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At 5.9%, TCS reports highest growth in 5 quarters

BENGALURU: Tata Consultancy Services (TCS) reported a 5.9% growth in constant currency in the fourth quarter of 2020-21, compared to the same period in the previous year, its best number in five quarters as IT services companies put behind a year that started off with uncertainties but ended with all of them on a firmer ground with bigger digital deals.
On a reported basis, TCS’s revenue was up 10% to about $6 billion, albeit on a low base because in the corresponding period last year, the company’s growth had faltered as the pandemic had just set in. Net profit was up 15.6% to $1.2 billion.
TCS order book in the March quarter was $9.2 billion, the highest ever TCV (total contract value) in a quarter. For the full year, its order book rose 17.1% to $31.6 billion.
Those numbers led CEO Rajesh Gopinathan to maintain that the company would return to double digit constant currency growth this fiscal.
“Our focus going into FY22 will be to engage with clients in their growth agenda, propelled by innovation and leverage of collective knowledge,” he said.

For the full year, the numbers were expectedly muted because of the drop in revenue in the first quarter at the height of the pandemic.
Total revenue was $22.1 billion, which translated to annual incremental revenue of just $143 million, one of the lowest in the company’s recent past. This excludes legal claims arising from the case with Epic Systems in the US.
Growth was led by two major markets, North America and continental Europe, which were up 5.9% and 11.7% respectively. In service verticals, BFSI and life sciences businesses were up 13.3% and 19.3% respectively compared to the previous year.
Gopinathan added that the next fiscal will be focused on growth and transformational deals. “There will be new revenue accessing new customer segments, new markets. Transformation will be front-end with changes in supply chain and industrial structure.”
Operating margins went up to 26.8%, the highest in nearly six years helped by “high quality revenue from growth and transformational segments,” which refers to digital deals which yield better margins.
“Our Q4 margins are a validation of our strong belief that it is possible to win mega-deals, post industry-leading growth, continue to invest in our people and in newer capabilities, and still deliver industry-leading profitability,” outgoing chief financial officer V Ramakrishnan said.
In the case relating to Epic Systems, where the latter has alleged unauthorised access to and download of its confidential information and use in the development of TCS’s product MedMantra, TCS has provided $165 million in its consolidated statement and loss for the year ended March 31.
TCS has declared a final dividend of Rs 15 per share.
It said it’s on track to hire 40,000 freshers from campuses in 2021-22. “It’s going to be like what we did last year. There won’t be changes in the campus hiring numbers,” said Milind Lakkad, TCS’s EVP and chief human resource officer.
TCS added 40,185 employees in the last fiscal, taking the total headcount to 4.8 lakh employees. The company said that IT services attrition (last twelve months) was at an all-time low at 7.2%.
Employees logged 43 million learning hours in 2020-21, resulting in over 3.7 lakh employees getting trained on multiple new technologies, and over 4.5 lakh trained on Agile methods.
“We are looking at ways to expedite vaccinations for eligible TCSers wherever local regulations allow it,” Lakkad said.
TCS has appointed Samir Seksaria as its chief financial officer, effective May 1. He takes over from Ramakrishnan V, who would be retiring on April 30. Ramakrishnan was appointed CFO in 2017. He joined TCS finance in 1999 and served as the finance head of TCS North America for 7 years.

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