The Company delivered a strong performance during 2015-16 and crossed
the trillion rupee revenue milestone, with reported revenues of
Rs.1,08,646 crore at an annual growth of 14.8 per cent. Operating margins
were an industry benchmark at 26.4 per cent for the year, well within
our target range of 26-28 per cent.
TCS remained the most profitable company in the Indian IT services
industry posting net margins of 22.4 per cent and annual net profit of
Rs.24,292 crore. This performance has enabled your Company to retain its
position as the most valuable company in India with a market
capitalization of Rs.4,95,770 crore (US$ 74.84 billion) as on March 31,
We have continued our practice to consistently reward our shareholders.
In FY16, our total dividend pay-out was Rs.43.50 per share including Rs.27
per share proposed as final dividend. The earnings per share for the
company increased toRs.123.28.
Strong Core Performance
Your Company''s customer-centric business model and its philosophy in
building new capabilities has led to increased participation in our
customers'' IT spend. The core business portfolio has performed very
well with all key segments posting steady growth led by Banking &
Financial Services, Retail, Manufacturing and Life Sciences - all these
industries grew above the company average growth rate on a constant
In terms of markets, growth was well distributed with North America
growing 10.8 per cent, Europe by 12.9 per cent and United Kingdom by
8.3 per cent in constant currency terms. India crossed $ 1 billion
milestone in annual revenues while overall revenues from new Growth
Markets exceeded $ 3.3 billion on in FY16.
From a services perspective, growth was led by Infrastructure services,
Products & Platforms and Assurance services. Digital services grew by
52.2 per cent annually with revenues crossing the $ 2 billion mark.
There were some headwinds in the business environment for your Company.
Adverse cross currency movements severely impacted the reported US$
revenue of 16.55 billion by 4.8 per cent. This resulted in lower US$
revenue growth of 7.1 per cent year-on-year compared to 11.9 per cent
growth in constant currency terms. Diligenta, our life and pensions
subsidiary in the UK continued to experience some slowdown while the
broader insurance vertical also remained weak. Our investment in Japan
is yet to pick up momentum.
Your Company''s talent development initiatives continued to support
business growth. At the end of FY16, TCS had a diverse base of 3,53,
843 employees in 55 countries from 129 nationalities including 33.8 per
cent women professionals. We continued to enjoy the highest retention
in the industry at 14.7 per cent LTM (last 12 months) for IT
professionals. Our employee engagement programs like Fit4Life,
Purpose4Life and Safety First are helping create awareness about health
and fitness as well as enabling our employees to engage with the
community to make a positive impact.
It is the commitment and dedication of these TCSers across the world
that has helped your Company perform on a sustained basis. On behalf of
all the shareholders, I would like to thank every TCSer for their drive
and passion that has helped this organization maintain its growth and
Today, customers see your Company as a partner of choice for their
transformation initiatives. This is evident from the strength of the
customer revenue metrics which have shown exceptional improvement in
FY16. We added eight new customers in the 0 million band taking
the total to 37 customers, while 37 new customers were added in the
million band totaling 298 customers. Our customer satisfaction
scores also reached an all-time high, reflecting this trend.
Digital Technology Trends
Demand for our services is being driven by the acceleration in the
adoption of Digital. Digital is creating new opportunities for
enterprises to drive Efficiency and Simplification across the business.
Most brick and mortar businesses were built in a pre-digital era.
Therefore, to thrive in the Digital economy, enterprises are on a quest
to deliver unique customer experiences, gain real-time access to
insights, improve workforce productivity and create a hyper-connected
The impact of Digital Technologies has further intensified in the
past twelve months. We are living in a digital age, characterized by an
accelerating trend of hyper-connectivity between humans and also
between humans and smart devices. As you go through this annual report,
we have attempted to showcase some of the key technology and business
trends that are shaping the future of TCS and that of our customers.
The digital world we inhabit today has very different characteristics
from what we have seen in the past. It is forcing all of us -
individuals, enterprises and governments - to learn new ways to engage
with our stakeholders. In addition, widespread adoption of Digital
technologies by business is leading to the evolution of the Smart
Enterprise companies that can respond in real time and provide unique
personalized experiences for its customers.
