Tag: Tata Consultancy Services

TCS CEO Krithivasan earned $3 million in first year at top job

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Tata Consultancy Services, India’s top IT services firm, said its CEO K Krithivasan earned ₹25.36 crore ($3.04 million) in the financial year 2024, making him likely the lowest-paid CEO among top the four Indian IT firms.

The commissions tied to TCS’ annual profit made up a key chunk of Krithivasan’s compensation, the company said in its annual report on Thursday. The company’s profit rose 9% in the year, at a time when the $254-billion IT sector struggled with weak client demand amid recession fears.

TCS is the first Indian IT firm to release its annual report for the previous financial year.

Infosys CEO Salil Parekh made $6.76 million in the financial year 2023, while HCLTech CEO C Vijayakumar made $3.46 million and Wipro’s former CEO Thierry Delaporte earned $10 million.

Wipro’s new CEO Srinivas Pallia stands to earn between $4.5 million and $7 million annually for the next two years.

“Krithivasan’s compensation looks comparatively lower than peers as the other top four were external candidates that joined the companies when they were in turmoil. Relatively, TCS has been a steady ship,” said Shriram Subramanian, founder of proxy advisory firm InGovern Research Services.

Krithivasan was named TCS CEO on June 1, 2023, two months into the fiscal year. His compensation includes the salary paid to him for April and May, when he oversaw its banking, financial services and insurance business.

As of March 31, Krithivasan held 11,232 shares in the company, which are worth ₹4.46 crore as of Wednesday’s close.

“TCS’ compensation has always been conservative when compared to the market because that is the Tata way of working where compensation alone isn’t a key value proposition,” said K Sudarshan, managing director at executive search firm EMA Partners.

Rajesh Gopinathan, Krithivasan’s predecessor, had earned ₹29.16 crore in fiscal year 2023.

Also Read: TCS chairman Chandra says these mega trends are shaping future priorities

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TCS Chief says AI will kill the call centre industry within a year

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The head of IT giant Tata Consultancy Services (TCS) believes that the growth of artificial intelligence will soon kill India’s call centre industry.

In an interview with the Financial Times, TCS CEO K Krithivasan said that there will be a “minimal” need for call centres across Asia in as soon as a year.

Krithivasan highlighted that while no job cuts have happened yet, the widespread adoption of generative AI among multinational clients is poised to revolutionise traditional call centre operations.

“In an ideal phase, if you ask me, there should be very minimal incoming call centres having incoming calls at all,” he told FT. “We are in a situation where the technology should be able to predict a call coming and then proactively address the customer’s pain point.”

The potential impact of generative AI on white-collar jobs, including call centre agents and software developers, has sparked concerns among policymakers globally.

India, renowned for its back-office services, particularly faces significant implications, with over five million people employed in the $48.9 billion IT and business process outsourcing industry, according to nasscom.

There are growing concerns about the impact of AI on jobs, particularly in India’s over $250 billion technology sector, which contributes significantly to the country’s overall GDP.

TCS, a key player in India’s technology landscape and a subsidiary of the Tata conglomerate, boasts a workforce of over 600,000 and annual revenues nearing $30 billion.

However, Krithivasan cautioned against overestimating the immediate benefits of generative AI, asserting that the true impact would be more long-term. He refuted claims of widespread job loss, arguing that the demand for technology talent would only increase, particularly in India.

nasscom had previously projected that less than 20% of India’s 1.5 million engineering students who graduate each year find work in the industry.

“If we can go to maybe 50% of the colleges, we provide more employment, and more importantly, we will be able to address the technology demand the overall global industry is going to have,” he further told FT.

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Has Gen AI impacted hiring at TCS? CHRO Milind Lakkad weighs in

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In an interview with CNBC-TV18, Samir Seksaria, the Chief Financial Officer of TCS, and Milind Lakkad, the Chief Human Resources Officer at TCS, discussed the reasons behind the moderation in headcount for the third consecutive quarter and the sustainability of margin growth.

Lakkad also shared insights into the potential changes in hiring patterns due to the increasing adoption of generative artificial intelligence.

