New business lines shore up TCS revenues

It has become a habit with the Indian IT services provider, Tata Consultancy Services (TCS), to better its performance every alternate year. In 2003, it became the first Indian IT firm to cross the $1 billion revenue mark. In 2005, it crossed the $2 billion mark and now in 2007, the $4 billion mark.

North America continues to account for over 50 per cent of TCS' revenues (52.3 per cent in FY07), with the UK coming next at 20.3 per cent, followed by India and continental Europe at 9 and 8.2 per cent, respectively. Revenues of TCS North America crossed the $2 billion mark while those of TCS Europe crossed the $1 billion mark.

As for verticals, the banking, finance and insurance (BFSI) segment continues to dominate the services portfolio of the company, contributing 42.2 per cent of the revenues in FY07. Telecom came next at 17 per cent, while manufacturing stood at 15.3 per cent.

New service lines such as infrastructure, global consulting, business process outsourcing (BPO) and assurance services now comprise 18 per cent of the company's revenues compared with 10 per cent in 2005-06.

Of the 12 deals of over $50 million (three of them over $100 million) closed in 2006-07, five deals involved the full services play, with customers using more than one service offered by the company.

TCS' top clients contributed 6.6 per cent of the total revenues in 2006-07, while the top-five clients contributed 18.5 per cent to the revenues. The top-10 clients accounted for 28.4 per cent of the total revenues.

The company has 297 $1 million clients, 119 $5 million clients, 75 $10 million clients, 39 $20million clients and 14 $50 million clients. The company has a total of 920 active clients, with 218 clients being added in the last financial year. The company gets 96.8 per cent of its revenue from repeat business. The company's offshore business accounts for 40.5 per cent of the revenue, onsite 55.7 per cent and the remaining from global delivery centres.

On the human resources front, wages and salaries accounted for 41.44 per cent of the total income in 2006-07 against 35.58 per cent in the previous financial year. The management perceives 12-15 per cent wage inflation for 2007-08 in Indian salaries and 3-5 per cent increase in international salaries. There was a gross addition of 32,462 (net 22,750) employees during 2006-07.

In Q4, the gross addition was 8,613 (net 5,827). TCS continued to maintain the lowest attrition rate in the industry at 11.3 per cent. However, last year, the figure was lower at 10.6.

At the end of the fourth quarter, the total employee strength of the company stood at 89,419 professionals.

Overseas nationals from 67 countries formed 9.6 per cent of the total employee base. Around 26 per cent of employees are women.

To further strengthen its market position globally and communicate its strengths to customers, TCS launched the first-ever global branding and marketing campaign by an Indian corporation during the fourth quarter called "Experience Certainty".