DQ Top 20 RANK 1 - TCS, BFG aka TCS: Big Deals, Big Imperatives 

High-value contracts with multi-year calendars can mean both risks and safety for a player like TCS. 

50 years is a long time to be an oak tree. But every new year is full of new competition, new forces, and new storms—in a forest like IT. There are many moments for a Bellwether to emerge as everyone’s Lighthouse that grasps the gust of new winds first and head-on. This year, a glance at TCSs FY 2022-23, shows what impact big-ticket business can bring in a turbulent year. 

Arguably enough, the streak of big deals was hard to miss on TCS’s report card. There were 60 clients in the US$100 Million+ band (+2 YoY), 133 in the US$50 Million+ band (+13 YoY), 291 in the US$20 Million+ band (+23 YoY), 461 in the US$10 Million+ band (+22 YoY) and 1241 in the US$1 Million+ band (+59 YoY) 

There were also reports of a deal worth more than $700 million—its largest in the UK in three years. It was inked with an insurance services provider and an old client Phoenix. It would be a ground for TCS to leverage its own banking industry platform BaNCS and innovation lab in the UK. 

Rajesh Gopinathan, Outgoing CEO & MD. 

“It is very satisfying to look back at our strong growth in FY 2023, on top of the mid-teen growth in the prior year. The strength of our order book demonstrates the resilience of demand for our services and gives us visibility for growth in the medium term. Krithi and I are working closely to ensure that the leadership transition over the next few months is smooth and seamless to all our stakeholders and that TCS is well positioned to capture the opportunities ahead.” 

The Q4 TCV was also seen at US$10 Billion with an all-time high number of large deals. 

The Full Year Revenue for TCS was at US$27.927 billion (with 8.6 percent YoY growth). Not all verticals were smooth—some were choppy, and some were sunny. In Q4 growth came from retail and CPG (+13 percent) and life sciences and healthcare (+12.3 percent). Other verticals showed single-digit momentum: technology & services (9.2 percent), BFSI (9.1 percent), manufacturing (9.1 percent), and communications & media (5.3 percent). Even on the full-year horizon, more growth came from retail and CPG (+19.7 percent) and communications & media (+14 percent), while technology & services grew 13.7 percent, life sciences, and healthcare went up 13.3 percent, manufacturing rose 13 percent, and BFSI accelerated 11.8 percent. 

If we slice this view from the lens of geography, we will see that the UK was a dominant spot (grew 17 percent in Q4 and 15 percent full-year). North America grew 9.6 percent in Q4 and 15.3 percent full year). Continental Europe grew 8.4 percent in Q4 and 11 percent full year. India showed a boom of 13.4 percent in Q4 and 14.6 percent full year. 

Middle East & Africa grew 11.3 percent in Q4 (7.8 percent a full year) and Asia Pacific grew 7.5 percent in Q4 and 7.6 percent full year. Let’s see how many deals were scored where. It’s nice to see that multi-year contracts were popping up in many places—giving a stable long road for the coming quarters. 

Key Wins 

• Singapore Airlines (SIA) (a multi-year contract for application maintenance and support with the aim to harness the multiplier effect of AI/ML for improved efficiencies) 

• Bayer (to drive its strategic program (#CORE)) 

• IHG Hotels & Resorts (for enterprise process automation across Finance, Travel Agent Commission, Revenue Compliance & Audit, Revenue Services, Sales, and HR) 

• ENMAX Corporation, a North American utilities company (for modernization of billing and customer care processes) 

• An American energy company (for next-gen IT operations and other work with TCS’s solution basket of MFDM, Cognix, and ignio) 

• Bombardier (IT and digital transformation) 

• Others: A strategic partnership with a large European pharmaceutical company, with a large global reinsurer (for cloud-based Infrastructure transformation), a leading American beverages firm (Transformation of their supply chain processes), a global fashion retailer, (for their AI/Data journey), and a contract by an American data communications and telecom equipment provider (For tech for service reliability). 

Reflection: Own concrete, better bricks, in new walls 

These deals show a continued appetite for transformation, data modernization, application modernization cloud, and agility projects. Work seems to be coming from all kinds of verticals—including aviation and beverages. This year also saw an expansion of partnership with SAS (work under the SAS-FORWARD initiative until 2028). There is a focus from the client side on carefully calibrated spends, prioritizing cost optimization, vendor consolidation, and automation initiatives. Cloud, cybersecurity, enterprise application services, and cognitive business operations are hot areas. 

TCS is using its own solutions and frameworks in many areas. Especially with preconfigured industry solutions on TCS Crystallus, integrated services approach, Cloud Platform Services, and cognitive platforms. Cognix led to multiple large wins in the quarter. This traction was supported by end-to-end infrastructure and network services, digital F&A, ERP operations, and MFDM. 

What’s important to note is that TCS kept a good momentum with double-digit growth in the top line and bottom in Q4FY23 when other giants missed analysts’ estimates for both bottom-line and top-line. 

As the company’s senior leadership has shared—Cloud and data are huge demand areas from a solutions point of view. The company is embracing AI/ML holistically in its execution methods and is making the most of the huge data and metrics that it has amassed on delivery performance over decades. 

What worked well for TCS was not slowing down investments in people, research and innovation, and intellectual property—FY 23 that was a year of transition after the pandemic faded into the sunset. 

On the Horizon 

Looking ahead-Its FY 23 Order Book TCV is at US$34.1 Billion. With K Krithivasan taking over as CEO and MD from June 1, 2023, there is some curiosity indeed on how the company continues or changes its strategic path. Especially as the overall customer-side mood is hinted to move towards more cost-rationalization, demand pullbacks, and a near-term recession. Plus, the banking crisis in the US regional and European banks in March 2023 has turned the mood quite cautionary now. Krithivasan (incidentally someone with BFSI as his strong suit) has outlined emerging areas like cloud cybersecurity, 5G, IoT, Generative AI, etc. as those with continued investments. 

But despite being a net hirer for this report card, TCS cannot ignore that attrition was at 20.1 percent—a jump of 15.3 percent in the previous quarter. With a net addition: of 22,600 employees and an employee headcount of 614,795), its employee strength will have to match the size and demands of big deals it is committing to. Also, the deterioration in demand from North America should be a canary worth listening to. A lot of discretionary programs were paused or canceled. TCS may have to struggle in flexing margin levers as challenges on near-term costs evolve. 

What’s important to note is that TCS kept a good momentum with double-digit growth in the top line and bottom in Q4FY23 when other giants missed analysts’ estimates for both bottom-line and top-line. Its January-March order book stood at US$10 billion while another big player shows a large deal total contract value of US$2.1 billion. 

Bagging giant deals can be a great nudge to get past the pandemic cliff. But one needs courage, confidence, and execution capability to nail it right. Not every player can handle giant deals. Would TCS be Sophie here? 

When BFG came

“The maid screamed. 

The Queen gasped. 

But Sophie waved.” 

— Roald Dahl, The BFG (Big Fat Giant)  

By Pratima H