TCS becomes first Indian IT firm to cross $100 billion market capitalisation
Tata Consultancy Services reached a special milestone on Monday, as the Indian consulting firm’s market capitalisation shot past the $100 billion mark — a feat which has occurred only once before on the Indian stock exchange. The firm’s IT services, in particular, have driven the spectacular growth of the Mumbai-based consultancy.
Much has been written in recent months about the IT services market in India. While the segment has traditionally thrived due to business from international clients in particular, the incremental digitalisation of the Indian economy in recent times has boosted the domestic market for IT services as well.
As a result, the segment has become highly competitive, drawing investment from major global players in consulting. Professional services firm Grant Thornton launched a digital arm in India last year, while Big Four accounting and advisory firm Deloitte launched its Deloitte Digital vertical earlier this year.
In the domestic environment, Indian firms have been devising substantial expansion strategies, not only to gear up for the large demand but also to fend off competition from large international players entering the market. One firm that appears to have found its balance in this competitive scenario is Tata Consultancy Services (TCS).
Tata Consultancy Services
The firm signaled its intent to capitalise on the Indian IT market last year, when it inaugurated an integrated software development facility in Mumbai, fully equipped with state-of-the-art software facilities, advanced recreational facilities, and designed to accommodate 30,000 employees when operating at full capacity.
As testament to TCS’ quality of service, two major companies that have had long term contracts with the firm extended their partnership by another five years. Market research firm Nielsen extended a decade-long outsourcing contract, while airline company Virgin Atlantic decided to continue a fifteen-year-long partnership for IT architecture. In addition, Malaysian Airlines also employed the firm’s services to transition its operations to a cloud platform.
Investments in software development have paid off in terms of recognition, as TCS was named a global market leader in software product engineering by the Everest Group, while market research consultancy NelsonHall named the firm a global leader in digital marketing services.
Now, the monetary returns on investment in the IT segment have materialised in spectacular fashion. In a quarterly report released by TCS last week, the firm reported net profits of nearly $70 billion, which exceeds the already generous expectations of market analysts, who predicted returns of just under $68 billion in a survey conducted by Reuters.
Encouraged by this tremendous success, the firm’s value on the stock market has soared. Share-value increased by nearly 4.5% to cross Rs.3,500 per share, driving the firm’s overall market capitalisation up to $102.7 billion. TCS now stands atop the Indian stock market, ahead of even major industrial actors like Reliance, HDFC, ITC, and Unilever.
The growth, driven by the firm’s IT services, has taken it past the $100 billion market capitalisation milestone, a level reached only once before — by Reliance Industries in 2007. TCS Chairman Natarajan Chandarsekaran was clear and concise in his assessment of the situation, stating, “As the industry goes through the adoption of robotics and deep learning, the opportunities for TCS are only on the increase, because there are more skills that are required.”
