TCS acquires Pramerica Technology Services from Prudential Financial

 India’s Tata Consultancy Services Ltd. agreed to acquire Pramerica Technology Services from insurance giant Prudential Financial Inc., according to a person familiar with the matter, helping the insurer cut costs to counter low interest rates and the coronavirus fallout.

TCS and the Newark, N.J.-based life insurer signed the agreement for the Letterkenny, Ireland-based tech-services business Wednesday, with a few details still being worked out, said the person, asking not to be identified because the deal isn’t public. No cash will change hands and TCS will take on more than 1,500 Pramerica employees.

TCS declined to comment, while Prudential didn’t respond to requests for comment.

Global banks and insurers are accelerating efforts to shed non-core assets, like tech support, as they navigate through the economic uncertainty of the Covid-19 pandemic. Just this week, Deutsche Bank agreed to sell its technology services unit, Postbank Systems AG, to TCS by the year end. The price: one euro.

The Prudential deal is similar in structure and concept. Shedding the operation is expected to help the insurer trim costs, as it aims for $750 million in savings by the end of 2023. For TCS, Pramerica will bring multi-year services contracts, strategy expertise and a development center in Ireland, the person said.

Tata Consultancy is Asia’s biggest exporter of software services with a market value of more than $130 billion. It has more than 450,000 employees around the world and generates $22 billion in annual revenue from selling software services and products to a range of customers including Citigroup Inc., BT Group Plc, Panasonic Corp. and Qantas Airways Ltd.

Prudential Financial is re-pricing services and moving to products that are less rate-sensitive, the insurer said while announcing quarterly earnings last week. It put share buybacks on pause as the fallout of the coronavirus outbreak clouded business visibility. Chief Executive officer Charles Lowrey said at the time the company would explore potential asset sales and that deal-making would help reshape the business.

TCS beats estimates on faster demand recovery, announces Rs 16K-cr buyback

 Tata Consultancy Services (TCS), the country’s largest IT services company, on Wednesday beat street expectations in its second-quarter (Q2) financials, led by a rebound in growth in key verticals and geographies.

The company’s consolidated revenues in Q2 rose 3 per cent on a year-on-year (y-o-y) basis at Rs 40,135 crore while they were higher 4.7 per cent quarter-on-quarter (q-o-q).

In dollar terms, revenues stood at $5.42 billion, an increase of 7.2 per cent over the same period of the last financial year.

The board of directors approved a share buyback, the third one of the Mumbai-headquartered company in the past four years.

The buyback, worth Rs 16,000 crore, is 1.42 per cent of its paid-up capital. In 2018, it bought back 76.1 million equity shares, worth Rs 16,000 crore. That constituted 1.99 per cent of its paid-up equity capital then.

In the quarter-ended September, TCS reported profit before tax (PBT) of Rs 10,037 crore, which was 5.6 per cent higher than in the previous quarter and 4.7 per cent lower than the same period last year.

Net income rose 20.3 per cent y-o-y at Rs 8,433 crore while sequentially it rose 4.9 per cent. This figure excluded the Rs 1,218 crore on the legal claim in the Epic Systems theft case.

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“It (Q2) has been a very strong quarter from a financial perspective. It also underlines demand recovery and it sets us up in participating in technology transformation in the medium to long term,” said Rajesh Gopinathan, CEO and MD. “If you see the revenue performance in dollar terms, it is our best performance in more than 20 quarters.”

The company called the recovery happening in the second quarter a “pleasant surprise”. TCS had earlier predicted reaching pre-Covid levels of Rs 40,000 crore in revenues in the December quarter.

However, Gopinathan sounded cautious when he said the overall business environment was not “out of the woods” because Covid-19 was there.

Growth in Q2 was led by two key verticals – retail; and banking, financial services and insurance (BFSI) – which account for more than 50 per cent of its revenues. The company declared an interim dividend of Rs 12 per share. The record date has been fixed on October 15.

Remain optimistic about future despite uncertainty due to virus: TCS CEO

India's largest IT services firm Tata Consultancy Services (TCS) on Tuesday said it is actively engaging with customers to overcome the current crisis in the wake of the coronavirus outbreak, and that it remains "positive and optimistic about the future" despite the "uncertainty in the next few weeks and months".

In a blogpost, TCS CEO Rajesh Gopinathan highlighted that the company's priority has been to safeguard the health and well-being of its associates while continuing to support critical IT backbones globally.

He added that TCS has taken proactive measures such as travel restrictions, cancellation of events and large internal meetings, safe working environments and processes that have helped minimise the impact.

