Ladies and gentlemen, good day and welcome to the TCS earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Kedar Shirali, Global Head Investor Relations at TCS. Thank you, and over to you, sir.
Thank you, Margaret. Good evening and welcome everyone. Thank you for joining us today to discuss TCS's financial results for the fourth quarter and full year of fiscal year 2021 that ended March 31st, 2021. This call is being webcast through our website, and an archive, including the transcript, will be available on the site for the duration of this quarter. The financial statements, quarterly fact sheet, and press releases are also available on our website. Our leadership team is present on this call to discuss our results. We have with us today Mr. Rajesh Gopinathan, Chief Executive Officer and Managing Director.
Good evening, everyone.
Mr. N.G. Subramaniam, Chief Operating Officer.
Good evening, everyone.
Mr. V. Ramakrishnan, Chief Financial Officer.
Hello, everyone.
Mr. Milind Lakkad, Chief Human Resources Officer.
Hi, everyone.
Rajesh and Ramki will give a brief overview of the company's performance, followed by a Q&A session. As you are aware, we don't provide specific revenue or earnings guidance, and anything said on this call which reflects our outlook for the future, or which could be construed as a forward-looking statement, must be reviewed in conjunction with the risks that the company faces. We have outlined these risks in the second slide of the quarterly fact sheet available on our website and emailed out to those who have subscribed to our mailing list. With that, I'd like to turn the call over to Rajesh.
Thank you, Kedar. Once again, welcome, everyone, and a very good day to all of you from wherever you're joining in. Before I start the call, I hope all of you are safe and staying healthy in these trying times. I am very pleased with our performance in Q4 on the top line as well as on the bottom line. Continued strength and demand for core transformation services, market share gains, and large deal ramp-ups powered strong sequential and year-over-year growth.
Sequentially, our revenue grew 4.2% in constant currency, 4% in INR terms, and 5% in USD terms. On a year-over-year basis, we grew 5.9% in constant currency and 10% in USD terms and 9.4% in INR terms. For the full year, we crossed over into positive territory in reported terms with revenue growth of 4.6% in INR and 0.7% in USD terms with a constant currency degrowth of 0.8% negative.
Our operating margin for the quarter was 26.8%, an expansion of 0.2% sequentially and 1.7% year-on-year. Net margin in Q4 was 21.2%. Our full-year EBIT margin was at 25.9%, while net margin was 20.3%, excluding our one-time provisions that we took for the legal expenses. I will now ask Ramki to go over all the headline numbers, financial and segmental performance, and I'll join you again later to talk about the demand trends we are seeing and the emerging opportunities in growth and transformation. Over to you, Ramki.
Thank you, Rajesh. Let me walk through the headline numbers first. In the fourth quarter of FY 2021, our revenues grew 4.2% quarter-over-quarter and 5.9% year-over-year on a constant currency basis. Reported revenue in INR was INR 437.05 billion at quarter-over-quarter growth of 4% and year-over-year growth of 9.4%. In USD terms, revenue was $5.989 billion at quarter-over-quarter growth of 5% and year-over-year growth of 10%. Full-year revenue in INR was INR 1.642 trillion, which is year-over-year growth of 4.6%. In USD terms, revenue was $22.17 billion, year-over-year growth of 0.7%. In constant currency, revenues declined by 0.8% over the previous year. Let me now get into the segmental details for the quarter. All growth numbers are in constant currency terms. All our verticals had strong sequential growth in Q4.
BFSI grew 7%, powered by large deals as well as greater investments in enhancing customer experience, expansion into newer businesses, core transformation, and RegTech. Year-on-year growth was also very strong at 13.3%. The retail cluster that includes CPG and travel, transportation, and hospitality also had robust sequential growth of 4%, despite continued weakness in some of the sub-sectors. Despite the good recovery over the last three quarters, retail is still in negative territory on a year-on-year basis. Our life sciences and healthcare business continues to perform very well, growing 3.8% QoQ and the quarter. It's worth noting that over the last decade, this business has significantly outperformed the rest of the company, growing from 4.5% of our revenue in FY 2011 to 9.8% in FY 2021.
