Investor Presentation July 2018 Copyright 2017 Tata Consultancy Services Limited
Forward Looking Statements Certain statements in this release concerning our future prospects are forward-looking statements. Forwardlooking statements by their nature involve a number of risks and uncertainties that could cause actual results to differ materially from market expectations. These risks and uncertainties include, but are not limited to our ability to manage growth, intense competition among Indian and overseas IT services companies, various factors which may affect our cost advantage, such as wage increases or an appreciating Rupee, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on cross-border movement of skilled personnel, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which TCS has made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry. TCS may, from time to time, make additional written and oral forward-looking statements, including our reports to shareholders. These forward-looking statements represent only the Company s current intentions, beliefs or expectations, and any forward-looking statement speaks only as of the date on which it was made. The Company assumes no obligation to revise or update any forward-looking statements. 2
Tata Consultancy Services TCS is an IT services, consulting and business solutions company, partnering with the world s largest businesses in their transformational journeys Global Presence in 46 countries with 190 Solution Centers in 18 countries Started in 1968, TCS is part of the Tata Group, known for its values, integrity and management excellence Employer of Choice, No. of Employees over 400,875 FY 2018 (ending March) revenue US$ 19.01 Bn Amongst the Top 10 Global IT Services providers 3
Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 REV IN USD MN EPS IN ` The Journey so far Industry-leading top-line growth $20k $10k $k 200 100 0 with superior profitability Judicious usage of cash 3% 23% 60% 14% FY05 to FY18 and higher-than-benchmark share performance TCS 1054% BSE IT 503% Shareholder payout Capex Acquisitions Invested Funds 4
Leading Technology Change
Leading through 50 Years of Enterprise Technology Cyber Sec, Identity, Blockchain Automation Y2K Factory Cypto Industry 4.0 Devices Security, Privacy MES, M2M BYOD Groupware, Apps, Smartphone IoT, Robotics Drones, Cyber-Physical Wearables, Bionics Collaboration, Social, Touch Interaction, Design, AR/VR Cognitive Automation, AI, Intelligent Agents 1970s 1980s 1990s 2000s 2010s Digital RPA Compute Data Applications Applications Development 1970s Mainframes, Unix, VAX, AS/400 1980s Windows 1990s 95, Linux 2000s 2010s DBMS, RDBMS Material Resource Planning COBOL, Object Oriented Warehouses ERP, HRMS, CRM, FS, BPS Client/Server, Thin Client Virtualization Grids BI, Marts, NoSQL SaaS Cloud, Edge, Fog, Mist GPU, FPGA Pervasive, Personal Big Data, Analytics, Data Monetization SoA, Agile PaaS, BPaaS, Products & Platforms APIs, DevOps
Business 4.0 EMBRACE RISK MASS CUSTOMIZE AGILE CLOUD LEVERAGE ECOSYSTEMS ABUNDANCE CREATE EXPONENTIAL VALUE AUTOMATED INTELLIGENT
Digital Transformation Offerings Consulting & Services Integration Enterprise Agility, M&A / Divestitures, Finance & Shared Services, CX Front Office Transformation, SCM as a Service, Next Gen Transformation, Digital Integration TCS Interactive Commerce, Channels, Marketing, Engagement Conversational Experiences Content, Care, Concierge, Commerce, Colleague Experience Intelligence Digital Core Analytics & Insights Business Analytics, Data Services Enterprise Intelligent Automation Infra, Application, Process IOT Connected Devices, Industry 4.0, Smart City, Digital Twin, Managed Services Cloud Apps, Microsvcs & API Migration, Modernization, Integration Cloud Infrastructure Public, TCS Private & Hybrid Cloud Cognitive Business Operations Business Process Services Domain & Enterprise Services Business Platforms as a Service Application Services IT Infra Services Digital Workplace Intranet Imagineering, Persuasive & Immersive Experiences, Collab & KM Systems, Emergent Learning Cyber Security I&AM, GRC, Digital Forensics, MSS, Cloud / Mobile/ IoT Blockchain Advisory & Ideation, Business Consulting, Value Demonstration Enterprise Application Services SAP, Oracle, MS, Salesforce Quality Engineering & Transformation Process, Performance, Agile
Gaining Leadership in Digital Digital adoption is progressing swiftly project ticket sizes are going up Early adopters are now taking up core transformation programs 12.5% $505 13.3% 13.7% $553 $568 15.5% 15.9% 16.1% $652 $694 $704 16.8% 17.9% $737 $797 18.9% $868 19.7% $934 23.8% 22.1% $1,183 $1,058 25.0% $1,263 Large scale, large scope, complex and risky undertakings: TCS is the preferred partner 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 Revenue from Digital ($Mn) Revenue Contribution % from Digital In FY18, TCS was ranked a leader in 39 competitive assessments pertaining to digital technologies by major industry analysts
Winning in a Business 4.0 World 10
