Offshore rev to form 45% of total rev in few qtrs: TCS

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Tata Consultancy Services announced its third quarter results on Monday. Beating expectations, the company posted net profit of Rs 1104.7 crore versus Rs 991.5 crore in the previous quarter, up by 11.41%. Its revenues was up 8.4% at Rs 4860 crore from Rs 4482.2 crore.

 

Here are the key takeaways from TCS' concall:

 

FINANCIALS

 

• Net profit Q3FY07 (QoQ); up 11.41% from Rs 991.5 crore to Rs 1104.7 crore.
• Revenues crossed USD 1 billion dollar in single qtr and $ 3 billion in first three quarters.
• Revenues up 8.4% from Rs 4482.2 cr to Rs 4860 cr, 40.8% (YoY in rupee terms) despite rupee appreciation.
• Revenue uptick of 8.4%.due to better volume increase 7.87% billing rate 2%, pricing and productivity productivity 2.59%, exchange rate 2.46% negative, offshore: reduction in revenues 1.56% 
•  Consecutive qtrs of margin improvement; OPM up 79 bps at 26.08% driven by higher pricing 1.74%, cost efficiency 0.14%, offshore up 0.28%, forex negative impact of 1.37%.
• Margins would have been up 1.37%, if remove rupee negative impact absent; expects margins same as ballpark of last year despite rupee appreciation.
• Expects offshore revenues to comprise 45% of total revenues in the next few qtrs. 

 MODEL:

 

• Global Network Delivery Model well developed;
• Focus On Large Deal in addition to others, gives opportunity for being Integrated Service Provider

ORDERS:

 

• Bagged two USD 100 million deals; Largest deal USD 140 million deal from Latin America for integrated asset plus BPO services second in China close to 100 mn mark, three USD 50 million deals, five deals in all different continents.
• Asset leverage solution 2.8% this qtr as compared to 2.5% last qtr.
• Looking forward big deals in the coming qtr; pursuing atleast 10 deals greater than 50 mn dollar,

 

CLIENTS

 

• Adds 55 new clients vs 58 new clients in Q2

 OFFSHORE:

 

• Offhsore revenues stood at 41.6% vs 41%
• Aims for Offshore comprising 45% revenues in next  3-4 qtrs 

ATTRITION: LOWEST IN INDUSTRY

 

• Attrition rate at 10.8% vs 10.6% in Q2
• Exit barriers for employees a) look at building competencies of employee b) engage employees in activities beyond work c) rotation plan across technologies and geographies

 PRICING & DEMAND ENVIRONMENT:

 

• Renews 3-5% higher, new contracts 5-10% higher
• Demand Environment is positive; deal size beginning to grow bigger; type of services increasing; global clients looking at cos GMDM.

 EMPLOYEES

 

• Adds 5565 net employees vs 6663 net employees in Q2
• So far 24,000 professional added to add 6,000 more, plans to add 30000 gross employees end of year
• For future availability visited 295 campuses; recruiting 2,500 other than engineers

For more, hear concall...