Overview of the Industry
Global GDP in FY 2023 was affected by the Russia-Ukraine war and resultant dislocations in supply chains, leading to surging food and energy inflation. Central banks raised interest rates sharply in response. As a result, the global GDP is estimated to have grown at a more subdued 3.4% in 2022, versus 5.9% in the prior year1.
Global technology spending on Enterprise software and IT services crossed the $2 trillion2 mark in 2022, growing 5.5% YoY. IT services grew 3.5% YoY, to $1,250 billion. This growth was led by accelerated cloud adoption, preference for external expertise due to severe talent scarcity, and expanding scope of digital transformation to cover more back-office operational areas.
The global IT services industry continues to be a highly fragmented one, with even the largest provider having a midsingle digit market share. TCS is among the largest IT services providers globally, with a market share of 2.2%, and has outperformed the market, growing significantly higher than market growth over the last decade.
1 World Economic Outlook, IMF, April 2023
2 Gartner 3GRI 2-22
The outperformance may be attributed to market share gains resulting from TCS longer-term, purpose-driven partnerships with its customers, its agile organization structure, and a very stable management team; its investments in organic talent development, research and innovation, intellectual property and in building newer capabilities that have helped expand wallet share with clients; and better execution resulting in greater customer satisfaction.
TCS Business An Overview
TCS is an IT services, consulting and business solutions organization partnering many of the worlds largest businesses in their transformational journeys for the last 55 years. It has a global presence, deep domain expertise in multiple industry verticals and a complete portfolio of offerings - grouped under consulting and service integration, application services, digital transformation services, cloud services, engineering services, cognitive business operations, and products and platforms - targeting every C-suite stakeholder.
The company leverages all these capabilities and its deep contextual knowledge of its customers businesses to craft unique, high quality, high impact solutions designed to deliver differentiated business outcomes. These solutions are delivered using its Secure Borderless Workspaces™ (SBWS™) operating model which enables a highly distributed, Location Independent Agile™ delivery.
TCS geographic footprint covers North America, Latin America, the United Kingdom, Continental Europe, Asia Pacific, India and Middle-East Africa.
TCS considers industry verticals as its primary go-to-market business segments. The key vertical clusters are: Banking, Financial Services and Insurance (BFSI), Communication, Media and Technology (CMT), Retail and Consumer Business, Life Sciences and Flealthcare, Manufacturing and Others.
Strategy for Sustainable Growth3
Customer-centricity is at the heart of TCS strategy, organization structure and investment decisions. TCS customer-centric worldview helps spot trends early, embrace business opportunities by making the right investments and mitigating risks while discharging its social and environmental responsibilities.
TCS has been broadening and deepening customer relationships by continually looking for new opportunities and newer areas in their businesses to add value, proactively investing in building newer capabilities, reskilling its workforce and launching newer services, solutions, products and platforms to address those opportunities.
In the last few years, the company has been using its investments in research and innovation, its intellectual property and deep contextual knowledge of the customers business and technology landscape to proactively pitch ideas and solutions designed to improve the clients topline and help drive competitive differentiation.
These growth and transformation (G&T) engagements are higher value engagements catering to the needs of a broader set of stakeholders in the client organization, enjoying greater visibility within the CXO suite and more closely aligned with their business strategy. An expanding share of this business is helping drive a steady increase in the scope and scale of service: consumed year after year, and an expansion of TCS share of wallet, as evidenced by the client metrics.
Over time, this strategy has resulted in deep and enduring customer relationships, a vibrant and engaged workforce, industry-leading profitability, a steady expansion of the addressable market, and a proven track record in delivering longer term stakeholder value.
Enabling Investments
TCS pioneered4 the use of the word digital to describe the new family of technologies that emerged in the last decade. Quick to recognize the potential of cloud, the company made investments ahead of time in launching new platform-based business models as far back as in 20095, reskilling the workforce, research and innovation, building collaborative workspaces and innovation centers, intellectual property, and alliances and partnerships. Those early investments have given TCS a head start in participating in its customers G&T journeys.
The company continues to invest in co-innovation hubs, launching TCS Pace Ports™ in major markets. TCS teams use these physical spaces to work with academic and start-up partners, ideate jointly with client teams and rapidly build
prototypes. The Pace Ports at Pittsburgh in the US, in the Carnegie Mellon University campus, and the other in Toronto, Canada, were formally inaugurated this year. Including the ones in Tokyo, New York and Amsterdam, the company has five Pace Ports in all.
The company launched joint innovation hubs as well, using the TCS Pace™ framework. TCS and Boots launched an agile incubator called INNOVATE Powered by TCS Pace™, at Boots Nottingham headquarters in the UK. TCS forged a major applied engineering and research partnership with The National Robotarium, UKs largest and most advanced AI and robotics research centre, located at Heriot-Watt Universitys Edinburgh campus.
TCS continued to expand and deepen its industry-leading portfolio of products and platforms, launching new variants within the ignio™ suite and building newer functionality and features in the TCS BaNCS™ suite, HOBS, TwinX, Mastercraft and Jile. TCS Omnistore™ now offers three more modules as part of its AI powered enterprise personalization- Unified and composable commerce, Enterprise personalization, and Marketing hub.
TCS dedicated practice units around AWS, Microsoft Azure and Google Cloud Platform have been steadily investing in training, certifications, credentials and in building solutions and intellectual property on their respective hyperscaler stacks.
In FY 2023, the company crossed the milestone of 100,000 hyperscaler-certified employees. By virtue of being one of their largest system integrator partners with deep domain expertise across multiple areas, TCS was the launch partner for many new solutions introduced by hyperscaler platforms during the year.