Smart Enterprises are quick to recognize that in a Digital world,
experience supersedes features. This was not the case even five years
ago, when we would buy a product based on its features alone without
even opening the box! But now it''s the experience of the product or
service that determines our buying behavior. The reason we focus on
experience today is because new features are only one software release
away. Whatever the product, be it a smart watch or even a car, every
software release brings new and enriched features.
For a Smart Enterprise to respond in real-time or ahead of time
requires dematerialization of an enterprise where physical assets now
have a Digital interface. Once dematerialized, all enterprise''s assets
- technology, infrastructure, operations, logistics, customer data and
content - become software driven and therefore now available for
seamless correlation and deriving proactive insights. For example, as
goods from cars to cans become more ''intelligent'', a dematerialized
smart enterprise can execute, respond, plan and predict in real-time
using insights gleaned from big data.
To succeed, Smart Enterprises have to be Agile by default. Agility is
the ability of an enterprise to move with speed and respond to changes
in its environment swiftly (for example, when launching new products).
Your Company is proactively increasing its use of Agile/ DevOps
(Development Operations) methodologies to radically decrease the time
to market of new solutions, while bringing about greater collaboration
between IT and business.
Further, to make sense of voluminous and unstructured data that is
increasing exponentially, Smart Enterprises are using Artificial
Intelligence technologies for developing machine learning and deep
learning capabilities. Software robots are playing a bigger role in our
lives from algorithmic trading and advisory services in financial
markets to map bots which give us daily driving directions.
Additionally, cloud-based models are enabling ''anywhere-anytime-any
device'' access to data which is creating a significant shift in
business models and enterprise IT architectures.
TCS Leadership in the Digital Economy
Your Company has been at the forefront of this Digital revolution by
making strategic investments across multiple dimensions ahead of time
to ensure that we are well equipped to capture this big opportunity.
Today, we are Digital partners for 52% of our customers across multiple
segments such as Mobility and Pervasive Computing, Cloud, Big Data,
Artificial Intelligence & Robotics all of which have grown at a
compounded quarterly growth rate of 8-12 per cent during FY16. We have
built the right technology talent combined with deep domain expertise
and an understanding of the customer''s business.
The Digital economy and disruptions in technologies are changing the
skills requirements in our industry. Recognizing the need to build the
right Digital talent, your Company has made significant investments to
upgrade skills of its employees as well as increase its focus on hiring
TCS has created a world-class Digital Learning Platform - an integrated
ecosystem that combines virtual, physical and experiential learning
with high quality content that is available anywhere, anyplace, anytime
and on any device. I am delighted to share that we have trained over
1,20,000 TCSers in multiple digital technologies during FY16.
Digital transformations entail new ways of collaboration among teams
that consist of players with multiple niche skills from design to
psychology in order to deliver a ''customer-first'' experience. Towards
this, we have invested in a new Design Studio in Silicon Valley,
staffed with top notch professionals with diverse skill sets. It is a
collaborative space where customers can co-create with TCS in a typical
start-up ''garage'' environment. A new executive briefing centre was also
launched for next-generation engagement with customers using immersive
technologies in Mumbai.
Your Company''s significant investments in Digital has resulted in a
growing portfolio of Digital products and platforms. TCS'' strategic
bets in TCS BancsTM for Financial Services and iONTM for the Education
sector have performed well. We also continue to invest in digital
platform solutions for key industries, horizontal functions (Account
Payable, HR) as well as technology assets. The new cloud platforms
together delivered 2 million in revenues in FY16, a growth of 37 per
cent year on year.
In June last year, we launched ignioTM, our flagship automation product
for enterprise IT that helps customers analyse, plan and predict their
IT needs. With its cognitive capabilities, ignioTM is technologically
an advanced enterprise automation product in the market. Within nine
months of its launch it had signed up 16 customers. TCS has also filed
24 patents for ignioTM till date.
Today''s digital enterprises also face an increased exposure to cyber
security threats from phishing attacks, Advanced Persistent Threat
(APT) and hyper-connected universe, data confidentiality and data
sensitivity. TCS has taken proactive steps to combat these threats and
ensure uninterrupted service delivery to customers. We also continue to
reinforce our stringent security policies and procedures.
