Tata Consultancy Services Limited · NSE:TCS
Tata Consultancy Services — Investor Day (May 2008)
16 slides from Tata Consultancy Services's investor day presentation, May 12, 2008
Slide 1: Profitable Growth Through Financial Leadership
Profitable Growth Through Financial Leadership S. Mahalingam Executive Director & Chief Financial Officer 12 May 2008 TCS Analyst Day, New York
Slide 2: Top Investor Concerns
Top Investor Concerns • Sustaining Growth – Lingering global economic outlook – Troubled banking sector • Maintaining Profitability – Salary inflation – Flattish pricing environment – Funding investments for future growth 12 May 2008
Slide 3: Sustaining Growth - Changing Profile Of TCS' Business
Sustaining Growth - Changing Profile Of TCS’ Business Revenue by Geography Asia Pacific MEA 5.2% 1.7% India 9.0% North India Americas America 11.9% 61.1% 50.7% Continental Europe Others 9.2% 6.3% UK Europe & UK 19.8% 20.7% Ibero America 4.4% FY02 FY08 Revenue: $0.9 bn Revenue: $5.7 bn Diversificatio
Slide 4: Sustaining Growth - Changing Profile of TCS' Business
Sustaining Growth - Changing Profile of TCS’ Business Revenue by Service Practice Asset Consulting Leveraged Infrastructure Solutions 3.4% Services 3.6% 6.5% BPO EIS 6.2% 5.4% Assurance 3.7% Asset Leveraged Solutions 1.6% Enterprise Solutions Others 13.1% 0.3% Enterprise Solutions & BI BI 10.8% ADM
Slide 5: 2008: A Challenging Year
2008: A Challenging Year Headwinds Wages (316 bp) Rupee Appreciation (415 bp) • Global Structure • New SEZ sites • Headcount additions for FY'09 growth Investments in Future Growth • Platform based BPO • Products Business- TCS Financial Solutions • Small & Medium Business Initiative 12 May 2008
Slide 6: 2008: A Challenging Year
2008: A Challenging Year Headwinds Largely Offset Pricing 6.58% Off shore Leverage 0.35% Hedge Program 1.95% Net Impact : Net Income 2008 21.95% 2007 22.17% 12 May 2008
Slide 7: 2008: Q4 A Challenging Quarter
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 12 May 2008
Slide 8: 2009: Looking Ahead
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 12 May 2008
Slide 9: Focus On Operational Excellence To Maximize Profitability
2009: Focus On Operational Excellence To Maximize Profitability • Utilization • Offshore Leverage • SG&A Cost Management • Employee Cost Control 12 May 2008
Slide 10: Focus On Operational Excellence To Maximize Profitability
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 12 May 2008
Slide 11: Offshore Revenue and Impact on Operating Margins
2009: Focus On Operational Excellence To Maximize Profitability Utilization Offshore Leverage SG&A Cost Mgmt Employee Cost Control Offshore Revenue and Impact on Operating Margins 50.0% 500 bps 40.0% 400 bps 30.0% 300 bps 20.0% 200 bps 125 bps 100 bps 10.0% 100 bps 35 bps (50 bps) 0.0% 0 bps -10.0%
Slide 12: Focus on cost management actions
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 sell
Slide 13: Employee Cost Control
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 • F
Slide 14: Sustaining Profitable Growth
Sustaining Profitable Growth FY06 FY07 FY08 % of % of % of INR m INR m INR m Revenue Revenue Revenue Revenue 132,455 186,332 228,614 Operating Income 33,894 25.6% 46,444 24.9% 53,651 23.5% Net Income 28,831 21.8% 41,315 22.2% 50,191 22.0% • FY 2008 Operating Margin: – 24.6% adding back FX gain in Ot
Slide 15: In Summary …
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 12 May 2008
Slide 16: Profitable Growth Through Financial Leadership
Profitable Growth Through Financial Leadership S. Mahalingam Executive Director & Chief Financial Officer 12 May 2008 TCS Analyst Day, New York