The company has leveraged its deep domain knowledge across multiple industries to create an extensive catalog of over 100 industry cloud offerings addressing the needs of clients across 20 industries. The portfolio of TCS solutions available on public hyperscaler cloud platforms continued to expand. In FY 2023, TCS Dexam™, TCS DigiGov™, TCS Cognitive Plant Operations, TCS Mobility Cloud Suite and TCS ESG Integrator were added to the list of existing solutions like TCS Omnistore™, TCS MasterCraft™, 5G Edge Suite, TwinX, TCS Clever Energy™, TCS IP2™ and TCS Envirozone™.
Strategic Responses to Opportunities and Threats
| Opportunity / Threat | TCS Approach | Outcomes |
| Macroeconomic uncertainty impacting decision making and prompting cost reduction initiatives | • Proven track record
in helping enterprises reduce their cost of operations.
• Proactive pitching of IT and business operating model transformations that not only deliver greater efficiency, but also enhance enterprise agility, resilience and throughput. • Leveraging full services capability and deep client relationships to propose product-aligned operating models. • Use of TCS Cognix™ to accelerate operations transformation, using over 600 pre-built automation components that infuse AI/ML and other technologies into IT and business processes to reduce human intervention, increase velocity and throughput. |
• Strong deal flow
resulting in a robust order book that gives better visibility of medium-term growth.
• Market share gains in vendor consolidations. • Efficiency gains helping fund clients transformation programs in some instances. • TCS Cognix recognized as a means of driving quicker realization of RoI and used by nearly 300 clients. |
| Opportunity / Threat | TCS Approach | Outcomes |
| Greater interest in using | • Focused on developing contextual knowledge and applying | • Expansion of addressable market. |
| technology to drive business growth and differentiation | that for inside-out
transformations.
• Continued investments in research and innovation, TCS |
• Growing share of G&T business adding to growth. |
| Pace Ports, and intellectual property (IP). | • Higher quality revenue, lending | |
| • Dedicated practice with domain experts to bring together | margin resilience. | |
| TCS differentiated capabilities from across the organization to stitch together comprehensive solutions. | • More deeply embedded in the clients business. | |
| • Proactive pitching of solutions to customers most pressing business problems. | • Engaging with a broader set of buyers in the client organization. | |
| • New brand tagline ‘Building on Belief to strengthen positioning as a growth and transformation partner. | • Higher visibility within C-Suites. | |
| Accelerated adoption of | • Dedicated business units with end to end capabilities on | • Strong growth in cloud |
| public cloud | each of the hyperscaler platforms. | transformation revenues. |
| • Continued investment by each of these units in skills, | • Top tier partner to each of the | |
| certifications, credentials, IP and accelerators. | hyperscalers. | |
| • Articulated the multi-horizon cloud transformation | • Preferred partner to clients seeking | |
| framework. | to use cloud native capabilities | |
| • Made available TCS products and solutions on public clouds. | to power their growth and transformation. | |
| • Over 110,000 hyperscaler-certified employees. | ||
| Greater acceptance of | • Strengthened alliances and launched new offerings around | • Stronger win-win partnerships. |
| as-a-Service platforms | the popular and new SaaS products. | • Expansion of addressable market. |
| • Helped ISV* clients upgrade their products to launch new SaaS versions. | • Strong growth in SaaS sales. | |
| • Partnering with product manufacturers to help launch innovative as-a-Service offerings using TCS Bringing Life to Things IoT framework. | • Platforms drive stickier
relationships, with long term revenue visibility. |
|
| TCS IP: | ||
| • Promoted SaaS versions of in-house product portfolio, now available on hyperscaler platforms. | ||
| • Used IP portfolio to launch new platforms that bundle IP and shared services on the cloud. |
* Independent Software Vendor Talent Management
TCS aims to attract, develop, motivate and retain diverse talent, that is critical for its competitive differentiation and continued success. The companys talent management strategy seeks to maximize the potential of every employee by creating a purpose-driven, inclusive, stimulating, and rewarding work environment, delivering outstanding employee experience, while fueling business growth. TCS strives to create a vibrant workplace and an engaged workforce by encouraging four behaviors: follow your passion, stay hungry, commit to lifelong learning and thrive together.
In FY 2023, TCS made a net addition of 22,600 employees globally, taking the total employee base to 614,795, representing 150 nationalities.
After two years of remote working, TCS initiated a Return to Office initiative to better integrate and acculturate new recruits, deepen employee engagement levels, drive purposeful engagement and extend the spirit of #OneTCS. As an outcome, 50% of employees started working from office for two or more days in a week.
Industry-First Initiatives
• Intensified focus on equipping the companys mid-level managers with market relevant skills by providing the right learning and certification opportunities to help them succeed in a world of new technologies. More than 90% of the target employee pool is participating in this strategic program and close to 60% is certified in various market relevant skills.
MnnnnQmont I ^ii nnn Ann i icic
• Xcelerate- The industry recognized Talent Transformation platform for employees, to capture employees aspirations and mapping them to future opportunities. Aspirations
of nearly 2/3rd of TCSers were captured, with ~100K progressing towards their aspired roles.
• Engagement with Purpose - A platform for employees to live TCS values through collective community service, enhance organizational belonging and self-actualization. More than 400,000 employees were engaged as part of the initiative.
Talent Acquisition
In FY 2023, TCS responded with agility to the changing supply side dynamics which saw the unprecedented industry-wide employee churn peaking mid-year, then falling sharply in the latter half. This entailed recalibrating talent acquisition dynamically to fully utilize the additional capacity built up in the prior year.
The company remains the preferred employer and one of the largest job creators in IT services in several major markets, for both freshers and lateral hires. In addition to about 44,000 fresh engineers, TCS onboarded its highest ever number of lateral recruits during the year. It also pivoted from a virtual-only mode to a hybrid model of virtual and in-person recruitment focused on attracting the right talent, creating better employee experiences, and building the TCS brand.
Key Achievements:
• TCS National Qualifier Test: Over 618,000 students from more than 4,200 institutes in India competed for the opportunity to work for TCS.