In dollar terms, its revenue has grown over 5.9 x during this period, a 10-year CAGR of 19.5%. Manufacturing also did well, growing 3.9% QoQ and 1.3% YoY. Technology and services grew 2.8% QoQ and 3.9% YoY, while our communications and media business grew 1.8% in QoQ and remained below prior year levels. On a full year basis, life sciences and healthcare grew 17.1%, BFSI at 2.4%, and technology and services at 0.2%, while the rest continues to be below prior year levels. By geography, growth was led by our major markets. Continental Europe grew 8.5% QoQ and 11.7% YoY. North America grew 3.9% QoQ and 5.9% YoY, and U.K. grew 3.4% QoQ and 1.1% YoY. Other markets grew well, too. Middle East and Africa grew 4.2% QoQ and 10.6% YoY. India grew 2.8% QoQ and 11.2% on a year-on-year basis.
Latin America grew 2.5% and 1.5% QoQ and YoY respectively. Asia Pacific grew 1.1% on the QoQ and 1.5% on a year-over-year basis. On a full year basis, with the exception of continental Europe, which grew 5.5%, all the markets continued to be in negative territory compared to the prior year. Coming to products and platforms, our portfolio performed well in Q4. ignio, our cognitive automation software, signed up 15 new customers and had seven go lives. With a significantly expanded portfolio of products within the suite, Digitate is now able to cross-sell and up-sell to existing customers. There were 21 such up-sells to existing customers in Q4. All in all, we added over 50 customers in FY 2021, taking the total to over 200 customers for ignio. During the quarter, we onboarded seven more reselling partners to our channel partner program.
The product suite won two more awards and was granted three more patents, bringing the total to 30 patents granted to date. TCS BaNCS, our flagship product suite in the financial services domain, had five new wins and five go lives in Q4. One of our marquee wins this quarter was State Street. TCS will help enhance its retiree services offering, leveraging the newly launched TCS BaNCS retirement platform, enabling access to expanded operational capabilities and enhanced technology to State Street's clients. Overall, it's been a very good year for TCS BaNCS with over 19 wins. Our platform is also attracting a diverse clientele, including digital-only neobanks and existing banks launching new crypto banking products. This momentum enabled our financial solutions business to grow sequentially every quarter this year, despite the deflation resulting from the shift to cloud.
The Quartz blockchain solution had two new wins in Q4 and one go live. In retail, we had one win and one go live for OmniStore, our AI-powered commerce suite that provides unified and personalized checkout experience for shoppers across all channels. In life sciences, our award-winning TCS ADD advanced drug development suite had two go lives. We deployed the TCS ADD analytics and insights platform for a top three life sciences company, transforming their clinical trial oversight process, enabling remote monitoring of ongoing trials at globally distributed sites using dynamic monitoring and predictive analytics. This platform is live now for 200-plus studies. We implemented the TCS ADD Regulatory platform for a leading pharma company for automation of submission planning through a real-time online portal-based collaboration tool. Our TCS HOBS suite of solutions for communication service providers had three new wins and three go lives in Q4.
TCS TwinX, our AI-based digital twin solution, also had three wins this quarter. Lastly, TCS MasterCraft, our suite of intelligent automation products for end-to-end enterprise application modernization, had eight wins, while Jile, our enterprise agile planning and delivery platform, saw seven new wins. Coming to client metrics, we showed some improvement in Q4 versus the prior quarter, but at higher levels it is sluggish. This is because the revenue contribution by customers is calculated on a last 12-month or LTM basis, and so these metrics will somewhat mirror our overall revenue growth on a full year basis. The number of clients in the +$100 million band stayed flat QoQ at 48. We added four more clients in the $+50 million band, bringing the total to 101. We added one more client in the $10 million-plus band, bringing the total to 387.
We added four more clients in the INR 5 million band, bringing the total to 569. We added 19 more clients in the INR 1 million plus band, bringing the total to 1,096. Let me now move on to the financials. Strong growth and improved operating metrics resulted in an operating margin of 26.8%, an expansion of 0.2% QoQ and 1.7% YoY. Net income margin was at 21.2%. For the full year, our operating margin was 25.9% and the net income margin was 20.3%, excluding the prudential provision of INR 1,218 crores as an exceptional item towards the legal claim that we are contesting in the U.S. courts.
Effective tax rate for the quarter was 25.9%. Our DSO in dollar terms was at 68, down one day compared to Q3. Net cash flow from operations was INR 92.47 billion, which is 100% of our net income. Free cash flow was INR.
