Tata Consultancy Services posts $22 billion in revenues

Indian IT services and consulting giant Tata Consultancy Services has posted revenues of $22 billion for its past financial year, and remains positive of a quick post-Covidrecovery.

Tata Consultancy Services has followed on the heels of fellow Indian tech services and consulting giant Wipro in releasing its full year financial results, posting revenues of $22 billion for the year ending March.

The result represents a 5.3 percent rise on its previous financial year, but the real story as elsewhere is early signs of impact from the global coronavirus pandemic, with year-on-year fourth quarter profits falling slightly by 0.8 percent.

This drop in profitability the firm attributes to inherent supply-side issues with public lockdowns and shifting to a remote-working model – the impact limited to only the final two weeks of its financial year – with TCS expecting the demand-side hit to be felt over the current quarter due to the global economic impact of the crisis. The firm however expects a complete rebound by the third quarter starting October, with its senior leaders united in their positive outlook.

“We went from a seamless integrated operational to a dispersed work model in a very short period of time and that had its challenges but it tested our business models. Our long-term profitability model is not shaken by this event and we expect to be back on track to Q3 FY20 level performance by Q3 FY21,” stated TCS CEO Rajesh Gopinathan, who only a few months ago spoke of the firm’s aggressive growth strategy underpinned by plans for big spending over the next few years.

Gopinathan continued; “Amidst the tumult of the last few weeks, our priority has been to safeguard the health and well-being of our employees while continuing to support our customers’ mission critical activities globally. The agility, resilience and adaptability of our operating model were put to the test, and it has emerged stronger and more proven than ever before. I want to thank all the TCSers who showed immense grit, resolve and ingenuity to make this possible.”

Notably, and undoubtedly contributing to the optimism, Gopinathan also revealed that TCS’s $8.9 billion order book for the past quarter was in fact the firm’s largest ever since it began reporting the metric, with the CEO putting the increased demand down to the growing awareness among organisations as to the need for systems resilience and leaner, faster, and more resilient operations. “Many of the large deals we signed during the quarter address precisely that need.”

As reported elsewhere, well over half ($5.3 billion) of the fourth quarter sales derived from the North American market, in which TCS had seen the slowest rate of growth over the past financial year. Europe, on the other hand, the firm’s highest growth market with a 12 percent revenue rise over the past year, has been forecast in one early analysis of the global consulting industry to be the hardest hit region from the pandemic, expected to contract by 28 percent.

TCS however appears unfazed. “The speed with which we were able to switch from a highly centralised delivery to a fully distributed model is also on account of the investments we have been making over the years in building an agile and resilient core,” concluded V Ramakrishnan, TCS’ CFO.

“As we enter a difficult and uncertain period, our strong balance sheet, best-in-class profitability and the inherent resilience of our business model position us well to navigate the challenges ahead and gain share.”