• Hiring from Indias top B-schools, including the top 3 IIMs, continues with internship and placement offers as part of the strategic leadership program.
• TCS CareersNext: TCS virtual career fair platform was leveraged for conducting 3 virtual hiring drives in this year, yielding over 32,000 registrations and 8,000 job applications.
• TCS HackQuest, the companys flagship ethical hacking competition now in its 7th season saw over 58,000 registrations from more than 3,000 institutes across India.
• Programs to improve diversity in hiring produced encouraging outcomes. Rebegin, an initiative for experienced women professionals re-entering the workforce after a break saw nearly 14,000 job applications. Over 200 job applications were received from people with disabilities.
• TCS Sigma launched in FY 2023 to provide career opportunities for graduates and postgraduates in pharmacy in the companys life sciences business.
• TCS Academic Interface Program continued to engage with faculty and students through focus group connects, workshops, faculty development programs and other campus outreach activities. In FY 2023, TCS engaged with over 216,000 students and about 17,000 faculty members in nearly 1,500 partner academic institutes across the world. More than 2,000 interns were engaged during the year.
Culture and Diversity
TCS is an equal opportunity employer and has a well-defined and progressive Diversity, Equity and Inclusion (DEI) policy embracing all diversity parameters which includes gender, marital status, religion, race/caste, colour, age, ancestry, nationality, language, ethnic origin, socio-economic status, physical appearance, disability, sexual orientation, gender identity and/or expression and any other category protected by applicable law.
TCS recognizes that a diverse and inclusive workforce is necessary to drive innovation, foster creativity, and guide business strategies. Its disclosures around DEI earned it a place in the Bloomberg Gender-Equality Index (GEI) once again. Other highlights include:
• iExcel: TCS flagship executive leadership development program for women completed 22 editions, benefiting 1,450 women leaders.
• The Diversity Maturity Matrix: An in-house diversity measurement tool that aims at identifying gaps and assessing an organizations maturity in DEI.
• Client engagement: Allies of Diversity is a program where senior leadership from client organizations are invited to share diversity best practices. Engagement with 75 C-Suite leaders with 63 different client organizations has been completed till date. An Allies of Diversity conclave was organized in London to provide a forum for DEI leaders
to share organizational learnings. DEI focused learning programs were conducted for 4 client organizations.
• The Workplace Coach: A 75-hour internal coach certification program enabling individuals to become coaches. This supports individuals within the organization towards ACC certification. So far, 3 cohorts have completed this program bringing together over 450 internal coaches.
• Education and Sensitization: TCS has mandatory online training designed to sensitize employees on key concepts of DEI. 504,255 employees completed this in FY 2023.
• Employee Resource Groups: These serve as platforms for under-represented communities and their allies to share concerns, experiences, stories and strategic solutions. TCS has 13 voluntary, employee-led groups that have come together based on shared diversity identity characteristics or interest.
• Champions of Equity: This campaign was created to ensure a fair and inclusive culture at the workplace. Under this program, 105,000 employees have taken a pledge till date, to be a Champion of Equity - someone who treats everyone with fairness and transparency, and takes an inclusive approach towards every individual, culture and system.
• TCS Culture Survey: As part of the Belongingness campaign, TCS Culture Survey was rolled out and responded to by over 7,000 employees across 7 geographies.
• Employee Engagement: Over 84,000 employees participated in DEI learning programs and diversity celebration month.
• Supplier Diversity: TCS has a Supplier Diversity Program that identifies certified diverse suppliers that can provide competitive, high-quality goods and services, whose business model is aligned with the companys business strategy.
Talent Development
TCS strongly believes that every employee should have access to market relevant learning opportunities for career growth and no TCSer should be left behind. The company has adopted a segmented approach to learning to ensure this.
TCS Elevate: TCS pioneering program linking learning to career growth and reward covered over 407,000 employees. Over
22,000 employees were identified as high talent and received increased compensation.
Contextual Masters: TCS program to identify tenured employees with contextual knowledge of the customers business and technology landscape, continues to expand. The company has over 64,000 Contextual Masters who are being groomed to be next generation transformation leaders with specially curated leadership development programs designed in collaboration with Ivy league institutions.
Key Metrics:
• 60,000 open positions fulfilled using up-skilled / crossskilled employees.
• TCSers invested in 82.4 hours of learning on average during the year.
• TCSers acquired 53,000 certifications on various
hyperscaler cloud technologies during the year. With over
110,000 cloud certified employees in total, TCS is the #1 partner for Google and #2 partner for Microsoft Azure.
• 500,000 employees trained in digital technologies, with an average of ~7.5 competencies per employee.
• 568,000 employees have acquired Agile competency, with
495.000 of them groomed as Agile practitioners, over
35.000 as Agile certified and about 3,000 as mentors and coaches.
• Taking advantage of the large numbers of employees who started returning to office after two years of entirely virtual working, the company adopted an increasingly phygital (physical + digital) approach to learning and development. Over 80,000 TCSers benefited from in-person training during the year.
Building on Belief through Purposeful People Policies
Based on feedback received from employees, evolving needs of the workforce and best practices in the field of human capital management, the company makes refinements to existing policies and introduces new policy. In FY 2023, TCS:
• Introduced a new policy on workforce fluidity, in keeping with its talent cloud strategy, that encourages employees to take ownership of their careers by seeking new and challenging opportunities at defined periodicity.
• Introduced a policy on flexible work arrangements, which provides necessary support and flexibility for caregivers of young children, expectant women employees, and persons with disability.
• Extended its policy on DEI to include gender identity, individuals with mental variations and HIV/Aids affected persons at the workplace, and to comply with relevant inclusivity laws.