80.85 billion. For the full year, it was INR 379.68 billion, up 17.5% YoY. Invested funds as at 31st March stood at INR 504.3 billion. The board has recommended a final dividend of INR 15 per share, taking the total to INR 37. Excluding the final dividend, over INR 306.6 billion of cash has been returned to shareholders this year in the form of dividends and buyback. On the people front, we had a net addition of 19,388 employees during the quarter, an all-time high. The total head count stood at 488,649, a net addition of 40,185 in the course of the year. It continues to be a young and diverse workforce, with 154 nationalities represented, and with women making up 36.5% of the base. At the heart of our success in gaining share in the growth and transformation opportunity has been our organic talent development strategy.
We have programs that anticipate emerging technology trends and tweaks individual learning programs to build up capacity in those areas while creating fulfilling career paths that help our customers meet their expectations. Other programs help identify individuals with deep customer-specific contextual knowledge and augment that with deeper solutioning capabilities to help create teams of change agents who can build transformative solutions that are deeply rooted in the customer's reality. These learning and development initiatives have gained immense popularity this year. Employees logged over 43 million learning hours in FY 2021, resulting in over 379,000 employees getting trained on multiple new technologies and over 457,000 trained in agile methods. Last 12-month attrition in IT services in FY 2021 was 7.2%, an all-time low. Keep in mind, though, that this is partly due to the LTM effect, and with growth returning across industry, we expect this to inch up in FY 2022.
Now, I turn it over to Rajesh for the demand drivers and trends. Thank you.
Thank you, Ramki. The key growth drivers during the quarter continue to be the ones we have spoken about in prior two quarters. We continue to see many wins around core transformation. This includes cloud migration, application modernization, and data modernization. In other places, organizations are revamping their operations in anticipation of cloud migration, freeing up resources, people, as well as funding, which are critical to their success there. You can see this in the increased activity around overall outsourcing. We also saw plenty of growth and transformation-side engagements. These are initiatives where enterprises leverage the power of new technologies to embrace new business models, pursue new revenue lines, deliver superior customer experience, or engage with newer segments of customers and transform operations.
In our January call, I had given examples of some typical transformation themes we are seeing in the market: M&A, supply chain transformation, customer experience, ecosystem innovation, and operations transformation. We continue to see the same themes play out in Q4 as well. If you look at the key highlights section of our Q4 earnings release, there are at least three new wins in the M&A or divestiture area, where TCS is helping plan and implement the separation of assets and processes and to ensure that the divested entity hits the ground running from day one. We now have several success stories in this space, validating our approach and capabilities. I'll name a few of these.
For example, for a large medical devices company which wanted to spin off an independent, publicly traded NewC o, TCS carried out the initial consulting-led due diligence exercise and developed a separation strategy business case. Subsequently, TCS led the transaction management office for the carved-out entity and developed day-one readiness plans, including rationalization of the parent company application portfolio, developing the target operating model post-IPO, and the operations blueprint for all functions in the new organization. The overall plan minimized the TSA needs to less than three months while reaching operational day-one readiness in nine months. The cloud solutions designed by TCS transformed their core operations and substantially reduced the technology debt while enabling best-in-class resiliency and security. Similarly, from a customer experience perspective, this continues to be a very popular investment theme among customers. Again, we had several wins in this area in Q4.
This is particularly urgent in the retail vertical, where the pandemic-driven change in shopping behaviors has driven new investments in creating consistent experience across digital and physical channels. We are very pleased with the example that we have here, which is with the PGA TOUR Superstore. It's an experiential specialty golf gear and apparel retailer, and it selected TCS' OmniStore platform, our award-winning unified commerce platform, to transform the shopping experience of the retailer's 8 million customers. Our platform enables a one-cart checkout, seamless omni-channel journeys, personalization, and flexible fulfillment with endless inventory across all stores. A journey that starts at multiple places you can add onto the same cart and check that out, which is one of the first instances of such a capability going live in this industry.