It also launched a programme to ensure business continuity using its "Secure Borderless Work Spaces" infrastructure which allows TCS associates working from home, both onshore and offshore, ensure business continuity with support from minimal associates working from offices, Gopinathan said.

"Today, TCS and other technology partners are actively partnering our customers overcome this crisis. We are helping rapid roll-out of COVID-19 tracking systems, supporting fragile supply chain systems across industries, ensuring critical payroll processes so that workers get paid in time... We will face more uncertainty in the next few weeks and months and our resolve and patience will be tested," he said.

Gopinathan noted that short-term impacts notwithstanding, in the long run, technology providers such as TCS will be more relevant than ever to organisations globally.

"As enterprises build more adaptive and agile organisations to survive uncertainty, technology will play an ever-increasing role. As enterprises focus on their core tasks and competencies, they will rely on experts like TCS to make new technology work rapidly for them using the contextual knowledge TCS possesses of their businesses, systems and processes," he said.

Gopinathan said research and innovation has always been a strength for TCS. "Once again, during the COVID-19 crisis, we are leveraging the TCS R&D infrastructure to run multiple threads looking for opportunities to support the governments, both India and abroad," he added.

He said some of these include examples such as COVID-19 patient tracker, creating a quick and light platform for clinical trials systems to rapidly collate effectiveness data in collaboration with pharma and medical institutions, drug molecule discovery using our patented technology and frameworks, exploring promising ideas for affordable and effective ventilators, and kits.

TCS, DLF seek govt nod to set up IT SEZs in Haryana, Uttar Pradesh

Software firm TCS and realty major DLF have sought government nod to set up special economic zones (SEZ) for IT sector in Haryana and Uttar Pradesh.

These proposals will be taken up by the Board of Approval, the highest decision-making body for SEZ, in its meeting on February 26 here. The inter-ministerial body is chaired by the commerce secretary.

TCS has proposed to set up an IT/ITeS SEZ at Noida in Uttar Pradesh in an area of 19.9 hectares, according to the agenda paper of the board meeting.

The total proposed investment for the project is Rs 2,433.72 crore.

Development Commissioner of Noida SEZ has recommended the proposal for grant of formal approval for setting up the zone.

On the other hand, DLF has proposed to set up two SEZs in Haryana. The proposed investments for these projects are Rs 793.95 crore and Rs 761.54 crore.

The requests of these two companies have been placed before the Board of Approval for consideration, it said.

SEZs are major export hubs in the country as the government provides several incentives and single-window clearance system.

As on November 14, 2019, the government has approved 417 such zones in the country. Out of this, 238 zones are operational.

Exports from these zones grew by about 14.5 per cent to Rs 3.82 lakh crore in April-September 2019-20. It was Rs 7.02 lakh crore in entire 2018-19 financial year.

Q3 result: TCS disappoints Street with slowest revenue growth in 8 quarters

Information technology sector leader Tata Consultancy Services (TCS) on Friday reported a mixed bag of financial numbers for the quarter ended December 31, with the company posting its slowest revenue growth in eight quarters, though it improved profitability.

With softness seen in key verticals such as banking, financial services and insurance (BFSI), and retail, the company said the chances of posting double-digit growth in FY20 were remote. The Tata group firm also saw its headcount shrinking by around 4,000 people in the quarter, indicating a slower pace of hiring.

In the December quarter, TCS’ profit before tax declined 1.32 per cent to Rs 10,569 crore compared with the corresponding period of the previous year, though it showed a 0.4 per cent rise sequentially. The company posted a net profit of Rs 8,118 crore, a marginal rise of 0.2 per cent over the same period of the last financial year, while it grew 1 per cent sequentially.

The Mumbai-headquartered firm reported revenues of Rs 39,854 crore, a rise of 6.7 per cent year-on-year

(YoY) and 2.2 per cent on a quarter-on-quarter basis (QoQ). Dollar revenues for the third quarter were $5.59 billion, a rise of 6.4 per cent YoY and 1.3 per cent in sequential terms.

In constant currency terms, revenues increased 6.8 per cent YoY, making it the second consecutive quarter of single-digit growth in revenues. In sequential terms, growth was 0.3 per cent, which is the lowest in the last two years.

In Q2 FY20, the company posted an 8.4 per cent rise in revenues, while the top line grew 11.4 per cent in April-June.

"Last (fiscal) year, we had a growth rate of 11.4 per cent. We are not going to be anywhere near that. If we do better than 8 per cent, I will be quite happy. It is somewhere in that range," said Rajesh Gopinathan, CEO and MD, TCS. "The range of possibilities is not quite wide. But we are quite optimistic about what comes after that," he added.