Talent Transformation
TCS has multiple initiatives to help employees grow in their careers:
• Mentoring: TCS has been building a culture of mentoring and coaching in the organization through systemic intervention programs as part of its Mentor Capability Building Framework. This was further strengthened during the year with the introduction of two new certifications
- Platinum and NexGen certification in mentoring. TCS currently has about 36,000 mentors in the organization of whom more than 3,500 Gold and Silver certified.
• iConnect is a highly collaborative tool designed to help employees reach out to senior mentors for guidance on career paths, and have face to face dialogues about their role and career. In FY 2023, over 29,000 iConnect sessions were initiated.
• Talent Review is TCS process to assess and review the leadership pool in the organization. It enables leaders to share their career aspirations and preferences of mobility, followed by an assessment of their leadership attributes. The objective of the program is to create and sustain a healthy leadership pipeline.
• Exciting Opportunities is the internal platform to publish niche and critical open positions to the leadership and
high potential communities, thereby facilitating talent mobility. This embodies the companys philosophy of giving the first right of refusal for all leadership positions to internal candidates, thereby enabling better leadership development and building strong organizational loyalty.
Competitive Compensation
TCS business model depends on its ability to attract and retain talent in the highly competitive, global market for software engineers with graduate or post-graduate degrees in engineering and with relevant technical skills.
Compensation levels are merit based, determined by qualification, experience levels, special skills if any, and individual performance. Compensation structures are driven by prevailing practices in each country that TCS operates in.
The merit based, democratized, transparent talent framework - Elevate, is designed to establish a tighter linkage between learning, skill development, career and reward. The company regularly benchmarks its compensation plans and benefits with the market to ensure competitiveness.
At TCS, three months notice is required from either side for termination6. Although most of the organizations activities are performed by full-time employees, TCS uses contractors, especially for short-term assignments or those requiring skills not internally available.
Engagement with Purpose
With more employees returning to work, various programs were run to enable higher levels of engagement. More than
320,000 employees were engaged through townhalls and project confluences with an emphasis on Living my Values,
Build my Career and Lifelong Learning. The company enabled more than 22,000 mentoring sessions and over 15,000 career conversations.
Highlights of the companys key engagement forums:
• New Joinee Integration: Various structured programs such as meet and greet sessions, workplace visits and leader connects were organized to improve the integration experience of new joiners at various milestones of their induction in the initial one year. The effectiveness of these programs was demonstrated by the high 83% iBelong satisfaction index.
• TCS Cares: Aims to build an emotionally strong and mentally resilient workforce. A special edition targeting leaders saw participation by over 1,100 leaders. 87% of participants agreed that it helped in their wellbeing and 80% agreed that their productivity increased after attending this program.
• Fit4life: Builds a fraternity of health and fitness conscious employees and creates a culture of fitness. 54,000 active participants logged physical activity equivalent to running 24 million kms.
• Purpose4Life: Forum for volunteering for community projects in the areas of education, health and environment. More than 40,000 volunteers participated in various social
6 GRI 402-1
outreach initiatives, contributing 898,000 volunteering hours that benefited 394,000 individuals in the community.
• PULSE: Pulse 2022 recorded an enthusiastic participation with more than 400k employees taking in the survey. TCS has achieved Satisfaction Index of 79.5 and Engagement Index of 81.0.
Other engagement and collaboration platforms in TCS include:
• Knome, KnowMax, GEMS: Platforms for social collaboration within the organization, learning, sharing and for rewards and recognition.
• Safety First: Initiative focused on employee safety and security.
• Maitree: Community of TCSers and their families who plan activities that help create a bond among employees and promote work-life balance.
Employee Retention
TCS values-driven culture, progressive HR policies, and philosophy of investing in people and empowering them have been integral to creating a culture of belonging and One TCS and also made it an industry benchmark in talent retention.
The companys philosophy of grooming leadership from within, and giving first right of refusal to internal talent for new open positions, inspires higher levels of loyalty to the organization. This has resulted in a very strong, deeply acculturated mid-layer with long tenures in the company. This cohort played a pivotal role in seamlessly integrating new talent in FY 2023 and added significant value through their contributions and contextual knowledge.
Unprecedented levels of employee churn across the industry drove TCS attrition to an all-time high in the first half of FY 2023. It trended down in the second half. IT services attrition was 20.1% on an LTM basis.
Occupational Health and Safety
TCS has a well-defined Occupational Health and Safety (OHS) policy and supporting processes to ensure the safety and well-being of its employees. Safety lead and lag indicators are measured across the organization and reported. The Stakeholders Relationship Committee in the Board reviews the companys health and safety performance on a half-yearly basis. Over 94% of the workforce is represented in joint management- employee health and safety committees that monitor, advise, and drive occupational, health and safety initiatives.
TCS is certified to ISO 45001:2018 Occupational Health and Safety Management System standard across 127 of its facilities worldwide covering approximately 94% of its total footprint.
The company continued to focus on creating ergonomic awareness including correct postures and workstation stretches for an office-based work environment and remote working environment, as employees worked in hybrid mode during the year. General safety awareness (fire safety, office safety, road safety etc.,) and safety incident reporting awareness was also provided to employees through monthly themes and campaign initiatives. There were also several fitness programs, including yoga and meditation practices, mental health and wellbeing which drew employee participation.
FINANCIAL PERFORMANCE OVERVIEW
The discussions in this section relate to the consolidated, Rupee-denominated financial results pertaining to the year that ended March 31, 2023. The financial statements of Tata Consultancy Services Limited and its subsidiaries (collectively referred to as TCS or the Company) are prepared in accordance with the Indian Accounting Standards (referred to as ‘Ind AS) prescribed under section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, as amended from time to time. Significant accounting policies used in the preparation of the financial statements are disclosed in the notes to the consolidated financial statements.