We are also partnering customers in helping them launch new products and services to address new market segments, to provide richer upsell and cross-sell opportunities, and to drive growth. TCS helped a North America-based insurer, known for its best-in-class customer experience and innovation culture, to venture into commercial lines for small business insurance, which was being done by their own members. TCS played a strategic role from inception to implementation, including market research, competitor benchmarking, product conceptualization, technology transformation, and integrating with partner ecosystems for the launch of their small business insurance and business owner's policy and general liability product. The new product was launched within a year across 5 states with a plan to expand to 8 new product lines across all U.S. locations, and to increase the customer base by approximately 4%, it's expected to generate intellectual property.
TCS has entered into an agreement with State Street to help enhance its retiree services offering with the provision of a new benefit payment technology platform. We will leverage our TCS BaNCS for Pensions in a SaaS model bundled with operations on a managed services basis. This will enable State Street to provide its clients access to expanded operational capabilities and enhanced technology. Coming to the Q4 order book. There have been some of these trends that we have been driving the strong demand for our services this year. With strong deal wins every quarter this year, we are closing the year with the highest TCV in signed deals this quarter from the time we started reporting this metric. The overall order book signed in the quarter was $9.2 billion.
By vertical, the BFSI order book of deals signed during the quarter stood at $3.9 billion, while the retail order book was at $1.4 billion. The TCV from deals signed in North America stood at $4.2 billion. Our total order book in FY 2021 was $31.6 billion, a growth of 17.1% over the prior year. Looking ahead, as we are entering FY 2022 with much better visibility for future growth with significant momentum built up over the last couple of quarters, a strong order book and a robust deal pipeline. In the medium and longer term, the technology refresh cycle that our customers are embarking on will unfold across three horizons that is spoken of in the past and provide strong structural growth drivers over the next three to five years.
The large-scale shift by customers and consumers to digital channels over the last 12 months now makes it all the more important for enterprises to differentiate themselves in these channels using technology. That necessarily entails greater use of data, analytics, machine learning, and AI for mass personalization. For others, it means exploring new business models that allow addressing new market segments or enable stronger, stickier customer relationships, which involves collaborating and co-innovating with ecosystem partners to knit together the individual products and services of each of the partners to create new emergent offerings that are purpose-led. All these represent the large growth and transformation opportunity that we have been talking about for the last three, four years and which has crystallized over the last 12 months, especially around the hyperscaler cloud stacks.
The accelerated adoption of cloud by enterprises over the last few months means that going forward, cloud will be the unifying and enabling technology fabric that powers their growth links transformation imperatives. However, it is important to note that the technology by itself does not lead to competitive differentiation. In fact, if anything, cloud models by default are about standardization and commoditization. Therefore, differentiation can take place only when a technology solution is contextualized to each customer's unique circumstances. That's where our approach to growth and transformation engagements differs from that of legacy models. One of the weaknesses of the legacy consulting model is that it places an undue premium on an outsider's expertise and invariably ends up replacing extant ways of working with shiny new, and most likely cookie-cutter solutions. That, by its very nature, dilutes differentiation rather than driving innovation.
In sharp contrast, we recognize that there is tremendous value in the tacit knowledge that resides inside the customer organization and which often goes untapped. This is foundational to contextualizing technology within the enterprise. By harnessing the collective knowledge of the customer teams and TCS teams, we are able to co-innovate and come up with transformative solutions that are uniquely rooted in that customer's reality. These bespoke solutions take into account the nuances of that organization's business and technology landscape and amplify the strengths and reduce the risks and results in highly differentiated outcomes. Another important difference is around accountability for outcomes.
Our customers truly appreciate our approach of taking end-to-end responsibility and leveraging our know-how for their transformation agenda and working along their teams with a sense of shared purpose. For the 8th consecutive year, we have been ranked number 1 in customer satisfaction in one of the largest independent surveys of its kind, polling over 1,700 CXOs of top IT spenders across Europe about their service providers. It is remarkable that on the attributes most critical to growth and transformation, like proactivity, innovation, and business understanding, TCS scored seven to nine percentage points higher than the average. Of course, success in the growth and transformation space is entirely predicated on capability. Our verticalized customer-centric organization structure has helped us build and foster domain and contextual knowledge within the industry solutions units.
Our systematic investments in upskilling our workforce, in research and innovation, and in intellectual property have all helped us build strong solutioning expertise. Our business and technology services unit has been steadily launching new service offerings aligned to the emerging transformation themes relevant to our customers. The diversity factory that I've spoken about in the past, the supply chain transformation offerings, our Bringing to Life framework for IoT and for connected products and services are all examples of these new offerings. Equally importantly, we have created structures that give us the ability to pull all the different capabilities from across different parts of TCS to put together holistic solutions that help our customers achieve their business objectives. All of these have helped us gain a beachhead in the growth and transformation opportunity over the last few years, winning share at the cost of legacy consulting organizations.