Below is the verbatim transcript of the interview.

Q: Is margin growth sustainable?

Seksaria: We are very pleased with it, we are touching our guiding beacon and that’s something which we have always believed in. So that’s 100 basis points sequential improvement. And if you look at it, that’s in spite of a 90 basis points headwind coming in from higher third party expenses, and increased travel expenses, which was offset by 190 basis points coming in from bottoming out of subcontractor costs and productivity and utilisation gains.

Q: So subcontractor costs has bottomed out?

Seksaria: We believe so, it’s at 4.6%. That’s 150 basis points lower than the previous quarter. I think now, it would still depend on the macro how it plays out, but we believe it has bottomed out.

Q: What’s the outlook on margins going ahead? Does it stay at 26% other than the wage hike quarter, say next time exit margins for FY25, can it be better?

Seksaria: So let us be happy with what we have been able to deliver in FY24. And exiting Q4 at 26% is really special. We are happy with it. If you look at the past three quarters, you’re almost delivered 100 basis points sequentially, plus minus, but 100 basis points coming in each of the quarters. We will continue our focus on disciplined execution.

Q: N Ganapathy Subramaniam (NGS) was telling us earlier that FY25 is going to be much better than FY24. So there is a bit of an operating leverage or whatever you want to call it, so margins perhaps could be better if growth picks up

Seksaria: Growth is a big lever on margins and if growth picks up, and is better, it will accelerate the margin journey.

Q: Headcount is down for the third consecutive quarter. So do you think it’s going to continue to moderate from here on?

Lakkad: Samir talked about productivity, and utilisation, all of that stuff is all coming together and plus our investment made in the past all of that coming together is what this result is going to be. Last quarter, you asked me and I said yeah, I will not be surprised if it is negative and it is this turned out to be lesser negative number. So we expect to drive the same kind of efficiency going forward. Growth will come, we will hire more.

Read Here | TCS explains the changing role of developers amid AI adoption

Q: So to drive this efficiency is it possible the next quarter again, headcount decline? Would you be surprised?

Lakkad: Let me put it this way, it is a function of our efficiency, what we hire, how many we hire, and eventually what the business growth is going to be all of this together, whatever that outcome will be, will be.

Q: No, my point was now with AI, etc., as well, can you give us a broad sense how many people that you potentially would have hired, you did not because of these new technologies, I mean, if you can give us some sense of that?

Lakkad: It is too early to say that, currently we are in a proof of concepts (POCs) mode, we are doing hundreds of POCs, actually 300 plus POCs, we are doing right now across, with our customers. All of that and eventually come coupled with all the other enterprise related challenges, all of this will take some time to basically come to that point. So we will play and we will obviously, keep you posted as we go along.

Q: But you don’t think it’s already happening?

Lakkad: It is not to the point of enterprise level changes at this point in time, customers are still testing out, customers are still figuring it out basically, how it is going to be all worked out, how eventually the accountability of the software generated by AI how it is going to be managed.

Q: On demand right now so far you are able to manage the current demand with a lower headcount, which is what’s driving your utilisation productivity, etc. When do you think the company will start hiring to meet demand which you can’t meet demand?

Lakkad: We are already hiring, we have hired a whole bunch of numbers, big numbers we are hiring. Yes, there are people who are leaving. The point is yes net headcount is dropping. Eventually, as the business start showing more positive signs, we are anyway going to ramp up like we always do.

For full interview, watch accompanying video

Also Read | TCS CEO says AI to be the ‘X-factor’ on determining how fast clients start spending

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TCS explains the changing role of developers amid AI adoption

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Multiple surveys by recruitment companies have shown both tech and non-tech firms’ rising demand for AI engineers, full stack developers and other ‘skilled techies,’ however, many still struggle to find jobs. India’s largest IT services firm Tata Consultancy Services (TCS) just validated the phenomenon and explained the changing role of developers.

