TCS Investing in GenAI, New Energy, and Upskilling for a Changing World
In his letter to shareholders, Tata Consultancy Services (TCS) Limited, Chairman N Chandrasekaran reflects on the company’s strong performance in FY 2024. In the Annual Report for 2023-24, N Chandrasekaran emphasizes the extensive growth and operational success of the company. He highlights record revenues and an industry-leading operating margin. Highlighting a revenue surge to Rs. 240,893 crore and an increase in operating margin to 24.6%, he points to a robust order book and the attainment of leading industry positions.
N Chandrasekaran details the pivotal role of GenAI technologies in shaping future business landscapes, enhancing productivity, and driving significant sector-wide changes, underscoring TCS’s strategic adaptations and investments in this evolving technological paradigm. Chandrasekaran acknowledges the global shifts impacting businesses, including economic slowdowns, geopolitical challenges, and inflation.
However, head of India’s largest multinational business group, emphasizes the opportunities arising from mega trends like AI, New Energy, and evolving supply chains. TCS, the world leader in IT services, consulting and business solutions, is investing strategically in these areas, building expertise in GenAI, green technologies, and 5G/6G infrastructure. The company is committed to upskilling its workforce to meet the demands of a rapidly changing technological landscape.
Here is full the text of his message:
In FY 2024, your company has continued to deliver strong performance. I am pleased to share with you that your company has crossed annual revenues of Rs. 240,893 crore, a growth of 6.8%, over the previous year. With relentless focus on operational excellence, this growth has come at an industry leading operating margin of 24.6%*, an increase from 24.1% last year.
The order book for FY 2024 came at an all-time high of US$ 42.7 billion supported by strong client relationships and engagement. Client metrics continue to exhibit healthy progress with strong client additions. Employee retention continues to be at benchmark levels in the industry. TCS has been selected as a Top Employer of Choice in 32 countries. TCS has retained its ranking as the second most valuable global IT services brand, valued at US$19.2 billion, an increase of US$2 billion from last year.
The global environment around the world continues to go through significant shifts. Post the pandemic, which resulted in supply chain shocks, there was an economic slowdown especially in developed markets. While initial signs of stability began to emerge, the military conflicts have further intensified this year and continue to impact the global supply chains.
After two years of recessionary fears, persistently high inflation, and unprecedented monetary tightening, the global macro-outlook looks relatively better now with improving growth, disinflation, and monetary easing in sight.
Across industries globally, there are multiple mega trends that are shaping priorities of businesses: AI, New Energy, Supply Chain and Talent.
- GenAI technologies will impact almost every sector and country going forward. Enterprises have already invested in cloud, data infrastructure and large processing power which will aid AI/ GenAI. GenAI will not only improve productivity, but also create impact we hitherto have not seen or imagined.
- Global energy transition is accelerating, and businesses are making clear commitments towards a sustainable future. The energy requirement of our fast-changing world is enormous. Key is to lower the cost of energy while also transitioning to renewables. This transition requires large investment in technology, electric mobility, renewable power, hydrogen and sustainable fuel.
Geo-political challenges are continuing to alter established supply chains and companies are rebalancing their supply chains to address both resilience and efficiency. New global supply chain ecosystems are being created, with India playing an important role in advanced manufacturing.
Advanced manufacturing, new technologies like AI, new energy, data and business models are changing the future of work and are compelling new skillsets to be built for the future.
Secure networks have become a key necessity as data is the foundation for businesses of today. These networks power everything from predictive analytics and AI to personalized customer experiences. As value of data increases, along with concerns of privacy and protection, it has rightly become a focal point of security for all businesses. The key question is what these disruptions mean to the IT services industry and how your company is preparing for these?
As enterprises globally prepare to respond to these mega trends, we see multiple opportunities for your company. Every industry is embracing these trends and their business is being shaped for the future.
For example:
- The deployment of AI and GenAI will significantly help financial institutions in both driving efficiency as well as target new customers and serve customers in a very personalized manner. For example, Insurance claims will be processed in a matter of minutes, lending and disbursements will become much faster.
- Adoption of new energy solutions and AI technology is driving the future of automobiles. It is not only driving reduction of emissions but also providing a new level of customer experience.
- AI is accelerating drug development by screening millions of compounds, predicting interactions and generating new candidates for testing.
- Connected medical devices together with AI and GenAI will transform Healthcare in a significant way. It will enhance productivity, enable remote care and help overcome shortage of skilled resources.
- In Advanced manufacturing, an AI-first approach will drive new benchmarks in productivity, efficiency and sustainability.
- Telecom industry globally is upgrading communication infrastructure to 5G/6G. These high speed, low latency networks, along with edge compute and AI will become the backbone of businesses in future.
- These transitions will require substantial investment in technology across industry sectors. Your company is making significant investments and building capabilities to partner with customers during this phase of rapid technological shifts:
- In FY 2024, TCS has consolidated AI and Cloud expertise with the creation of the AI.Cloud unit. In addition, each of the business groups are developing domain-specific AI/GenAI offerings relevant to the industry value chain. Over 300,000 employees have been upskilled on GenAI technologies in FY 2024. TCS’ products and services are also being enhanced with AI capabilities. For example, TCS BaNCSTM is enriching its product portfolio with integrated AI/ML and GenAI capabilities; AI is also being embedded in Cybersecurity services to enable predictive capabilities.
- To partner with customers on their energy transition agenda, TCS is investing in research on green hydrogen, biofuels; developing digital platforms to help customers reduce Scope 1/2/3 emissions. Our proprietary ESG framework enables enterprises to build transparency into operations and simplifies compliance reporting.
- TCS is pioneering the engineering of the 5G/6G communication stacks using open standards. Two state-of-the-art labs for future ready communication infrastructure and interoperability have been setup at Bengaluru and Gurugram. Investments are being made in multiple niche technologies such as 5G SA Core, O-RAN radios, to build these solutions indigenously.
- Your company continues to invest in upskilling its talent base of over 600,000 employees. Employees are actively leveraging experiential and personalized learning on a wide range of emerging technologies, clocking over 51 million learning hours in FY 2024. TCS continues to build strong talent supply chains with deep partnerships with leading educational institutions, shaping the curriculum for new skill needs for the future. On behalf of the Board of Directors of the company, I want to thank you for your continued trust, confidence, and support.
Warm regards,
N Chandrasekaran
Chairman
Tata Consultancy Services (TCS) Limited
(Source: TCS Annual Report 2023-24)
Also Read