We have had some high-profile successes that significantly enhance our visibility in our customer organizations and give us a seat at the table in their strategic discussions. From a business point of view, these engagements are driving high-quality revenue growth for us and industry-leading profitability. We have been sharing these customer stories with you in our earnings call as well as our annual report. The growth and transformation opportunity is very large, and in my opinion, yet to be fully scoped. The transformation imperative will only strengthen over time. As new technologies emerge, newer combinatorial possibilities will open up, driving further investments by our customers. We believe this part of the market opportunity will see tremendous growth in the coming years. That puts us in a very advantageous and promising position.
In addition to the large outsourcing opportunity, which we continue to dominate, we are now entering a large growing opportunity that expands and probably significantly increases our addressable market. Our focus and investments will now be on growing further and gaining more market share in this space. Towards this, we are investing in deepening our transformation capabilities. Programs like Contextual Masters, which I've spoken about in the past, are scaling up nicely. We have added newer learning and development initiatives that will identify high-potential candidates and put them through experiential courses that help them become more effective transformation leaders. We are strengthening our partnerships with large technology providers as well as startups, academia, and domain specialists towards co-innovating and collaborating to create new service offerings.
We also refreshed our brand last month and launched a new brand statement, "Building on Belief," to reflect who we are today and to support our aspirations in the growth and transformation space. It talks of how every new idea, every new innovation, is born out of a belief that it will help make the world better, and how TCS partners with customers in bringing those beliefs to fruition. With that, we can open the line for questions.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sandip Agarwal from Edelweiss. Please go ahead.
Hi. Good morning to the management team. Congratulations on the excellent exhibition. Also, we wish Ramki best of luck, and we will miss his excellent guidance on the financials.
Sorry to interrupt you, Mr. Agarwal. Your voice is not very clear, sir.
Yeah, sorry. Can you hear me now?
If you can come on the handset mode if you're on speaker.
I am on the handset mode, I have a choked throat. Okay, let me re-attempt . Yeah. Thanks for giving the opportunity, and congrats on the good exhibition, good quarter, and record deal win. Also would wish Ramki best of luck, and thanks for all his great explanation of the financials in the past. I have only one question, Rajesh, that if you see only 45% or 50% of the business for us has started growing on a year-over-year basis, and the balance 45%-50% is still flattish or is slightly lower than the last year. What is your sense that when this business starts contributing next year, what will be the overall impact on our overall growth and particularly when we have 17% higher order wins?
If you can throw some color on these verticals, particularly the manufacturing piece, which has not grown much in this quarter also, and also the retail, CPG, and communication. Where do you see these businesses going forward? Will there be still one or two quarters before they start recovering strongly, or you think we are probably going to see quick recovery from here? Thanks. That's all from my side.
Sandip, I think this quarter and probably for the next one or two, our standard metric of year-on-year probably is not necessarily the best one to look at. On the shorter term trajectory that the sequential quarter provides, it gives a better visibility of the trajectory. If you look at retail itself, it is about 4% on a sequential basis, but still it's lagging on a year-on-year basis given the kind of impact that it had and the hit that it took in the first half of the year. Same is true for manufacturing. Sequential growth numbers are much better than the year-on-year comparatives, reflecting the returning strength. By far, it has not completely, by no means has it fully recovered. We are more focused on the trajectory. As you will notice, this is our third sequential quarter of 4% plus QoQ growth.
In line with our overall commentary at the beginning of the year, that we think there will be a deep correction in Q1, and we will see strong demand recovery going into the rest of the year, and that is playing out pretty much along the lines that we expected. As we look forward, other than sectors like travel and hospitality, other sectors are well on the path to recovery, subject to a few individual cases. By and large, we remain very optimistic about the overall demand scenario.
Okay, thanks. That's all from my side. Best of luck for the current quarter.
Thank you. The next question is from the line of Sudheer Guntupalli from ICICI Securities. Please go ahead.
