The famous corporate guru Peter F Drucker once famously mentioned, ?Management is about doing the right things, but leadership is about doing things right.? So when most of the companies, especially technology companies, were facing the wrath slowing down of economies in the west Tata Consultancy Services (TCS), expanded its leadership position in India.
So during the financial year 2008-09, TCS?s consolidated revenues cross the coveted $6 billion mark. Consolidated revenues grew by 23% in 2008-09, over the previous year, to touch Rs27,813 crore, and consolidated operating profits grew by 26% to Rs 7,170 crore. And at a time when profitability was under doubt, its operating margins improved by 109 basis points to 23.73%. The net profit was Rs 5,256 crore, a growth of 5% over 2007-08,due to external factors like extreme currency volatility.
?The company is positioned to work in collaborative mode, learning constantly, critically evaluating all that it does and demonstrate the leadership it is known for,? said S Ramadorai, former chief executive officer and managing director. On October 6, 2009 Ramadorai smoothly handed over the mantle to Natarajan Chandrasekaran.
The management over the years has been looking towards expanding its geographical reach so as to reduce its dependence on the US markets. Ramadorai points out, ?The company has been continuously making investments to open up new markets and services. The investments the company made in new growth markets like Asia-Pacific, Latin America and now in Middle East and Africa are attaining scale, size and a meaningful presence. In 2008-09, the new growth markets grew at a rate of 16%.?
And while newer markets grew, even the traditional US market business remained robust. TCS? biggest market North America crossed the $3 billion revenue milestone and grew by 26% in 2008-09 despite the recession in the region, while Europe grew by 38.5% during the year.
With the $ 505 million acquisition of Citigroup?s captive BPO in India, which has since been renamed TCS e-Serve, has enabled the company to add a vital new aspect to its banking and financial services business. The acquisition came with 12,500 talented professionals and a contract from Citigroup worth $2.5 billion over nine years. While operations have been expanding, the smooth transition of leadership has been noteworthy and a demonstration of strong management practices at TCS. And as the global economic scenario has improved the company has been in a position to derive maximum benefit.
And this was reflected in the results for the quarter ended December 2009 as revenues at Rs 7,649 crore saw a 2.9% growth over the previous quarter of the same year and 5.1% over the previous year. Similarly, operating profit margins jumped up by 126 basis points, sequentially. And the net profit grew by 11.1% over the September 2009 quarter to touch Rs 1,824 crore.
Speaking about this, N Chandrasekaran the new CEO& MD said, ?TCS yet again posts high growth and delivers on margin improvements for the third successive quarter in this difficult year. Our investments ahead-of-time in emerging markets, multiple industries and client relationships is reflected in our exemplary performance.?
However, it was the US market that continued to lead demand recovery. UK & European firms are increasingly beginning to invest for the upturn, said the management. APAC and India are seeing strong demand driven by growth in sectors like Energy, Utilities, and BFSI.
The growth momentum is also reflected across the portfolio of clients with 32 new client additions, growth in the number of active clients and additions of seven clients in $5 million plus bracket. Clearly, there are a lot many right things being done at TCS to maintain its leadership position.