TCS' constant currency growth in sequential term also remained the lowest among its peers. While Infosys posted a 1 per cent sequential rise in revenues, it was 1.8 per cent for Wipro. However, TCS' revenue base is more than double that of its nearest competitor.

chart"Third quarter was a challenging one as the sectoral trends of the first half of the year continue to play out during this period. However, we are happy about the way we have negotiated with the environment and performed in this quarter," said Gopinathan. The Tata firm, however, showed an improvement in its operating margin owing to cross currency gain and efficiency measures. Margin expanded by 100 basis points in sequential terms at 25 per cent.

"Our ability to expand our margins in a volatile environment speaks of the strength of our business model, strong execution focus and the higher quality of revenues," said V Ramakrishnan, chief financial officer at TCS.

Also, momentum in large deals continued as TCS signed $6 billion contracts in the quarter, taking the total contract value (TCV) of deals signed during the first nine months of the fiscal year to more than $18 billion, 22 per cent higher YoY.

Among business verticals, TCS continued to face growth bumps in the BFSI and retail segments. While its BFSI vertical grew 5.3 per cent YoY, the retail segment grew 5.1 per cent.

"The UK and US (banking businesses) were structurally challenging during the quarter as clients were focussing on cost optimisation. However, we have added 20 small and medium new clients in the US apart from serving our large banking clients. Also, within BFSI, the insurance segment has performed extremely well in Q3," said N Ganapathy Subramaniam, chief operating officer.

TCS banking on universal banking platform to clinch large finance deals

With information technology (IT) services companies seeing subdued demand from the banking, financial services and insurance (BFSI) segment, industry leader Tata Consultancy Services (TCS) says it is expecting its universal banking platform, BaNCS, to clinch large deals in this space.

Last week, the Mumbai-based major announced it had a multi-year IT outsourcing contract from Scotland-based Phoenix Group; the industry estimate is $2 billion. Phoenix is Europe’s largest life insurance and pensions consolidator.

This is the second such large deal the company has signed in BFSI which involves large-scale deployment of its BaNCS solutions; the Transamerica contract last year is said to be of similar size. The latter deal marked TCS’ entry into a specialised insurance third-party administration marketplace in the US, establishing BaNCS in the region.

“The expanded partnership (with Phoenix) will result in the digital transformation of Standard Life’s pensions and savings operations onto the TCS BFSI digital Platform, powered by TCS BaNCS. This will expand the overall scope by a further 4.2 million policies, taking the total number of policies managed by Diligenta, TCS’ regulated subsidiary in the UK, to nearly 10 million,” said Suresh Muthuswami, president of BFSI Platforms at TCS.

In the ongoing year, TCS has announced several other deals which are led by BaNCS, in Europe, the Asia-Pacific and West Asia. “Despite headwinds in the BFSI vertical, TCS has indicated that the BaNCS platform is doing fairly well and has been able to achieve six new wins and six go-lives in Q2 (September quarter),” says Girish Pai, research head at online share market trader Nirmal Bang.

TCS already services around 35 million policies globally through the platform business. The new mandate from Phoenix will make it 40 million. “This will cement our market leadership in the life and pension insurance segment, with a strong presence in open book deals," added Muthuswami.

TCS presently services around 7.5 million open book policies, which offer higher profitability than closed book ones. To further the platform business and make inroads in markets outside of Europe, it is now looking at localising the product for other markets, especially for America.

“The banking platform in the UK is doing well and is highly mature. We are now in a position to on-board 750,000 to a million policies every quarter, which is giving us steady growth and non-linearity,” says N Ganapathy Subramaniam, chief operating officer.

According to industry analysts, TCS' investments around products and platforms, as well as its aggressive patenting, will be a key differentiator. At end-September, it owned 1,121 patents and had applied for 4,874 more.

Seven of top-10 firms add Rs 76,998 cr in m-cap; TCS biggest gainer

The combined market capitalisation of seven of the 10 most valued Indian firms advanced by Rs 76,998.4 crore last week, with TCS leading the chart.

Reliance Industries Limited (RIL), HUL, HDFC, ITC, ICICI Bank and SBI were the other firms which witnessed a jump in their market valuation for the week ended Friday, while HDFC Bank, Kotak Mahindra Bank and Infosys suffered losses.

The valuation of Tata Consultancy Services (TCS) zoomed Rs 25,403.64 crore to Rs 7.97,400.51 crore.