Yeah. Good evening, gentlemen. Thanks for giving me this opportunity. In terms of the deal wins or deal TCVs witnessed by the sector in general or TCS in particular, any color on what share of this pertains to absolutely net new spends by clients and what share pertains to say something like renewals, renegotiated or researched deals?
No, not very different from our typical trends. As usual, year-end and beginning quarter of the year. Some of the shorter-term contracts get renewed, but it is no different from what our other typical trends. From a segmental perspective, it's quite broad-based across all the segments that we reported, whether it is North America or BFSI or retail. It has seen very strong growth on all the three segments.
Sure. General understanding at this juncture is that in the post-COVID era, industry should see structurally higher growth rates, given the multi-year technology transformation cycle we are betting on. If you look at the growth rate reported this quarter, adjusted for the two captive takeovers, that's more or less in line with the typical March quarter's growth. At a fundamental level, how do we read this gap? Should this quarter be read as an aberration and going forward, do we expect higher than usual growth rates?
No. Captive takeover is an integral part of our business model, so I don't see any aberration.
Sure. Sure, Rajesh. Quickly on the reason for the strong increase in other expenses this quarter.
Ramki, you want to take that?
You mean other operating expenses, right? There is a slight uptick in the subcontracting and expenses, which is more tactical. We have said that in the past. It's a more flex pool. For that, I think there is no significant increase. We'll have to look at it along with the overall employee cost. I think the overall is in line. Employee cost comes as a separate line item. The other operating expenses come separately. We don't see a significant increase otherwise.
Sure. Thanks. That's it from my side and all the best for the future.
Thank you. The next question is from the line of Diviya Nagarajan from UBS. Please go ahead.
Hi. Thanks for taking the question and congrats on a good quarter once again. Couple of questions from my end. I think we've seen the sequential growth numbers being pretty strong in the last two quarters. How should we think about what is normalized sequential growth for a company of your size from here on? That's question number one. Second, on the margin side, Ramki, we have seen margins go up to almost 27%. It is also moved a little bit in favor now. How do you see margin trends going into FY 2022?
Thanks, Diviya. I'll take the first section. I think on a steady-state basis, as we have discussed in the past, in the pre-COVID time, I think double-digit is the aspirational band that I believe that if we can achieve that, we are in a good wicket. That itself has whatever construct you can think of from a sequential basis, once you bring in a bit of seasonality into it. That's the steady-state target that we are working towards. I've said that in the past, that the management team is focused on trying to achieve that. This year will be a bit of an aberration because of the kind of denominator that you have coming off this year. Otherwise, our long-term strategy is built on trying to achieve that double-digit number.
Okay, on the margin side?
Yeah. Diviya, I think our objective has been to be resilient on the margins. What you're seeing is in that direction. Growth has been a factor, and I think that continues and that will be definitely a contributing factor to that margin resilience as well. Apart from that, other discretionary expenses and also our globally distributed model, plus on parameters, we have been able to do a lot of things, and that is also helping in the margins to be within our target range and also consistently be steady on that. Currency in the overall year has been helping during FY 2021 to take care of our compensation increases. That is again another factor which we will continue to watch as we go along.
Thanks, Ramki. Just one last question from me. We have seen a fair amount of deal wins in the quarter, the highest ever. In terms of the deal dispersion, I think a few quarters ago when the crisis hit, you had talked about how there was a bit of a dumbbell-shaped curve in how the deal dispersion had shaped up. Has that normalized, and how do you see that changing into the next 12 months?
Yeah, Diviya, very interesting. If you remember two quarters back, I'd said that it was unusually smaller deals, but the pipeline itself is more evenly distributed. Right now when we look at it, we have a fair amount of large deals in here. The 9.2 actually has a good mix of large as well as very small deals. The volume of small deals is also continuing to remain quite high. Is that normalization? We can't comment on right now. The volume of smaller deals continues to stay quite high, and the large deals are coming in and acting as a kicker on top. To put it in perspective, our largest deal in this quarter is in the range of about INR 500 million-INR 600 million, and that's a one-off.
Whereas if you compare to the year-ago period when we had $8.9 billion, we had a $2 billion deal in that setup. It's a much more spread out kind of a structure, but I'm not yet ready to call it as a trend or to generalize beyond that.
Okay. All right. Thank you so much. Ramki, it's been a pleasure interacting with you so far. Hope to stay in touch post your retirement as well, and wish you all the very best for the rest of the year.
