Profitable Growth Through Financial Leadership

Transcription

1 Profitable Growth Through Financial Leadership S. Mahalingam Executive Director & Chief Financial Officer TCS Analyst Day, New York

2 Top Investor Concerns Sustaining Growth Lingering global economic outlook Troubled banking sector Maintaining Profitability Salary inflation Flattish pricing environment Funding investments for future growth

3 Sustaining Growth - Changing Profile Of TCS Business Revenue by Geography Others 6.3% India 11.9% Americas 61.1% Asia Pacific 5.2% MEA 1.7% India 9.0% North America Continental 50.7% Europe 9.2% Europe & UK 20.7% UK 19.8% Ibero America 4.4% FY02 Revenue: $0.9 bn FY08 Revenue: $5.7 bn Diversification provides protection from a slowdown

4 Sustaining Growth - Changing Profile of TCS Business Revenue by Service Practice Assurance 3.7% Infrastructure Services 6.5% BPO 6.2% Consulting 3.4% Asset Leveraged Solutions 3.6% EIS 5.4% Asset Leveraged Solutions 1.6% Others 0.3% Enterprise Solutions 13.1% Enterprise Solutions & BI 10.8% ADM & EIS 87.3% BI 9.7% ADM 48.3% FY02 Revenue: $0.9 bn FY08 Revenue: $5.7 bn Diversification provides protection from a slowdown

5 2008: A Challenging Year Headwinds Wages (316 bp) Rupee Appreciation Investments in Future Growth (415 bp) Global Structure New SEZ sites Headcount additions for FY'09 growth Platform based BPO Products Business- TCS Financial Solutions Small & Medium Business Initiative

6 2008: A Challenging Year Pricing 6.58% Headwinds Largely Offset Off shore Leverage 0.35% Hedge Program 1.95% % Net Impact : Net Income %

7 2008: Q4 A Challenging Quarter Revenue + 2.9% Q/Q Delay in expected project starts Margins Operating Margin: 22.8% Net Margin: 20.6% Continue to invest for future growth Headcount additions to drive FY 2009 growth Infrastructure Project transition

8 2009: Looking Ahead Environment Rupee: Stable Pricing: Stable with upward bias Demand Robust over full year, though sluggish near term Significant opportunities to assist clients: Transformation projects Cost rationalizations Vendor consolidations

9 2009: Focus On Operational Excellence To Maximize Profitability Utilization Offshore Leverage SG&A Cost Management Employee Cost Control

10 2009: Focus On Operational Excellence To Maximize Profitability Utilization Offshore Leverage SG&A Cost Mgmt Employee Cost Control Average utilization range: 78% - 80% FY 2009: Higher utilization rate to improve margins

11 2009: Focus On Operational Excellence To Maximize Profitability Utilization Offshore Leverage SG&A Cost Mgmt Employee Cost Control 50.0% 40.0% 30.0% Offshore Revenue and Impact on Operating Margins 500 bps 400 bps 300 bps 20.0% 10.0% 0.0% 100 bps (50 bps) 125 bps 35 bps 200 bps 100 bps 0 bps -10.0% FY05 FY06 FY07 FY bps Offshore Revenues Impact on Operating Margins (RHS) Moving towards 45% revenue from offshore Positive impact on operating margin: up to 25 bps from each percentage point shift offshore

12 2009: Focus On Operational Excellence To Maximize Profitability Utilization Offshore Leverage SG&A Cost Mgmt Employee Cost Control Focus on cost management actions FY 2008: Active cost control program 65 bps cost improvement without Rupee appreciation FY 2009: On-going programs Shift of selling costs to low cost locations, where possible Cost management programs, including communications Improved utilization, lowering bench costs

13 2009: Focus On Operational Excellence To Maximize Profitability Utilization Offshore Leverage SG&A Cost Mgmt Employee Cost Control Employee Cost Control Annual wage increase held to 10% About 250 bp impact vs. 316 bp impact in FY 2008 Broaden pyramid Shift in Fresher/Lateral hiring ratio From 45/55 in FY2008 to 60/40 in FY2009

14 Sustaining Profitable Growth FY06 FY07 FY08 INR m % of Revenue INR m % of Revenue INR m % of Revenue Revenue 132, , ,614 Operating Income 33, % 46, % 53, % Net Income 28, % 41, % 50, % FY 2008 Operating Margin: 24.6% adding back FX gain in Other Income 25.6% without Rupee appreciation

15 In Summary Well-poised to sustain strong growth Markets, Service Offerings and Delivery Locations are diversified Focused on maximizing profitability Utilization Offshore Shift SG&A Cost Management Employee Cost Management Maturing of Strategic Initiatives

16 Profitable Growth Through Financial Leadership S. Mahalingam Executive Director & Chief Financial Officer TCS Analyst Day, New York