In a post-Q4 earnings chat, TCS Chief Human Resources Officer (CHRO) Milind Lakkad was asked about the required talent pool given educators believe one doesn’t need to learn coding anymore since they can tell AI to write the code.

“At a basic level, you will always need programmers but a developer’s role will change. There will be an AI copilot which will work with you,” the CHRO explained, adding that it is now on the person to get the job done by the AI copilot and how. This role change is being reimagined at TCS and in the industry, he said.

When asked how many people TCS would have hired if not for AI and other new technologies, Lakkad said it was too early to say that.

TCS CEO K Krithivasan also said that the firm is doing over 200 AI engagements and that its pipeline is close to $900 million, AI and Generative AI.

“With any other cycle, there’ll be some realisation on what is possible here, what you should do with Gen AI, what you should not try to do with Gen AI because it’s fairly intense technology. Also, it is not going to come cheap…we will also try to understand how expensive it is or what are the economic benefits. It will probably take a few more quarters to understand which are the appropriate use cases for this technology.”

Reflecting on the net reduction in the employee headcount for the third quarter, Lakkad said, the firm has been hiring in big numbers but people are leaving and therefore the “net headcount” is dropping. Eventually, as business starts showing more positive signs, the company will ramp up like always, he asserted.

His remark comes as TCS saw a net decline of 1,759 employees in the January to March 2024 quarter, which takes the total workforce at the end of the 2023-24 fiscal to 601,546 — the lowest in the last two years.

The CHRO, meanwhile, boasted TCS of being the first one to go to campus for hiring. “We have already gone to private institutions and made 1,000s of offers,” he said, adding that experienced talent is hired every quarter based on the required demand.

He retained 40,000 as the freshers’ hiring target just like every year but with a caveat that it may not change significantly this year. “I cannot tell you exactly what that number will be.”

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TCS workforce shrinks for third straight quarter, now at the lowest in last two years

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Tata Consultancy Services (TCS) saw a net reduction of 1,759 employees in the January to March 2024 quarter, which takes the total workforce at the end of the 2023-24 fiscal to 601,546 — the lowest in the last two years, the firm’s earnings statement showed on April 12.

This marks the third consecutive quarter of declining total headcount at India’s largest IT services firm. In the October to December 2023 quarter, TCS witnessed a reduction of 5,680 employees, bringing the headcount to 603,305. Overall, in the fiscal year 2023-24, TCS has reduced its workforce by 13,249 employees.

The attrition rate, which measures employees leaving an organisation, continued to decrease and stood at 12.5% for the quarter under review.

Milind Lakkad, Chief HR Officer, commented on the developments, stating, “The reduced attrition rate of 12.5%, along with a positive response to our campus hiring, increased customer engagements, and employees returning to the office, has fostered a vibrant atmosphere in our delivery centres and boosted the morale of our associates.”

Also Read | TCS Q4 Results: EBIT margin best in 12 quarters, net profit of ₹12,240 crore

The CHRO also announced annual increments for the TCS workforce with top performers receiving double-digit hikes.

Meanwhile, Samir Seksaria, Chief Financial Officer, said: “In FY 2024, our disciplined approach to operations has helped us expand our industry-leading margins. In a challenging environment, we persisted with our long-term investments in workforce reskilling, research and innovation. We will continue to drive efficiencies and competitiveness to capture opportunities for growth with profitability.”

Also Read: TCS declares final dividend of ₹28 per share for FY24

TCS’ employee base comprises 35.6% women and employees with 152 nationalities. Year to date, TCSers have clocked 51 million learning hours and acquired 5 million competencies. IT services’ attrition was at 12.5% for the last 12 months, the firm said in a statement.

Track TCS Q4 results LIVE here

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TCS declares final dividend of ₹28 per share for FY24

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The board of Tata Consultancy Services Ltd (TCS) on Friday approved a final dividend of ₹28 per equity share for the financial year ending March 2024.

Along with the March quarter results, the Mumbai-based IT services giant said the dividend will be paid on the fourth day from the conclusion of the 29th Annual General Meeting, subject to approval from the shareholders.

