for services providers, but one thing is certain: competition is increasing, and so are the rewards.


Wipro’s chief business officer Satishchandra Doreswamy steps down

April 3rd, 2015

India’s third-largest software services provider Wipro Ltd’s chief business officer Satishchandra Doreswamy has stepped down to pursue opportunities outside the company, the company said.Outsourcing18

The development comes just a fortnight after the Banglore-based company announced a new organisational structure and appointed former TCS business process outsourcing unit head Abid Ali Neemuchwala as chief operating officer (COO) as well as group president.

Before joining Azim Premji-led Wipro in 2011, Doreswamy was working with Tata Consultancy Services as vice president and global head for infrastructure services. Neemuchwala also joined Wipro last month from TCS where he spent almost two-and-a-half decades.

As chief business officer at Wipro, Doreswamy was responsible driving large and strategic transformation deals and inducting next generation tools, processes and practices.

In March this year, Wipro had announced a series of internal changes, including creation of positions of group president and chief operating officer (COO). The position is being seen as a clear number two position in the company after that of the CEO.

The appointment of Neemuchwala also possibly sets a new line of management in place as a potential succession plan after 55-year-old Kurien hangs up his boots.

Kurian was named CEO of Wipro four years ago after the IT services major scrapped its previous top leadership structure involving two joint CEOs. Kurien had taken over from Girish Paranjpe and Suresh Vaswani.


Infosys, Wipro, TCS caught in outsourcing price war

March 26th, 2015

Top software service exporters are under pressure to drop prices to retain contracts with marquee customers such as American Express and Home Depot that are up for renewal this year, according to executives and experts involved in the contract negotiations.Outsourcing17

Rates have fallen by double digits for some of the biggest customer accounts in the past six months, with companies such as Infosys and Wipro sacrificing profit margins to gain market share and incremental revenue from these key accounts, they said.

Retaining strategic outsourcing contracts — that generate at least $100 million annually — is crucial to top IT firms such as TCS, Infosys and Wipro.

“We’re definitely feeling the heat in some of our key accounts — and there’s no way we can afford to lose a top customer since gaining new logos to make up for the shortfall is not an option,” said a Wipro executive, who requested anonymity.

An executive at another top IT firm, also declining to be identified, said as traditional businesses have become commoditised, no company could afford to charge a premium.

“Top customers are more aware now of the changing dynamics in the market and are taking the opportunity to negotiate multi-million dollar contracts at lower prices,” this person said.

Experts tracking the contract negotiations said prices could drop further over the next 3-4 quarters.

“It’s become a dog-eat-dog business more than ever,” said Phil Fersht, chief executive of outsourcing advisory firm HfS Research. “There is a clear downward pressure on all IT services pricing. We estimate this is a 3% price decrease per FTE (full time equivalent) per deal, on average, over the last 6 months.”

TCS, Cognizant and Infosys declined to comment for the story.

Infosys, TCS and Wipro are increasingly automating commoditized businesses like infrastructure management to improve margins but are forced to pass on a majority of the benefits to key customers such as Bank of America and Citigroup.

“We are seeing big price movement, some of it betting on increased maturity of autonomics. TCS, Wipro and Infosys have all signaled their move away from (automation company) IPSoft and towards internally developed autonomics solutions. I assume that this will give them more pricing flexibility than they were getting with third-party software,” said Bill Huber, a former IBM executive and managing director at outsourcing advisory firm Alsbridge.

For Infosys and Wipro, which have lagged average industry growth rates over the past three to four years, gaining market share at the cost of margins seems to be their best option in the near term to revive double-digit growth rates.


TCS features as Leader in Life Sciences IT Outsourcing in Europe

February 25th, 2015

Tata Consultancy Services (TCS) has been recognized as a Leader in Life Sciences IT Outsourcing (ITO) in Europe by leading advisory and research firm Everest Group. The Everest Group report ‘IT Outsourcing in European Life Sciences Industry – Service Provider Landscape with PEAK Matrix Assessment 2014’, acknowledged TCS for its engagements across key infrastructure and application towers, substantial revenue, strong growth in the Life Sciences ITO business and a balanced portfolio of deals across geographies.
The report also recognized TCS’ significant and ongoing investments in proprietary solutions and research.

TCS is an IT services, consulting and business solutions organization that delivers real results to global business, ensuring a level of certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of IT, BPO, infrastructure, engineering and assurance services.


Protected by تهنئة
Get Adobe Flash player