Driving Research & Innovation
Your Company has been pursuing a two-pronged Research and Innovation
(R&I) agenda. Our in-house R&I programs have been refined to focus on
foundational research in areas like deep learning, nano-materials,
cognitive computing and genomics as well as engage in industry-centric
innovations like the use of block chain technology in banking,
connected cars or smart homes.
Your Company remains focused on Intellectual Property creation. At the
end of FY16, the company has applied for 2,842 patents cumulatively,
including 565 applied during the past 12 months, of which the company
has been granted 341 patents.
However, as an organization we are humble enough to recognize that it
is impossible to innovate in isolation. Therefore, to complement the
in-house R&I efforts, your Company has built a global start-up
partnership ecosystem called COINTM (Co-Innovation Network) which
actively engages with technology start-ups, academia and venture
capitalists to identify innovative ideas on an ongoing basis from over
1,400 companies on our radar.
Additionally we continue to build our strategic academic partnerships.
In FY16 your Company made a US million gift to Pittsburgh-based
Carnegie Mellon University, which was the all-time largest corporate
gift to the university and the largest gift from outside the U.S. This
donation will fund a new 40,000 square feet facility, the TCS Building,
which will support education, cutting-edge research and house
state-of-the-art facilities. In India, your Company also announced
plans to set up the FC Kohli Center on Intelligent Systems at IIIT
Hyderabad which will coordinate research in related domains across
different centre''s of the university.
In March, in collaboration with Nashik city and MIT Media Labs, your
Company began a unique social innovation program. The TCS Digital
Impact Square is an open Social Innovation Platform to address real
life challenges by engaging with students and entrepreneurs from across
India and providing them with internships to build solutions to
challenging social issues using Digital technologies and human centric
Beyond Business: Key Social Initiatives
Your Company made a significant impact in the community with new
programs and initiatives. TCS stepped forward to extend its support
towards the ''Swachh Bharat, Swachh Vidyalaya'' initiative, announced by
India''s Prime Minister Shri Narendra Modi on August 15, 2014. As the
largest corporate contributor to the program, your Company has built
dedicated toilets for girl students in 1,472 schools in Andhra Pradesh,
Telangana, Bihar and Tamil Nadu, changing lives of over 80,000 students
in the process by giving them the opportunity to live a healthy
childhood and gain an education.
Another landmark initiative was the social transformation of All India
Institute of Medical Sciences India''s pre-eminent public healthcare
institution - where using process re-engineering and technology, a TCS
team worked tirelessly for six months to re-engineer and deploy new
processes to reduce waiting times by 66 per cent to less than two hours
benefitting over three million patients annually.
The TCS STEM (Science, Technology, Engineering, Math) program expanded
its reach, inspiring young minds. It is designed to empower students to
master digital technologies through innovative technology learning
platforms. TCS contributed to US2020 program to launch a new online
platform which aims to connect more STEM professionals to grassroots
volunteering opportunities, acknowledged by the US White House in a
Your Company will continue to look for ways to make significant social
interventions using digital platforms and technologies in the areas of
health and education going forward.
Last but not least, I am delighted to share that your Company has been
recognized and rewarded by peers and stakeholders. TCS was rated as the
world''s most powerful brand in IT Services and also retained its
position as the fastest growing brand within its industry over the last
6 years. Among other major accolades, TCS ranked number 1 in Europe for
Customer Satisfaction by White lane Research for third year in a row.
Your Company also appeared in the global Forbes 100 most innovative
global companies list for the eighth consecutive year and topped the
Business Today 500 list for the third year in a row.
Looking ahead, as global businesses aspire to become Smart Enterprises
by accelerating adoption of digital, your Company is very well
positioned in this regard. Our rich customer base, domain expertise
and deep understanding of the customer landscape, technology
investments and IP combined with our global scale puts us in pole
position to make a significant impact in the Digital world.
I would like to thank shareholders for all their support and
encouragement during the year.
With Warm Regards Yours Sincerely
Chief Executive Officer and Managing Director April 18, 2016