Artificial intelligence and generative AI (GenAI) technologies are expected to impact every sector and the country going forward, and Tata Consultancy Services (TCS) is making significant investments to continue building these capabilities, said chairman N Chandrasekaran in the company’s annual report for the fiscal year 2024.
In a letter to the shareholders, Chandrasekaran also highlighted that after two years of recessionary fears and high inflation, the global macro-outlook has started to look better in the new financial year.
“After two years of recessionary fears, persistently high inflation, and unprecedented monetary tightening, the global macro-outlook looks relatively better now with improving growth, disinflation, and monetary easing in sight,” he said.
He, however, continues to remain wary of the military conflicts that intensified this year and continue to impact the global supply chains, even as initial signs of stability began to emerge.
According to TCS, across industries globally, there are multiple mega trends that are shaping priorities of businesses. These include AI, new energy, supply chain and talent.
“GenAI technologies will impact almost every sector and country going forward. Enterprises have already invested in cloud, data infrastructure and large processing power which will aid AI/ GenAI. GenAI will not only improve productivity, but also create impact we hitherto have not seen or imagined,” Chandrasekaran said on the impact of generative AI.
TCS sees opportunities in deployment of AI and GenAI across its key verticals, including financial institutions to drive efficiency and target new customers, automobiles to reduce emissions, for drug development for screening millions of compounds, predicting interactions and generating new candidates for testing, taking an AI-first approach for manufacturing; and as telecom industry globally is upgrading communication infrastructure to 5G/6G, edge compute and AI will become the backbone of businesses in future.
GenAI skilling
In FY24, TCS consolidated its new business unit AI.Cloud. Additionally, each of the business groups are developing domain-specific AI/GenAI offerings relevant to the industry value chain.
TCS has upskilled over 300,000 employees on GenAI technologies in FY24.
“TCS’ products and services are also being enhanced with AI capabilities. For example, TCS BaNCSTM is enriching its product portfolio with integrated AI/ML and GenAI capabilities; AI is also being embedded in cybersecurity services to enable predictive capabilities,” Chandrasekaran said.
During the company’s Q4FY24 earnings, CEO K Krithivasan had shared that TCS has $900 million worth of AI and generative AI projects in the pipeline, and has won over 200 engagements in AI so far this year.
Overall, TCS clocked in a strong order book of $42.7 billion in FY24.
Apart from GenAI upskilling, TCS employees have trained in a wider range of emerging technologies clocking over 51 million learning hours in FY 2024.
“TCS continues to build strong talent supply chains with deep partnerships with leading educational institutions, shaping the curriculum for new skill needs for the future,” Chandrasekaran added.
Demand Outlook for FY25
Krithivasan, who is set to complete a year of taking over as the CEO, said that during FY24, customers continued reprioritization of projects in favour of business critical projects and where ROI (return on investment) realization is likely faster. TCS continues to see pressure on customers’ discretionary spending.
“The recently won deals are converting into revenue as planned, the ongoing engagements started during the pandemic are being re-examined for the incremental value generated. While transformation remains a key ask, customers are expecting the same to be funded through savings from operations. Hence, the key engagement themes we saw during the year were around cost optimization and cloud transformation,” he said in the letter.
According to Krithivasan, demand was led by vendor consolidation, cloud migration and transformation, customer and employee experience enhancement, operating model transformation, business process optimization, supply chain initiatives, sustainability, and AI enablement which includes creating a cloud and data foundation for AI, and early-stage AI-infused transformational engagements.
“Today, clients are seeing cloud as a strategy for business transformation and growth. The shift to cloud-native products and platforms is being fast-tracked, to achieve increased collaboration, security, scalability and efficiency. Hybrid, multi-cloud platforms are now becoming mainstream,” he said.
Krithivasan added, “Cloud adoption is is a catalyst for innovation, and a strategy for business and growth itself. It provides the unifying digital fabric that forms the foundation for a connected future—one that continues to unfold with each technological advancement, including generative AI (GenAI).”
Speaking of outlook for FY25, he said that the company's all-time high order book, continued deal flow and pipeline velocity gives confidence for business momentum.
"Looking forward, we see greater opportunities ahead, as businesses become more technology-intensive and depend on technology to drive competitive differentiation and transform their industries."
TCS completed its fifth buyback program in FY24, distributing
Rs 17,000 crore to shareholders.
For the full year, the company’s shareholder payout was Rs 47,445 crore, which will be our largest payout to date. The company's average shareholder payout has been more than 100 percent during the last five years.
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