Tata Consultancy Services (TCS) reported a strong order book of $10.2 billion for the first quarter of fiscal year 2024. Beating macroeconomic headwinds in the United Kingdom this quarter, the IT services major surpassed its quarterly deal win guidance of $7-9 billion.
The total contract value (TCV) for Q1 was up by 24.39 percent on a year-on-year (YoY) basis as compared to $8.2 billion reported in Q1FY23. Last quarter, TCV stood at $10 billion.
The growth was driven by the UK market which grew at about 16.1 percent YoY in constant currency (CC) terms. Among major markets, North America grew 4.6 percent and Continental Europe grew 3.4 percent. In emerging markets, Middle East & Africa grew 15.2 percent, India grew 14 percent, Latin America grew 13.5 percent, and Asia Pacific grew 4.7 percent.
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Key segments like banking, financial services and insurance (BFSI) grew at 0.2 percent QoQ, manufacturing at 1.5 percent QoQ, retail at 1.1 percent QoQ and communication slipped by 1 percent QoQ while life science grew at 0.8 percent QoQ – showing signs of continued pressure in these segments especially BFSI and communication.
According to the company, there is a strong focus across verticals to “engage with TCS to explore generative AI use cases around productivity improvement, content creation and enriching customer interactions etc.”
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K Krithivasan, Chief Executive Officer and Managing Director, said: “It is very satisfying to start the new fiscal year with a string of marquee deal wins. We remain confident in the longer-term demand for our services, driven by the emergence of newer technologies. We are investing early in building capabilities at scale on these new technologies, and in research and innovation, so we can maximize our participation in these opportunities.”
N Ganapathy Subramaniam, Chief Operating Officer and Executive Director, said: “Our products and platforms achieved major milestones during the quarter with several transformational engagements going live. In the UK Life and Pensions administration space, we signed three new deals on our digital insurance platform, making TCS the undisputed leader in this market on any metric.”
Subramaniam added, “We are proactively building differentiating capabilities in generative AI and actively working on such projects with our clients, delivering impact on technology, operations and client experience dimensions.”
Major deal wins this quarter include several billion dollar plus deals in the UK such as the $1.1 billion deal from UK’s National Employment Savings Trust, a $1 billion plus deal with Marks & Spencer, a 10-year contract with UK’s Teacher’s Pension Scheme and another deal with the Phoenix Group to name a few.
Closer home, a consortium led by TCS won a deal from government owned telco BSNL with an advance purchase order of $1.8 billion.
Amidst all of these deals, TCS also lost a $2 billion deal and a 10-year contract from US-based Transamerica Life Insurance, which it got in 2018.
During the company’s annual general meeting (AGM) last month, chairman N Chandrasekaran said that while TCS is well-positioned to benefit from the demand in the medium to long-term thanks to the company’s investment into technologies like artificial intelligence (AI), IoT, 5G etc.
“I believe that the growth for the medium to long term is going to be strong. But in the nearby quarters there will be volatility in different markets on customer spending, especially in discretionary projects. It will go across sectors—some places it will be BFSI, others it will be manufacturing or retail,” he said.
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