The following table gives an overview of the consolidated financial results of the company:
( crore)
| FY 2023 | FY 2022 |
||||
| Amount | % of Revenue | % Growth | Amount | % of Revenue | |
| Revenue from operations | 225,458 | 100.0 | 17.6 | 191,754 | 100.0 |
| Earnings before interest, tax, depreciation and amortization (EBITDA) (before other income) | 59,259 | 26.3 | 11.7 | 53,057 | 27.7 |
| Profit Before Tax (PBT) | 56,907 | 25.2 | 10.1 | 51,687 | 27.0 |
| Profit after tax attributable to shareholders of the company | 42,147 | 18.7 | 10.0 | 38,327 | 20.0 |
| Earnings per share (in ) | 115.19 | 11.2 | 103.62 | ||
Analysis of revenue growth
On a reported basis, TCS revenue grew 17.6% in FY 2023, compared to 16.8% in the prior year. The growth was driven by accelerated spending on digital transformation initiatives, cloud adoption and increased outsourcing, aided by currency benefit.
Average currency exchange rates during FY 2023 for the three major currencies are given below:
| Currency | Weightage (%) | FY 2023 | FY 2022 | % Change YoY |
| USD | 56.0 | 80.74 | 74.61 | 8.2 |
| GBP | 12.8 | 96.98 | 101.50 | (4.5) |
| EUR | 10.8 | 84.01 | 86.36 | (2.7) |
Movements in currency exchange rates through the year resulted in a positive impact of 3.9% on the reported revenue. The constant currency revenue growth for the year, which is the reported revenue growth stripped of the currency impact, was 13.7%.
| Growth attributable to | FY 2023 (%) | FY 2022 (%) |
| Business growth | 13.7 | 15.4 |
| Impact of exchange rate | 3.9 | 1.4 |
| Total Growth | 17.6 | 16.8 |
Segmental Performance
The revenue break-up by Industry Vertical and Geography is provided below:
Segment revenues, year on year growth, a brief commentary and segment margins are provided below:
| Industry Vertical | Segment Revenue FY 2023 (FY2022) ^ crore | YoY
Revenue Growth % |
Key Demand Drivers7 | Segment Margin FY 2023 (FY
2022)
% |
| Banking, Financial | 86,127 | 14.6 | • AI for risk monitoring and management, fraud detection and | 25.9 |
| Services and | (75,126) |
trading strategies. | (26.9) |
|
| Insurance | • Customer journey transformation, ecosystem strategies for new products and services, connected insurance, fintech adoption. | |||
| • Decentralized finance, embedded finance, Banking as a Service, document custody transformation. | ||||
| • Sustainability and climate change initiatives, green lending. | ||||
| Communication, | 37,653 | 18.1 | • 5G and fiber rollout, network virtualization, cloud enablement, | 28.3 |
| Media and Technology | (31,874) |
product, and platform
engineering.
• AI-monitored networks, generative AI for automated content creation. |
(29.9) |
|
| • Hyper-personalization, immersive experiences in gaming, recommendation engines. | ||||
| Retail and | 37,506 | 22.1 | Retail and Consumer Packaged Goods (CPG): | 25.7 |
| Consumer Business | (30,715) |
• Marketplace, social commerce, future stores, digital advertising platform, payments. | (27.8) |
|
| • Smart shelves, smart manufacturing, automated micro-fulfilment centers. | ||||
| • Resilient and intelligent supply chain, partner integration, track and trace, last-mile delivery, AI enabled inventory management. | ||||
| • Seamless and unified
customer experience across channels
(omni-channel), hyper personalization, CX and recommendations, AI for apparel design and personalized fashion recommendations. |
||||
| • Green labeling. | ||||
| Travel, Transportation and Hospitality (TTH): | ||||
| • Retailing in airlines, new distribution capability, experiential selling and non-booking revenues in hospitality, decision intelligence. | ||||
| • Automation and
self-service, touchless experience, digital
identity solutions, maintenance drones in airlines, autonomous vehicles, and robots in airports. |
||||
| • Warehouse robotics, intelligent shipment planning, last mile delivery, real-time operations visibility, AI-enabled pricing, end- to-end shipment visibility in logistics. | ||||
| • Safe and sustainable travel. |
7 Only industry specific drivers are listed. In addition, every industry vertical saw demand for TCS services around IT estate rationalization, core platform simplification, application and data modernization, ERP modernization, cloud enablement, cloud migration, data democratization, data compliance and protection, IT infrastructure modernization, employee experience redesign, digital workplace transformation, cyber security, intelligent automation, business and IT operating model transformation, agile and DevOps adoption, digital marketing and analytics, mergers, acquisitions and divestitures, supply chain transformation, vendor consolidation and cost optimization.
| Industry Vertical | Segment Revenue FY 2023 (FY2022) ^ crore | YoY
Revenue Growth % |
Key Demand Drivers7 | Segment Margin FY 2023 (FY
2022)
% |
| Life Sciences and Healthcare | 24,605
(20,462) |
20.2 | Life Sciences:
• Drug discovery, virtual clinical trials, connected labs, and instruments. |
28.0
(30.0) |
| • Digital twin for manufacturing and factory of the future. | ||||
| • AI-led pharmacovigilance and product surveillance. | ||||
| Healthcare: | ||||
| • Patient experience, health data platforms. | ||||
| • Wearable devices, mobile health. | ||||
| • AI powered diagnosis, treatment planning, digital surgery, personalized medicine. | ||||
| Manufacturing | 21,236
(18,610) |
14.1 | • Integration across silos
and digital twins for product innovation.
• Connected assets and plants, remote asset management. • Resilient supply chain, parts track and trace. • Front-end digital investments to enhance customer experience. |
27.5
(30.1) |
| • Plant safety, energy efficiency and decarbonization, emission tracking and monitoring, sustainability focus on facilities waste management and energy, EVs. | ||||
| Others | 18,331
(14,967) |
22.5 | • Connected ecosystems for utilities, connected home, smart metering and alerts, virtual power plants, remote monitoring and infra inspection. | 21.1
(20.6) |
| • AI-enabled smart grids, patterns, and predictions. | ||||
| • Energy transition, emission detection and monitoring in critical infrastructure. |
Business Outlook
Global growth is projected to moderate from 3.4 percent in 2022 to 2.8 percent in 20238 , weighed down by central banks raising interest rates to fight inflation, and Russias war in Ukraine. In major economies, the heightened risk of a recessior - made worse by a banking crisis - has led to uncertainty in enterprise decision-making, affecting spending on capex and certain discretionary programs.
