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Monday 11 January 2021

TCS Q3 growth strongest in 9 years

TCSTCS posted its strongest quarterly growth in nine years for the third quarter with total revenue of $5.7bn, up 5.1% QoQ and 2.1%YoY – all with an operating profit margin of 26.6% (its highest for 5 years).

Since the pandemic broke TCS bet big on its Secure Borderless Workspace (SBWS) model and the creation of a location-independent digital workplace. Something that is clearly resonating with clients and with TCS itself, which continues to have c.95% of its staff working from home. Indeed, the cost benefits of SBWS are at the heart of the highest operating margins for five years.

All TCS’s vertical markets grew QoQ, with Manufacturing (+7.1%), BFSI (+2%), Life Sciences and Healthcare (+5.2%), Communications & Media (+5.5%) and Retail and CPG (+3.1%). YoY Life Sciences and Healthcare posted the strongest growth at +18.2% with BFSI (+2.4%) and Technology & Services (+2.4%). There were YoY declines for Retail (-5.1%), Manufacturing (-3.6%) and Communications & Media (-4.8%).

Geography wise, all the regions grew on Q2 with North America (+3.3%), India (+18.1%) and Continental Europe (+2.5%). The UK improved on Q2 by +4.5% but remains down -1.6% on Q3 last year. 

TCS announced UK wins for Q3 that included a data and analytics deal with a major supermarket and an environment and data services project with an unnamed energy company. However, the most significant and interesting deals of the quarter are the acquisitions of financial service “captives” from Pramerica and Postbank Systems both likely to play key roles in the future developments of TCS’s UK & Ireland and European businesses respectively.

Given that Q3 is typically a seasonally slow quarter for TCS, and the backdrop of the pandemic these look like a very strong set of results, repaying the company’s faith and early move to SBWS.

Posted by: Marc Hardwick

Tags: results   tcs   offshore  

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