Marching ahead with our Brand Ranked among the Top 3 IT Services brands globally, and the Fastest growing among them Ranked Global Top Employer by the Top Employers Institute across 27 countries Listed in Fortune s 2017 List of the Top 50 companies that Changed the World Ranked among the Top Regarded Companies and World s Best Employers in the Forbes Global 2000 list Won top honours in the Institutional Investor's 2017 All Asia Executive Team Rankings
Strategic Investments
Embracing Agile at Scale Execution Capability 211,000+ Agile trained associates 8,000+ Externally certified 400+ Agile Development Zones Market Success 440+ Clients using agile methods 1900+ Agile engagements 50+ Transformational programs US Home Supplies Retailer Leading Cargo Handler Time to market 90% reduction Product Quality 30% improvement Time to market 90% reduction Product Quality 30% improvement Agile Assets External Visibility Agile Workspaces Agile Ready Teams Customer Engagement Australian Bank Large US Financial Services Co Time to market 65% reduction Product Quality 80% improvement Time to market 20-50% reduction Product Quality 60% improvement
Scalable Reskilling using the Digital Learning Platform Access Analytics and Insights Cloud Anytime, Anyplace, Any device Content Rich & Expanding Crowd sourced faculty Mobility, Digital Marketing IOT & Cyber Security Delivery Domain-infused, Culture focused, Gamified Infrastructure Cloud based, Immersive and Virtual FY 18: 247k associates trained in Digital 861k+ Digital competencies acquired
Investments in Digital Products, Platforms & Partnerships PRODUCTS PLATFORMS Customer Intelligence & Insights Omnistore Optumera Intelligent Urban Exchange Advanced Drug Development ERP on Cloud PRODUCTS HOBS TCS Connected Universe Platform PARTNERS Cloud Providers Tech Partners 3,916 patent applications; 654 granted 20 DESIGN STUDIOS & LABS ENABLERS OEMs COIN Partners 11 150 INNOVATION CENTERS DISTRIBUTED AGILE DEVELOP0MENT CENTERS
Focus Areas for Research & Innovation FOUNDATIONAL RESEARCH Computing, Physical Systems, Sciences BFSI Blockchain Data Marketplace, Banking Analytics, Peer to peer Insurance INDUSTRY 4.0 Automation, Cognitive computing, Drones RETAIL Algorithmic Retail, Price Optimization, Dynamic Omnichannel, Shelf Product Recognition GOVERNANCE Automated Compliance, Consent Management, Enterprise Security MANUFACTURING Early warning system, EHS Digital Assistant, Digital Twin SUSTAINABILITY Remote Healthcare, Accessibility, Energy Management LIFE SCIENCES Digital Clinical Trials, Digital Drug Discovery, Paperless Labs
Co-innovating with the Startup Eco-system 3,062 Visibility Investor Portfolio Events, Meetups Demo days Hackathons Conferences, Forums Customer Innovation Partner Innovation Publications TCS BU Requests 1,073 Validation TCS Horizontals and Vertical BUs Customer BUs 113 Valuation Joint Go to Market Strategic Alliances As of 31 st March 2018
Longer Term Growth Strategy
Customer Centricity : Going deeper, Casting wider Customer-centric Organization Key Benefits Outcomes Verticalized Business Units Entrepreneurial Organization Focus on Overall Spend Deep domain expertise Strong growth Investments: New capabilities Customer Focused Innovation Proactive Solutioning IP Development Contextual knowledge Full Stakeholder Coverage Preferred partner for Transformation Enduring relationships Resilient business 19
Going Deeper, Casting Wider: A Case Study Large Retail Client in UK 20
Going Deeper, Casting Wider: Business Outcomes Large Client Metrics Rev Rev per per US$1 $ Mn Million CLient Client US$ 20 Mn+ US$ 50 Mn+ US$ 100 Mn+ 3 207 $19.8 121 52 17 97 38 $16.7 FY13 FY18 FY13 FY18
Going Deeper, Casting Wider: Financial Outcomes Revenue per capita ($cc) Net Income per capita ($) $74,146 $12,212 $9,248 $41,885 FY13 FY13 - FY18 FY13 FY13 - FY18
Cash Flow Cash Conversion OCF to Net Income 109.1% 88.7% Free Cash Flow USD Mn $4,090 Free Cash Flow/ Enterprise Value 5.7% $1,760 3.0% FY13 FY18 FY13 FY18 FY13 FY18 Data as of fiscsal year ending March 31 st
Amt in $ Mn Strong Capital Allocation 105.7% 43.1% $3,824 $4,090 $4,233 Average Payout FY14-FY18 : 64% 37.1% $2,030 $2,939 91.2% $2,929 $2,886 41.8% $1,540 $1,687 $1,165 FY14 FY15 FY16 FY17 FY18 Free Cash Flow Shareholder Payout
Structural Growth Drivers Consolidating market >> Scale providers gaining market share Emerging Markets catching up in Technology adoption>> Expanding global spend IT is a source of competitive differentiation >> Rising technology intensity of businesses Shortening Tech shelf-life >> Greater propensity to outsource 25
Annexure
Latest Earnings Financial Highlights IFRS USD Mn Yearly Quarterly FY18 FY17 YoY 1Q19 1Q18 YoY Revenue - CC $18,754 $17,576 6.7% $5,018 $4,591 9.3% Revenue - ` Bn 1,231 1,180 4.4% 343 296 15.8% Revenue - USD $19,089 $17,576 8.6% $5,051 $4,591 10.0% Gross Profit $8,035 $7,611 5.6% $2,090 $1,908 9.5% Gross Margin 42.1% 43.3% (121 bps) 41.4% 41.6% (20 bps) Operating Income $4,730 $4,518 4.7% $1,264 $1,073 17.8% Operating Margin 24.8% 25.7% (93 bps) 25.0% 23.4% 160 bps Net Income $4,005 $3,917 2.2% $1,082 $923 17.2% Net Margin 21.0% 22.3% (131 bps) 21.4% 20.1% 130 bps EPS in ` 134.19 133.41 0.6% 19.17 15.20 26.1% 27
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