TCS had declared an third interim dividend of ₹9 and a special dividend of ₹18 per share in January this year, following a ₹9 payout in October 2023.

Besides, it also came out with ₹ 17,000 crore share buyback in FY24.

In the past 12 months, TCS has declared an equity dividend amounting to ₹69 per share.

At the current market price, Tata Consultancy Services Ltd.’s dividend yield is 1.73%, according to data from Trendlyne.

Shares of TCS usually trade ex-dividend on the day of record date or a day before.

When a company goes ex-dividend on a particular date, its stock does not carry the value of the next dividend payment.

An ex-dividend date also dictates which shareholders are eligible to receive the dividend payment.

For the fourth quarter of FY24, TCS reported a net profit of ₹12,240 crore, a growth of 4.3% compared to the December quarter.

Analysts polled in a CNBC-TV18 estimate had pegged the net profit figure to be ₹12,080 crore.

In rupee terms, TCS reported a revenue growth of 1% as against the December quarter. The ₹61,237 crore figure was slightly lower than the ₹61,400 crore estimate from a CNBC-TV18 poll.

However, TCS’ constant currency revenue growth stood at 1.1% on a sequential basis, while the CNBC-TV18 poll had pegged a figure of 1.3%.

The 5% growth in EBIT (Earnings before Interest and Tax), or simply the operating profit, off ₹15,918 crore was better the street estimate of ₹15,515 crore.

The operating margin also widened 100 basis points to 26% from 25% three months earlier. It was better than the CNBC-TV18 poll of analysts that predicted the EBIT margin at 25.3%.

Ahead of the earnings announcement, shares of TCS ended 0.48% higher on the National Stock Exchange at ₹4,003.80.

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TCS Q4 Results 2024 Highlights: EBIT margin best in 12 quarters, net profit of ₹12,240 crore

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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TCS Q4 Results 2024 Highlights: The country’s largest software services company TCS on Friday reported a 9.1% growth in its March quarter net profit at ₹12,434 crore. The Tata Group company’s post-tax profit during the January-March period last year stood at ₹11,392 crore. In the fiscal year 2023-24, the company’s net profit grew 9% to ₹45,908 crore, as per an exchange filing. In the March quarter, its revenue grew 3.5% to ₹61,237 crore year on year. Its operating profit margin expanded by 1.50$ to 26%.

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Tata Sons to trim stake in TCS, likely to dodge the giant IPO

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Tata Sons, which had consolidated borrowings of ₹1.58 lakh crore as of March 2023, plans to offload as many as 2.3 crore shares in Tata Consultancy Services (TCS). The offer price for offloading has been set at ₹4,001 per share, with a discount of 3.6% to Monday’s closing price for TCS shares. The proposed deal will see the promoter raise at least ₹9,200 crore by offloading a 0.64% stake in the company.

The selling stake by Tata Sons could be the start of a fundraising exercise to reduce its debt at the group level so that it can avoid the mega-initial public offering (IPO). The consolidated borrowings of Tata Sons (other than debt securities) have increased by 8% to ₹1.58 lakh crore in FY23. 

Earlier in March, the market anticipated the company going public as it had been classified as an upper-layer non-banking financial company (NBFC) last year. Sensing an imminent listing, many group stocks, especially Tata Chemicals, Tata Investment Corp (TICL), and Automobile Corporation of Goa (ACG) had rallied up to 40% in less than seven sessions.

However, the news flow that propelled the rally in group stocks was short lived. Sources to CNBC-TV18 confirmed that the group is evaluating alternative measures to reduce debt at the group level. The latest move by Tata Sons could be an effort by the group to refrain from going public. As per the RBI mandate, an upper-layer NBFC has to get listed within three years of being notified. Tata Sons was classified as an upper-layer NBFC in September 2022.

Interestingly, dividend income contributed 95% of Tata Sons FY23’ revenue. The dividend for the year increased by 189% to ₹33,252 crore in FY23. Thanks to a big payout by the group’s cash cow, TCS. The dividend payout ratio of TCS was 158% in FY23, while Tata Sons’ holding stood at 72.4% at the end of December 2023. The net profit of Tata Sons for the year increased by 29% to ₹22,132 crore.