Despite this, spending on IT services has been resilient so far. Cloud migration programs are continuing apace, and clients continue to launch new G&T projects. The higher level of uncertainty in the business environment has made clients more receptive to proactive proposals around IT and business operating model transformations that can not only deliver significant efficiencies but also help them become more agile and resilient. All this has resulted in a strong order book for
FY 2023, at $34.1 Bn, which is 1.2 times revenue. The pipeline has also grown well.
This provides visibility on medium-term growth amid nearterm uncertainty. If the delayed decision-making and cash conservation seen in some segments at the end of FY 2023 flows over into the first half of FY 2024, that could result in some moderation in full year revenue growth after two years of strong growth.
Key demand drivers expected to power the companys growth in FY 2024 include:
• Technology transformation: IT infrastructure
modernization, cloud enablement, application and data estate modernization, cloud migration, data centre and collocated data support, digital workplace, digital twins, cyber security, ERP modernization, low-code no-code, 5G/ Edge and AI adoption.
• G&T: Customer experience transformation using personalization, omnichannel implementation, immersive experiences using XR/Metaverse, product and business model innovation, supply chain modernization, M&A integration / divestitures, sustainability.
• Operations: Traditional outsourcing, vendor consolidation and multi-services deals, AI/ML-led transformation of IT
/ business operations for greater resilience and leaner operating models, managed services models and real time operation visibility.
Enterprise Risk Management9
FY 2023 saw multiple external and internal challenges continuing to shape the overall risk profile of the company. Macroeconomic and geo-political risks had an impact throughout the year.
The Russia-Ukraine war and geo-political tensions, trade wars and imposed sanctions were pervasive and had direct and cascading impacts on economies and businesses. Shortages, rising inflation, supply-chain disruptions, energy crisis led to further uncertainties in the economic growth environment, with the year ending with banking industry upheavals in US and Europe. During the year, IT organizations including TCS faced the
knock-on effects of the pandemic including attrition and impact of hybrid modes of working. Technological advancements and breakthroughs like generative AI and metaverse have opened up new vistas of both risks and opportunities.
TCS continues to monitor this uncertain and dynamic business environment very closely and has strengthened the deployment of its Enterprise Risk Management framework to address the risks and leverage the associated opportunities. This framework enables risk identification, risk assessment, risk response planning and actions, risk monitoring and overall risk governance. Key risk indicators and control indicators are used to anticipate risks and assess effectiveness of their mitigation actions respectively.
TCS takes a holistic view of its enterprise risk profile, covering strategic, operational, compliance, financial and catastrophic risks, thus enabling informed decision-making. Risks are assessed and managed at various levels with a top-down and bottom-up approach across the enterprise, business units, geographies, business functions, customer relationships and individual projects.
Listed below are some of the key risks, anticipated impact on the company and mitigation strategies.
Internal Financial Control Systems and their Adequacy
TCS has aligned its current systems of internal financial control with the requirement of Companies Act, 2013, on the lines of the globally accepted risk-based framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. The Internal Control - Integrated Framework (the 2013 framework) is intended to increase transparency and accountability in an organizations process of designing and implementing a system of internal control. The framework requires a company to identify and analyze risks and manage appropriate responses. The company has successfully laid down the framework and ensured its effectiveness.
TCS internal controls are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use, executing transactions with proper authorization and ensuring compliance with corporate policies. TCS has a well-defined delegation of power with authority limits for approving contracts as well as expenditure. Processes for formulating and reviewing annual and long-term business plans have been laid down.
TCS uses a state-of-the-art enterprise resource planning (ERP) system that connects all parts of the organization, to record data for accounting, consolidation and management information purposes. It has continued its efforts to align all its processes and controls with global best practices.
TCS management assessed the effectiveness of the companys internal control over financial reporting (as defined in Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR) as of March 31, 2023.
B S R & Co. LLP, the statutory auditors of TCS have audited the financial statements included in this annual report and have issued an attestation report on the companys internal control over financial reporting (as defined in section 143 of Companies Act, 2013).
TCS has appointed PricewaterhouseCoopers Services LLP (PwC) LLP to oversee and carry out internal audit of its activities. The audit is based on an internal audit plan, which is reviewed each year in consultation with the statutory auditors and approved by the Audit Committee. In line with international practice, the conduct of internal audit is oriented towards the review of internal controls and risks in the companys operations such as software delivery, accounting and finance, procurement, employee engagement, travel, insurance, IT processes, including the subsidiaries and foreign branches.
TCS also undergoes periodic audit by specialized third party consultants and professionals for business specific compliances such as quality management, service management, information security, etc. The Audit Committee reviews reports submitted by the management and audit reports submitted by internal auditors and statutory auditors. Suggestions for improvement are considered and the audit committee follows up on corrective action. The audit committee also meets TCS statutory auditors to ascertain, inter alia, their views on the adequacy of internal control systems and keeps the board of directors informed of its major observations periodically.
Based on its evaluation (as defined in section 177 of Companies Act 2013 and Regulation 18 of SEBI LODR), TCS Audit Committee has concluded that, as of March 31, 2023, the companys internal financial controls were adequate and operating effectively.