ICICI Bank's market capitalisation (m-cap) rallied Rs 20,271.2 crore to Rs 3,03,054.59 crore and that of SBI advanced Rs 10,664.91 to reach Rs 2,51,317.06 crore.

Likewise, the m-cap of RIL appreciated by Rs 9,762.29 crore to Rs 9,06,941.76 crore.

The valuation of Hindustan Unilever Limited (HUL) jumped Rs 7,934.03 crore to Rs 4,63,886.75 crore and that of ITC went up by Rs 1,658.68 crore to Rs 3,04,520.66 crore.

HDFC's valuation rose by Rs 1,303.65 crore to Rs 3,63,105.62 crore.

In contrast, the m-cap of Infosys plunged Rs 55,921.5 crore to Rs 2,73,830.43 crore.

Shares of the IT major had plummeted nearly 17 per cent on Tuesday following a whistleblower complaint regarding alleged malpractices by the top management.

Kotak Mahindra Bank's valuation dropped Rs 5,262.13 crore to Rs 3,03,293.39 crore and that of HDFC Bank dipped Rs 273.54 crore to Rs 6,72,192.76 crore.

In the ranking of top-10 firms, RIL remained at the number one position, followed by TCS, HDFC Bank, HUL, HDFC, ITC, Kotak Mahindra Bank, ICICI Bank, Infosys and SBI.

During the last holiday-shortened week, the BSE Sensex lost 240.32 points or 0.61 per cent. PTI SUM ABM

TCS may report higher Q2 margin on Thursday; weak rupee to help firm

At Tata Consultancy Services’ (TCS’) announcement on Thursday of its second quarter (Q2, July-September) earnings, analysts will be watching the Mumbai-based company’s commentary on three of its segments.

These being BFSI — banking, financial services and insurance — manufacturing and retail. The segments are expected to give a broader sense about the information technology (IT) services sector’s performance in the quarter.

TCS, the IT bellwether, is expected to benefit from a weaker rupee and stronger North American growth in the quarter. However, client-specific challenges with regard to some banking and manufacturing clients in Europe, and some semi-conductor and equipment vendors, are likely to play a key role on whether it ends 2019-20 with strong double-digit growth, say analysts.

The banking and financial services segment, especially capital banking, has been stressed for a while in Europe. Among the top Indian IT players, TCS is at the forefront of implementing some of the large projects in this space. Its order bookings and commentary on this will be keenly watched.

Analysts will also seek clarity on revenue inflow from large deals, with the company having started disclosing the total contract value (TCV) from these. In Q1 (April-June), it had reported outsourcing contracts with TCV of $5.7 billion, making it the fourth quarter in a row of signing deals more than $5 billion.

“We believe continued pressure building up from the Europe BFSI will make TCS' double-digit revenue growth challenging. (We also) Expect deal closure to be soft, due to a volatile macro environment,” said Aniket Pande, research analyst at brokerage Prabhudas Lilladher.

chartAccording to the latter entity, TCS is likely to report constant currency revenue growth of 3.2 per cent (quarter on quarter). And, operating margin is likely to expand by 150 basis points (bps), supported by rupee depreciation, absence of wage hikes and visa costs. On a year-on-year (YoY) basis, the margin might see a decline, due to limited talent supply and increase in the US cost structure.

TCS had in Q1 shown steady performance, by sustaining double-digit growth. It had reported a 11.4 per cent rise over a year in revenue at Rs 38,172 crores; this was 0.4 per cent higher over the preceding quarter. In dollar terms, revenue at $5.48 billion, had grown 8.6 per cent over a year; in constant currency, the rise was 10.6 per cent. However, the revenue in dollar terms missed Street estimates.

“TCS will likely report reasonable growth, with challenges in the financial services and retail verticals. We expect constant currency revenue growth of 2.6 per cent and cross-currency headwind of 75 bps on a quarter-on-quarter basis. Q2 of FY19 had a high revenue base and will likely result in a deceleration in YoY constant currency growth to a single digit,” reported Kawaljeet Saluja, research analyst at Kotak Securities.

He feels net profit growth is likely to be modest, due to completion of its buyback programme. Progress on localisation initiatives in the North American markets will be watched, as that will guide the changing cost structure situation in the region. IT companies across the board have been coping with increasing localisation requirements by hiring from American universities and going for contractual staff, both of which have impacted employee cost.

TCS hires 30,000 graduates, highest in 5 years; women workforce at 36%

Tata Consultancy Services (TCS) has issued over 30,000 joining letters to fresh graduates, of which 12,356 employees came on board in the April-June quarter, the highest in five years. The remaining are expected to join the second quarter of the current fiscal. As of June 30, 2019, the total headcount at TCS stood at 436,641 and the percentage of women in the workforce rose to 36.1 per cent, it added.

