COVID-led tech adoption drives TCS; bags $32 billion contracts in FY21

Before the Covid-19 outbreak, TCS management never anticipated that their customers would adopt the tools and technologies that they were developing in digital, cloud, artificial intelligence, among others, at such a pace. However, the most profitable Tata group company continued with the innovations and product developments for accelerating its client businesses. The pandemic has made the adoption of new technologies faster and it helped TCS win new contracts worth $31.6 billion in 2020-21, which is 17.1 per cent higher than the previous year.

Talking to the shareholders of TCS at the annual general meeting (AGM) on Thursday, Tata group chairman N Chandrasekaran said the Indian IT services giant is well positioned to benefit from the multi-year technology upgradation cycle, which is happening across companies in different sectors. Rajesh Gopinathan, MD and CEO, TCS, said that their customers are leveraging technology across the entire value chain to achieve operational resilience to deal with pandemic outbreak. The customers shift significantly to digital channels and accelerate migration to the cloud, he told the shareholders.

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The customers execute the transformation agenda across multiple horizons, starting with building a digital core that touches both their applications and technology infrastructure as well as business and operation transformation initiatives, Gopinathan said. Innovating the business models by leveraging the power of data and analytics is the next horizon for transformation. According to him, TCS believes that cloud will enable creation of a purpose-led ecosystem where enterprises will collaborate with other adjacent enterprises to benefit customers.  

"These initiatives together will result in a significant technological transformation across multiple industries, which gives us long-term visibility in the overall demand environment and we are gearing up for that," Gopinathan said.  

TCS has adopted a new brand statement, "Building on Belief", based on its traditional focus on customer requirements and empowerment of people. In line with the practice of returning 80-100 percent free cash flow to shareholders, TCS has paid out aggregate Rs 33,873 crore in dividend and buyback in the last financial year, said Chandrasekaran. The pay out comes to 95 percent of the free cash flow. "Looking back, if you had invested in one TCS share at the issue price of Rs 850 in the IPO in 2004, the value of that investment today in a period of 17 years, would be around Rs 28,000, a return of over 3,000 per cent on your investment," said Chandrasekaran.

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