Revenue: TCS reported flat revenue growth sequentially in the third quarter, the company's worst performance in at least four years. Growth was hit by cross-currency headwinds. On a constant currency basis revenue rose 2.5% in dollar terms
Guidance: TCS had dialled down its previous growth commentary after missing revenue expectations in the second quarter. The company had expected to beat industry growth figures in FY15; the company now says it expects to post industry-leading growth in the year. The National Association for Software and Services Companies expects the industry to grow 13-15% this year.
Hiring: TCS expects to exceed its hiring target of 55,000 for the year. The company has already hired 52,000 people this year, it said. For the third quarter, the company reported net additions of 4,868 employees.
Client additions: TCS reported strong client additions for the third quarter. The company added one $100 million client, three $50 million clients and the number of $5 million clients increased by 20.
Markets: TCS was hit by a slowdown in its UK business, which contributes nearly 17% to revenue. Revenue from the UK fell 3.2% sequentially. Asia-Pacific revenue dropped 0.7%. But the company saw strong growth in North and Latin America, which grew 4.7% and 10.3% respectively. India revenue grew 4% and Continental Europe grew 4.1%
Verticals: TCS pointed out to weakness in its insurance vertical, due to Diligenta. The company reported 3.1% sequential growth in BFSI, 1.7% in retail and distribution, 2.6% in manufacturing, and more than 5% each in Life Sciences and Hi-Tech
Margins: TCS' margins expanded 20 basis points to 27%, helped by higher realizations
Discretionary spending: TCS sees strong demand in discretionary spending which is expected to power revenue growth in its digital business. Though deal sizes are small and $100 million digital deals are unlikely, TCS can compete for multiple smaller deals boosting its revenue. The digital business is expected to be worth more than $5 billion in the next 3-5 years on a cumulative basis. The run rate in that business is expected to reach a couple of billion dollars in the same period.
Utilisation and Attrition: TCS' utilization, excluding trainees, touched an all-time high of 86.7%. The company says that at its scale, it no longer makes sense for it to consider utilization in terms of percentages. Attrition was rose to 13.4%, Infosys' attrition rate was 20.4% mark in its third quarter.
Lay-Offs: The company once again dismissed rumours of large-scale job cuts and said the number of people being asked to leave would be around 1000 in India. CEO N Chandrasekaran said the company would look at the reasons the 'normal performance exercise' caused so much noise this year.
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