Performance Trend - 10 years
| Ind AS | ndian GAAI | |||||||||||
| FY 2023 | FY 2022 | FY 2021* | FY 2021 | FY 2020 | FY 2019 | FY 2018 | FY 2017 | FY 2016 | FY 2015# | FY 2015 | FY 2014 | |
| Revenue from operations | ||||||||||||
| Total revenue from operations | 225,458 | 191,754 | 164,177 | 164,177 | 156,949 | 146,463 | 123,104 | 117,966 | 108,646 | 94,648 | 94,648 | 81,809 |
| Revenue by geographic segments | ||||||||||||
| Americas | 124,336 | 100,072 | 84,278 | 84,278 | 82,000 | 77,562 | 66,145 | 66,091 | 60,011 | 51,053 | 51,053 | 45,259 |
| Europe | 67,436 | 61,142 | 52,346 | 52,346 | 48,037 | 43,456 | 34,155 | 30,038 | 29,092 | 26,730 | 26,730 | 23,433 |
| India | 11,271 | 9,805 | 8,449 | 8,449 | 8,964 | 8,393 | 7,921 | 7,415 | 6,729 | 6,108 | 6,108 | 5,488 |
| Others | 22,415 | 20,735 | 19,104 | 19,104 | 17,948 | 17,052 | 14,883 | 14,422 | 12,814 | 10,757 | 10,757 | 7,629 |
| Cost | ||||||||||||
| Employee cost | 127,522 | 107,554 | 91,814 | 91,814 | 85,952 | 78,246 | 66,396 | 61,621 | 55,348 | 48,296 | 50,924 | 40,486 |
| Other operating cost | 38,677 | 31,143 | 25,817 | 27,035 | 28,888 | 28,711 | 24,192 | 24,034 | 22,621 | 19,242 | 19,242 | 16,170 |
| Total cost (excluding interest & depreciation) | 166,199 | 138,697 | 117,631 | 118,849 | 114,840 | 106,957 | 90,588 | 85,655 | 77,969 | 67,538 | 70,166 | 56,656 |
| Profitability | ||||||||||||
| EBITDA (before other income) | 59,259 | 53,057 | 46,546 | 45,328 | 42,109 | 39,506 | 32,516 | 32,311 | 30,677 | 27,110 | 24,482 | 25,153 |
| Profit before tax | 56,907 | 51,687 | 44,978 | 43,760 | 42,248 | 41,563 | 34,092 | 34,513 | 31,840 | 28,437 | 25,809 | 25,402 |
| Profit after tax attributable to shareholders of the Company | 42,147 | 38,327 | 33,388 | 32,430 | 32,340 | 31,472 | 25,826 | 26,289 | 24,270 | 21,912 | 19,852 | 19,164 |
| Financial Position | ||||||||||||
| Equity share capital | 366 | 366 | 370 | 370 | 375 | 375 | 191 | 197 | 197 | 196 | 196 | 196 |
| Reserves and surplus | 90,058 | 88,773 | 87,014 | 86,063 | 83,751 | 89,071 | 84,937 | 86,017 | 70,875 | 52,499 | 50,439 | 48,999 |
| Gross block of property, plant and equipment | 32,344 | 30,300 | 28,658 | 28,658 | 26,444 | 24,522 | 22,720 | 20,891 | 19,308 | 16,624 | 16,624 | 13,162 |
| Total investments | 37,163 | 30,485 | 29,373 | 29,373 | 26,356 | 29,330 | 36,008 | 41,980 | 22,822 | 1,662 | 1,662 | 3,434 |
| Net current assets | 66,712 | 65,959 | 66,076 | 65,125 | 63,177 | 70,047 | 63,396 | 65,804 | 47,644 | 30,726 | 28,495 | 27,227 |
| Earnings per share in ? | ||||||||||||
| EPS- as reported | 115.19 | 103.62 | 89.27 | 86.71 | 86.19 | 83.05 | 134.19 | 133.41 | 123.18 | 111.87 | 101.35 | 97.67 |
| EPS- adjusted for Bonus Issue | 115.19 | 103.62 | 89.27 | 86.71 | 86.19 | 83.05 | 67.10 | 66.71 | 61.59 | 55.94 | 50.68 | 48.84 |
| Headcount (number) | ||||||||||||
| Headcount (including subsidiaries) as on March 31st | 614,795 | 592,195 | 488,649 | 488,649 | 448,464 | 424,285 | 394,998 | 387,223 | 353,843 | 319,656 | 319,656 | 300,464 |
Overview of Funds Invested
Funds invested exclude earmarked balances with banks and equity shares measured at fair value through other comprehensive income.
( Crore)
| FY 2023 | FY 2022 | FY 2023 | FY 2022 | FY 2023 | FY 2022 | |
Current |
Non-current |
Total funds invested |
||||
| Investments in mutual funds, Government | 36,897 |
30,262 |
230 |
187 |
37,127 |
30,449 |
| securities and others | ||||||
| Deposits with banks | 8,223 | 15,784 | 1,334 | 1,232 | 9,557 | 17,016 |
| Inter-corporate deposits | 846 | 6,074 | 170 | 303 | 1,016 | 6,377 |
| Cash and bank balances | 2,124 | 2,211 | - | - | 2,124 | 2,211 |
| Total | 48,090 | 54,331 | 1,734 | 1,722 | 49,824 | 56,053 |
Total invested funds include ?2,080 crore and ?1,722 crore for FY 2023 and FY 2022, respectively, pertaining to trusts and TCS Foundation held for specified purposes.