Further, the market value of Tata Sons holdings in various listed companies stood at ₹16 lakh crore as of Monday. Of this, ownership in TCS alone is valued at over ₹10 lakh crore. Tata Motors is another company in which Tata Sons has the highest holding. The current investment value of Tata Sons in the company is pegged at ₹1.6 lakh crore.

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TCS signs multi-million-dollar deal with Nuuday for cloud transformation

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Tata Consultancy Services Ltd gained up to a percent today after the Tata Group company announced that it has signed a multi-million-dollar deal with Denmark-based Nuuday to implement a complex cloud transformation.

As part of this deal, TCS will take full responsibility for Nuuday’s IT infrastructure and migrate it to the TCS hybrid cloud.

Nuuday’s move to TCS’ Enterprise Cloud Platform, a next-gen hybrid cloud architecture with built-in tools and accelerators, will reduce time to market for new products and services. It will result in enhanced experiences for customers and employees of Nuuday, which delivers connectivity products and digital services to over 4.1 million Danish homes and 1.8 million businesses, the company said in an exchange filing.

As the strategic technology partner, TCS will help Nuuday realise its objective of becoming a ‘truly digital service provider’ with a modern and secure infrastructure. TCS will host and manage all IT domain services of Nuuday during the transformation. This cloud transformation will enable faster and easier adoption of next-gen technologies.

“We are turning to TCS based on the company’s proven industry experience and successful completion of complex cloud transformation projects in the digital communications sector. This important partnership will help us futureproof our business by delivering the latest digital experiences our customers expect and ensuring excellent end-user satisfaction,” said Monika Gullin, Chief Technology Officer, Nuuday.

“With its extensive contextual knowledge, deep domain expertise, and experience in the digital communications sector, TCS is committed to supporting Nuuday’s vision with innovation and new technology in this nationally significant Scandinavian partnership,” said Vikram Sharma, Country Head, Denmark, TCS.

Shares of TCS were trading 0.081% higher at ₹4,151.95 apiece on the NSE at 11:30 am. The stock has risen 8% so far in 2024.

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UBS has upgraded this Tata group stock and raised target price to ₹4,700

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Tata Consultancy Services (TCS) shares will be in focus on February 27 as global brokerage UBS upgraded its rating to ‘buy’ from neutral on the IT services stock. The Swiss analyst has also raised its target price by 17.5% on the stock to ₹4,700 from ₹4,000.

UBS has high hopes for TCS in the financial year 2024-25, as it expects the tech behemoth to lead its peers in revenue growth by 100-150 basis points as well as in terms of margin improvement.

The brokerage believes the market is not pricing in the company’s lead to its peers, given a divided consensus. The stock remains at the lower end of its long-term trading premium versus peers, it said.

Also Read: Exclusive | TCS CEO Kritivasan expects a better 2024-25 but warns of disruptions

According to UBS, growth drivers for TCS include the ramp-up of large deals such as BSNL, NEST, Aviva, etc, revival in the banking, financial services, and insurance (BFSI) segment and cloud migration projects, and continued managed services demand strength at the industry level.

Among other brokerages, 25 analysts have a buy call on TCS, 11 suggest holding it while 11 recommend selling it.

In the December 2023 quarter, TCS reported revenue of ₹60,583 crore and the company’s net profit on an adjusted basis stood at ₹12,016 crore.

The firm reported an EBIT or earnings before interest and tax of ₹15,155 crore during the quarter, which was 4.6% higher sequentially. The EBIT margin expanded by 70 basis points to 25%.

Deal wins during the quarter stood at $8.1 billion, the company said. The Tata Group giant had won deals worth $11.2 billion during the quarter.

Meanwhile, TCS shares have increased investors’ wealth by 20% in the past year, just a little less than a 22% rise in benchmark Sensex during the period.

Also Read | Internally people refer to me as chief marathon officer: TCS Global CMO Abhinav Kumar

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow