TCS rings in the new year on a roll

Tata Consultancy Services (TCS) has started the new year on a roll with a strong third-quarter performance and recent recognition as one of the world’s most valuable brands.

During the third quarter of its 2020-2021 financial year that ended on 31 December 2020, TCS’s revenue grew 2.1% year-on-year to reach $5.7bn, reversing the earlier revenue declines of 7.8% and 2.1% in the first and second quarters, respectively.

Rajesh Gopinathan, CEO and managing director of TCS, attributed the growth to the demand for core transformation services and strong revenue conversion from earlier deals, enabling the company to overcome seasonal headwinds and post one of its best performances in a December quarter.

“We are entering the new year on an optimistic note, our market position stronger than ever before, and our confidence reinforced by the continued strength in our order book and deal pipeline,” he said. “Looking beyond the immediate business growth opportunity, we are tremendously excited by what lies ahead.”

Much of the growth came from businesses in key industries such as manufacturing, financial services, healthcare, communications and retail. They contracted TCS to work on mainframe and legacy modernisations, data modernisation on cloud, augmented analytics, and regulatory and compliance analytics, among other technology initiatives.

To support its growth, TCS had also launched a massive programme to ensure business continuity by enabling employees to work from home with support from a small number of people working from offices.

Earlier this week, TCS overtook rival Accenture to become the world’s largest IT services firm by market capitalisation, which stood at $169.2bn versus the latter’s $168.8bn. It also grew its brand value by 10% to reach $1.4bn, cementing its position as one of the top three most valuable brands in the IT services sector, according to the Brand finance IT services 25 2021 report.

“With what was a very tough 2020, TCS has excelled once again. Along with 10% growth in its brand, its market cap also hit pole position in its industry and it is increasingly closing in on the top two in the IT services sector table,” said David Haigh, CEO of Brand Finance.

Sunil Kumar Verma, lead ICT analyst at GlobalData, said cloud, automation, artificial intelligence and other disruptive technologies had helped Indian IT services companies such as TCS tide over the pandemic which has accelerated digital transformation initiatives across India.

“Indian IT vendors are more likely to be in demand in the coming years, as companies focus on cost rationalisation and look for partners that can provide them with a consultative approach along with management of their entire IT infrastructure,” he said.

India’s tech sector currently makes up around 8% of its GDP. According to GlobalData, the domestic enterprise IT market in India was projected to grow at a compound annual growth rate (CAGR) of around 7% for the next five years.