TCS Q4-2010 – earnings, metrics and learnings
DATE: APRIL 19th, 2010
FACTS
- 39 new clients
- Signed a deal work more than 500 million dollars (TCS wins the UK Government 10 year, £600 million deal), a number of 100+ million dollars. Healthy pipeline of deals between 50 to 500 million.
- 100 million dollar deal with global electronic conglomerate for infrastructure management
- European headquartered financial services firm selected TCS to provide IT,BPO,KPO, infrastructure services.
- 25% of revenues coming from non application development(non-IT) services including infrastructure management, products, BPO & assurance
- Pricing is flat with a marginal up-tick
- Healthy pipeline of deals in the 50 to 500 million dollar range. Signed 10 deals above 50 million dollar multi year deals.
- Sees recovery in the business as all the verticals are flat or have an up-tick
- Will spend around 193 million dollars in raises and promotion related expenses.
- Took a hit of 1.1% due to currency fluctuation
- Financial Services & Insurances leading the recovery, Telecom showing an upward trend.
- Europe recovery is still lagging behind US and TCS has a cautious approach around European recovery
METRICS
- Revenues – $ 1.686 billion QoQ (+3.07%) YoY (+17.61%)
- Net Income – $420 million QoQ(9.69%), YoY (+59.69%)
- FY10 Total revenues – $6.34 billion (YoY +5.38%)
- FY10 Total Net profit – $1.45 billion (YoY +29.01%)
- Yearly volume growth 17%
- 16,851 gross, 10,775 net additions of employees this quarter (Highest gross addition)
- 160,429 employee strength end of March 2010
- Attrition Rate – 11.8% ( compared to 11.6% last quarter)
- BPO Attrition rate – 18.8%, IT attrition rate – 11.0%
- Utilization Rate – 81.8%
- Pay raises of 10% offshore ( India) and 3-4% onshore
- Yearly addition of employees – Gross -38,063, Net – 16,668
- 30% workforce is women, 10,700 non Indian employees, 57% of workforce has more than 3 years of experience.
- Large number of trainee recruiters last two quarters and the ratio will continue to be around 70:30. 70% freshers and 30% lateral hires. Cost of labor remained same from Q3 to Q4.
- 20,000 campus offers for FY11 (entry level)
- Revenue break up – North America – 54%, UK – 15.2%, Continental Europe – 10.0%, India – 8.9%
- BFSI- 44.4%, Retail & Distribution – 12.3%, Telecom -12.1%, Manufacturing – 8.3%, Hi-Tech – 5.1%, Life Sciences & Healthcare – 6.1%
- Time & Material – 51.3%, Fixed Price – 48.7%
- BPO Services – 11.5% , Infrastructure Services – 8.3%, Consulting – 2.5%, Application Development & Maintenance – 47.6%
LEARNINGS
- US markets are and will continue to be key drivers for growth for outsourcing vendors and recovery in US markets directly impact the growth of offshoring vendors. Emerging markets are growing and will contribute to growth of outsourcing although the total impact on revenues will still be minimal.
- Market seems to be settling in the pattern of larger deals for cost management initiatives and smaller, phased deals for transformation initiatives.
- India based firms like TCS are working hard to create a global brand although their largest composition of employee base still remains India centric (93.3%).
- Larger outsourcing firms are looking at diversifying their portfolio of services. Infrastructure services, product engineering, BPO, life science analytics are a few of the areas where firms see a growth outside of pure application development and maintenance activities.
- Marketplace is still evenly divided in fixed price and time & material deals. There are new innovative deal structured being put in contracts but reality of the marketplace is that very few processes or relationships have matured to a stage to really leverage those new structures.
Additional links:
Infosys Q4 2010 earnings – Facts,Metrics & Learnings
iGate Q1 2010 (March 2010) earnings – Facts,Metrics & Learnings
Accenture Q2 2010 results – facts, metrics & learnings
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