While the economic situation appeared promising at the start of the year, it is now marred with several challenges including global pandemic, military conflict, growing inequality, supply chain shortages. Consequently, the macro environment may face low growth and high inflation, N Chandrasekaran, Chairman of Tata Consultancy Services (TCS) said.
He highlighted how the Russia/Ukraine crisis has dented global growth, spiked inflation, caused supply shocks due to higher oil prices and semiconductor shortages.
Speaking at the IT services major’s annual general meeting (AGM), Chandrasekaran was quick to follow it up with the key trends and tailwinds that will enable growth of TCS.
India to be fastest growing major economy
“Global GDP is expected to grow at a slower pace of 3.4 per cent in 2022, which is almost a 100 bps drop from the earlier estimate of 4.4 per cent. Global inflation, meanwhile, is expected to climb above 7 per cent. In this context, India’s growth will become even more critical. India will be the fastest growing major economy at 7.8 per cent,” he said.
Disruption led to transition
Even though challenges have disrupted businesses and communities, they have also laid the foundation for the future. Chandrasekaran said that the first trend was digital transition: a world that is totally determined and accelerated by AI, ML and Data analytics. “The second is an energy transition which is an irreversible move towards a green economy. The third is a supply chain transition where the supply chain will get rebalanced for resilience, and finally a talent transition, ushering the coming age of the talent cloud, a diverse inclusive and a global talent pool that can be accessed across the globe.”
“Supply chains of all organisations across countries will be redesigned. Our customer base is looking at various alternatives to bring on efficiencies. Advanced manufacturing technologies such as 3D printing and robotics are transforming the very nature of manufacturing. We have made significant investments over the years and are well positioned to help companies make the transition in supply chain,” he added.
Areas such as renewable energy, battery storage, decarbonisation, electronic waste management, etc. are already generating numerous opportunities, he said. TCS, he said, is prepared for the all four transitions and is well positioned to help customers usher in the new economy.
$25 billion in revenue
In FY22, TCS reported $25 billion in revenue and a strong TCV of $32.6 billion.
“Over the last five years the revenue growth has been steady with a compounded annual growth rate of more than 10 per cent and with a resilient industry leading operating profits between 24.8 to approximately 25 per cent,” Rajesh Gopinathan, CEO & MD, TCS said.
He added, “Our approach towards shareholder friendly capital allocation has resulted in returning 90.5% of total cash generated during the course this year. This distribution we have chosen multiple streams to do it, whether it be dividends, special dividends or buybacks. On an average we have distributed more than 100 per cent of net profit in these five years.”
The Company completed its fourth share buyback in five years, to the tune of ₹18,000 crores at ₹4,500 per share, extinguishing 4 crore equity shares, representing 1.08 per cent of the total paid-up equity share capital. This translates to a total of ₹38, 010 crores in dividend and buyback including buyback tax of ₹4,192 crores, resulting in a pay out of 102.8 per cent of the free cashflow of the company.
TCS employee base grew to 5,92,195, adding over 1,00,000 associates in FY22 alone, it highest ever head count addition. Of this, over 2,00,000 employees are women.