The company had trained over 315,000 employees in digital technologies and 361,000 employees in Agile methods. The IT services rate attrition stood at 11.5%.

'The vibrant, enriching workplace and best-In-class retention rates at TCS are a key competitive differentiator. Customers value the lower attrition because of results. In greater stability and fewer disruptions in our service delivery. Moreover, TCS account teams are better placed to retain the contextual knowledge gaIned over time, and use that to build differentiated solutions tailored to each customer's unique requirements," said Milind Lakkad, Global Head, Human Resources. 

On Tuesday, TCS reported a profit of Rs 8,131 crore in Q1 of the current financial year 2019-20, up 10.8 per cent from Q1 of previous fiscal. The net profit in the corresponding quarter of the last financial year was Rs 7,340 crore.

The Q1 FY 20 revenue grew 11.4 per cent year-on-year to Rs 38,172 crore due to strong performance from its key banking, financial services, and insurance (BFSI) segment, said India's biggest software services company.

The company has also announced a dividend of Rs 5 per share.

TCS all set to start a major centre in Patna, says Ravi Shankar Prasad

Union minister Ravi Shankar Prasad on Saturday announced that Tata Consultancy Services (TCS) is all set to start a major centre in Patna.

The Union IT minister, who also holds Communications and Electronics portfolio, announced it on his twitter handle after meeting Tata Sons Chairman N Chandrasekaran in New Delhi.

"Chairman of Tata Sons Shri N Chandrasekaran met me today. We had an enriching discussion on India's digital future. I am delighted that soon TCS is starting a major centre in Patna. Investment by India's largest IT company in Bihar should promote IT investments in the state," he tweeted.

The move will attract other IT companies to set up their centers in the state, he added.

Both Prasad and Chandrasekaran discussed about various issues relating to India's digital sector and exchanged new ideas shaping a brighter digital future for the country, a statement issued by Prasad's office said.

TCS modernises 150,000 post offices under multi-year deal with India Post

Tata Consultancy Services (TCS) has partnered India Posts in a multi-year deal to become a multi-service digital hub, modernise the delivery of mail and packages, enhance customer experience, and launch innovative services that will drive new revenues.

TCS will implement Core System Integration deploying an integrated ERP solution that caters to mail operations, finance and accounting, and HR functions, and connects its network of over 150,000 post offices, making this the largest distributed ePostal network in the world.

The solution is built to cater to the department’s immense scale, and future needs.

TCS revamps 150,000 post offices under Rs 1,100-cr deal with India Post

India's largest IT services company Tata Consultancy Services (TCS) said it has deployed an integrated solution for India Post that has helped modernise a network of more than 150,000 post offices in the country.

In 2013, the Mumbai-based company had announced receiving an over Rs 1,100 crore multi-year contract from the Department of Posts (DoP) for an end-to-end IT modernisation programme.

The partnership was aimed at equipping India Post with modern technologies and systems to enable it to offer more services to the customers in an effective manner.

"At the heart of this transformation is the Core System Integration (CSI) program designed and implemented by TCS. This involved deploying an integrated ERP solution that caters to mail operations, finance and accounting, and HR functions, and connects its vast network of more than 150,000 post offices, making this the largest distributed e-postal network in the world," TCS said in a statement.

The integrated solution supports requirements of over five lakh employees, services over 40,000 concurrent users, and processes over three million postal transactions a day, making this one of the largest SAP implementations globally, it added.

On the front-end, TCS said, it has implemented its Point of Sale (PoS) solution across 24,000 post offices with over 80,000 PoS terminals and has also built a web portal with consignment tracking capabilities, and set up a multi-lingual call centre for customer support.

"An important objective of the transformation is to use the department's nation-wide reach to drive financial inclusion and accessibility of citizen services in remote areas.

"This is being accomplished through over 130,000 DARPAN 1 hand-held devices that Gramin Dak Sevaks use to provide postal, banking, insurance, and cash management services in remote villages, even those without network connectivity," TCS said.

TCS Business Group Head (Public Services) Debashis Ghosh said postal services across the world are reinventing themselves to stay relevant to a new generation in the digital era.

"We are proud to have partnered with the Department of Posts in this pioneering, mission mode initiative to build a world class, future-ready digital platform that the nation can be proud of. With this, the department can offer smart postal services, enriched customer experiences, and innovative value-added services to the citizens of India," he added.