Tata Consultancy Services (TCS) CEO K Krithivasan stressed on the strategic shift seen among the company’s clientele in his FY24 letter to shareholders. According to the CEO, customers have increasingly prioritised projects that are critical to their business operations, particularly those with faster ROI.
This reprioritisation, he said, reflects broader market trends where companies are looking to navigate economic uncertainties by focusing on core, value-generating activities.
Krithivasan also mentioned about the pressure on discretionary spending but noted the conversion of newly won deals into planned revenue streams. This suggests that while clients are cautious with their budgets, they are still investing in transformative technologies. He also mentioned that TCS’s focus over the year has revolved around cost optimisation and cloud transformation initiatives, aligning with the broader demand for more efficient and scalable technological solutions.
“Demand was led by vendor consolidation, cloud migration and transformation, customer and employee experience enhancement, operating model transformation, business process optimisation, supply chain initiatives, sustainability, AI enablement i.e. creating a cloud and data foundation for AI, and early-stage AI-infused transformational engagements,” Krithivasan mentioned in the letter.
One significant area of technological investment highlighted in the CEO’s letter is the adoption of cloud strategies and the exploration of Generative AI (GenAI) technologies. These innovations are not just seen as tools for operational enhancement but as crucial strategies for business growth and transformation. The shift to cloud-native products and platforms has been accelerated, aiming to increase collaboration, security, scalability and efficiency across industries.
Looking ahead, Krithivasan expressed confidence in TCS’s trajectory, citing an all-time high order book and a strong pipeline velocity. “Looking forward, we see greater opportunities ahead, as businesses become more technology-intensive and depend on technology to drive competitive differentiation and transform their industries. Our integrated business model which drives value creation for all our stakeholders, will continue to help us benefit from each new wave of technology change, and be a force multiplier for our growth and leadership in years to come.”
The financial year 2024 concluded with TCS seeing an operating margin of 24.6 per cent, with a quarterly operating margin of 26 per cent in Q4. This performance aligned with the company’s targeted margin band of 26 per cent to 28 per cent. The net margin for FY24 came in at 19.3 per cent.
TCS experienced a revenue growth of 6.8 per cent in FY24, reaching Rs 2,40,893 crore, with the revenue growth in constant currency standing at 3.4 per cent.
