TCS reports slowest dollar growth in 10 years

KEY HIGHLIGHTS

• TCS clocks an annual dollar revenue growth of 5.3% for FY20
• Exudes optimism to bounce back by H2 FY21

India's largest software exporter Tata Consultancy Services (TCS) reported an annual dollar revenue growth of 5.3 per cent at $22.03 billion - its slowest since the global financial crisis of 2009-10. It was only in financial year 2009-10 that TCS, which was a $6.34 billion company then, had clocked an annual growth of 5.38 per cent on the back of a crisis. The company's quarterly revenue also fell by 2.5 per cent sequentially in the last quarter of FY20 on the back of uncertainty and global macro economic environment deterioration owing to COVID-19 pandemic.

Expressing concern over the existing macroeconomic headwinds amid the coronavirus crisis, Rajesh Gopinathan, CEO and MD of TCS, said, "The impact on revenue side of what is unfolding around us is comparable to global financial crisis and its peak impact is going to come in the next quarter (Q1 of FY21)".

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Interestingly enough, it was Rajesh's mentor, N Chandrasekaran at the helm of TCS weathering the global financial crisis storm in a year when the company had posted similar growth numbers. The company said growth and profitability in short-term will take a hit, however the growth in Q3 and Q4 of FY21 is expected to be around the current levels of the corresponding quarter of FY20. The IT bellwether, however, believes that the current crisis will provide a big boost to digital revenues in the medium to long term.

Stressing on cost optimisation exercise across board, V Ramakrishnan, Chief Financial Officer, said "We can't predict how demand will pan out in the short-term, so we have to ensure we optimise as much as possible". In stark contrast to its peer, TCS said that it has no retrenchments in place, however increments have been deferred while promotions remain on track. TCS is also keeping its campus hire numbers intact. "We will honour all the 40,000 offers made to the campus and will start on-boarding after June. It's a strategic intent" said Milind Lakkad, Global HR head.

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The board of TCS also recommended a final dividend of Rs 6 per equity share of Rs 1 each of the company which shall be paid on the fourth day from the conclusion of the annual general meeting, subject to approval of the shareholders of the company.

As on March 31, 2020, the company has applied for 5,216 patents, including 210 applied during the quarter, and has been granted 1,341 patents.