Ratio Analysis - 10 years
Ind As |
Indian GAAP |
||||||||||||
| Unit | FY
2023 |
FY
2022 |
FY
2021* |
FY
2021 |
FY
2020 |
FY
2019 |
FY
2018 |
FY
2017 |
FY
2016 |
FY
2015# |
FY
2015 |
FY
2014 |
|
| Ratios - Financial Performance | |||||||||||||
| Employee Cost / Total Revenue | % | 56.6 | 56.1 | 55.9 | 55.9 | 54.8 | 53.4 | 53.9 | 52.2 | 50.9 | 51.0 | 53.8 | 49.5 |
| Other Operating Cost / Total Revenue | % | 17.1 | 16.2 | 15.7 | 16.5 | 18.4 | 19.6 | 19.7 | 20.4 | 20.9 | 20.4 | 20.3 | 19.8 |
| Total cost (excluding interest & depreciation) / Total Revenue | % | 73.7 | 72.3 | 71.6 | 72.4 | 73.2 | 73.0 | 73.6 | 72.6 | 71.8 | 71.4 | 74.1 | 69.3 |
| EBITDA (Before Other Income) / Total Revenue | % | 26.3 | 27.7 | 28.4 | 27.6 | 26.8 | 27.0 | 26.4 | 27.4 | 28.2 | 28.6 | 25.9 | 30.7 |
| Profit Before Tax / Total Revenue | % | 25.2 | 27.0 | 27.4 | 26.7 | 26.9 | 28.4 | 27.7 | 29.3 | 29.3 | 30.0 | 27.3 | 31.1 |
| Tax / Total Revenue | % | 6.5 | 6.9 | 7.0 | 6.8 | 6.2 | 6.8 | 6.7 | 6.9 | 6.9 | 7.2 | 6.6 | 7.4 |
| Effective Tax Rate - Tax / PBT | % | 25.7 | 25.6 | 25.5 | 25.6 | 23.2 | 24.1 | 24.1 | 23.6 | 23.6 | 23.5 | 23.7 | 23.9 |
| Profit After Tax / Total Revenue | % | 18.7 | 20.0 | 20.3 | 19.8 | 20.6 | 21.5 | 21.0 | 22.3 | 22.3 | 23.2 | 21.0 | 23.4 |
| Ratios - Growth | |||||||||||||
| Total Revenue | % | 17.6 | 16.8 | 4.6 | 4.6 | 7.2 | 19.0 | 4.4 | 8.6 | 14.8 | 15.7 | 15.7 | 29.9 |
| EBITDA (Before Other Income) | % | 11.7 | 14.0 | 10.5 | 7.6 | 6.6 | 21.5 | 0.6 | 5.3 | 25.3 | 7.8 | (2.7) | 39.4 |
| Profit After Tax | % | 10.0 | 14.8 | 3.2 | 0.3 | 2.8 | 21.9 | (1.8) | 8.3 | 22.3 | 14.3 | 3.6 | 37.7 |
| Ratios - Balance Sheet | |||||||||||||
| Debt (excluding lease liabilities) - Equity Ratio | Times | - | - | - | - | - | - | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Current Ratio | Times | 2.5 | 2.6 | 3.0 | 2.9 | 3.3 | 4.2 | 4.6 | 5.5 | 4.1 | 3.9 | 2.4 | 2.7 |
| Days Sales Outstanding (DSO) in terms | Days | 67 | 65 | 67 | 67 | 71 | 68 | 74 | 70 | 81 | 79 | 79 | 81 |
| Days Sales Outstanding (DSO) in $ terms | Days | 65 | 64 | 68 | 68 | 67 | 69 | 74 | 73 | 80 | 78 | 78 | 82 |
| Invested Funds / Capital Employed | % | 50.4 | 57.4 | 52.6 | 53.1 | 47.7 | 55.2 | 55.6 | 55.8 | 45.8 | 42.3 | 43.9 | 44.0 |
| Capital Expenditure / Total Revenue | % | 1.4 | 1.5 | 1.9 | 1.9 | 2.0 | 1.5 | 1.5 | 1.7 | 1.8 | 3.1 | 3.1 | 3.8 |
Ind As |
Indian GAAP |
||||||||||||
| Unit | FY
2023 |
FY
2022 |
FY
2021* |
FY
2021 |
FY
2020 |
FY
2019 |
FY
2018 |
FY
2017 |
FY
2016 |
FY
2015# |
FY
2015 |
FY
2014 |
|
| Operating Cash Flows / Total Revenue | % | 18.6 | 20.8 | 23.6 | 23.6 | 20.6 | 19.5 | 20.4 | 21.4 | 17.6 | 20.5 | 20.5 | 18.0 |
| Free Cash Flow / Operating Cash Flow Ratio | % | 92.7 | 92.6 | 91.9 | 91.9 | 90.5 | 92.5 | 92.8 | 92.3 | 89.7 | 84.8 | 84.8 | 78.9 |
| Depreciation of Property, Plant and Equipment / Average Gross Block of Property, Plant and Equipment | % | 9.2 | 9.1 | 8.7 | 8.7 | 8.6 | 8.5 | 9.1 | 9.5 | 10.0 | 11.7 | 11.7 | 10.6 |
| Ratios - Per Share | |||||||||||||
| EPS- adjusted for Bonus | 115.19 | 103.62 | 89.27 | 86.71 | 86.19 | 83.05 | 67.10 | 66.71 | 61.59 | 55.94 | 50.68 | 48.84 | |
| Price Earnings Ratio, end of year | Times | 27.8 | 36.1 | 35.6 | 36.6 | 21.2 | 24.1 | 21.2 | 18.2 | 20.4 | 22.8 | 25.1 | 21.8 |
| Dividend Per Share | 115.00 | 43.00 | 38.00 | 38.00 | 73.00 | 30.00 | 50.00 | 47.00 | 43.50 | 79.00 | 79.00 | 32.00 | |
| Dividend Per Share- adjusted for Bonus | 115.00 | 43.00 | 38.00 | 38.00 | 73.00 | 30.00 | 25.00 | 23.50 | 21.75 | 39.50 | 39.50 | 16.00 | |
| Market Capitalization / Total Revenue | Times | 5.2 | 7.1 | 7.2 | 7.2 | 4.4 | 5.1 | 4.4 | 4.1 | 4.6 | 5.3 | 5.3 | 5.1 |
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