Thank you. Thank you, Diviya.
Thank you. The next question is from the line of Sandeep Shah from Equirus Securities. Please go ahead.
Yeah. Thanks for the opportunity. Rajesh, some of your peers have indicated that in some pockets, there is a pricing pressure. Are you witnessing for the same?
I can't comment on them. From our side, pricing remains quite stable. In our industry, old services get priced differently and newer services have price resilience. The overall portfolio remains quite stable.
Okay. Just a few bookkeeping questions. If you look at the FCF generation for the quarter, though it is still healthy, but has come off from the very strong trends in the 1Q to the 3Q. Is it a growth factor which is leading to FCF now getting normalized, or some collection got delayed as a whole and FCF may continue to remain robust even in FY 2022? Second, the two large deals of BFSI, are they fully ramped up in the Q4 of this financial year?
I'll take that question on the FCF, Ramki here. I'd say, I think there has been no delays in collection, et cetera. The overall collections have been very steady, very good. Also if you have seen our metrics around DSO and other working capital elements. To some extent it is true that when growth returns, there'll be of a working capital. But the thing to note is our cash conversion is upward of 100% of our net profit, and that is what is critical. A little bit of ups and downs within quarters is not signifying anything else beyond a growth factor.
Yeah.
Sorry, on the second question, Rajesh.
Yeah, both are fully ramped up.
Okay, thanks. Thanks, and all the best. All the best, Ramki.
Thank you.
Wish you all the best.
Thank you.
Thank you. The next question is from the line of Sajeet Manghat from BloombergQuint. Please go ahead.
Hi, Rajesh. Just wanted to get an idea on the growth which you spoke about. At the end of Q3, you had mentioned that the kind of momentum and deal wins, if you were expecting a double-digit growth for FY 2022. Are we still on line to get that double-digit growth? You just mentioned that this year might be an aberration. What does exactly that mean?
We're definitely on track to achieve double digit in FY 2022. I was answering to Diviya's question about overall model that we have. As I said, the exit momentum that we have, that is the aberration that I was talking about.
Thank you.
Thank you. The next question is from the line of Keith Bachman from Bank of Montreal. Please go ahead.
Hi, this is Bradley Clark on for Keith Bachman. Thank you for taking my question. Would you be able to comment on attrition trends in the industry? The last 12 months have been at an all-time low, but as competitive dynamics and demand for skills and services pick up over the next year or so, could you comment on both the expectations for employment and attrition trends going forward, potential margin impact, and more specifically, what you've been observing in the past couple of months as it relates to competitive dynamics for talent? Thank you.
Brad, attrition is directly dependent on employees' belief in the organizations they work for. TCS has a great history of believing in its employees and continuously investing in them, and therefore, we continue to maintain our best retention rates. Beyond that, I wouldn't like to comment about industry. You will need to speak to other participants. Next question, please, Margaret.
Thank you. The next question is from the line of Pankaj Kapoor from CLSA. Please go ahead.
Yeah. Hi. Thanks for the opportunity. I had two questions. First, are you seeing any change in how customers are looking at their technology spend? What I mean is that are you seeing spend coming back on the discretionary areas or on the longer-term payoff projects? That's my first question.
You're completing or do you want to start?
Yeah. Okay. The second question-
Sorry. Okay, go ahead.
I'll come back with the second one.
Yeah. N.G., you want to take that? About the nature of technology spend.
Yeah. Overall, Pankaj, the technology spend stays stable. What we see is a number of opportunities coming in the, what we call as the growth and transformation side. Right? If you take, let's say, financial services customer, the aspects like portfolio expansion or market penetration are type of opportunities that are coming. We are very excited about those kind of opportunities. In the case of retail, again, whether it is supply chain resilience. Every one of the segments that we see and we operate, the opportunities are towards moving, in addition to being vertically integrated, how we can collaborate horizontally is a very big theme in almost every industry that we operate, right?
All the investments that we have made over the last three years, whether it is agile, whether it is machine-first thinking, whether it is the machine-first methodologies that we have come up with. All of them are pretty much contributing to participating in such opportunities neatly.
Okay. Understand that. The second question I had, Rajesh, was on the deal pipeline. Just taking forward from the earlier question from Diviya. Do you still see cost takeout and vendor consolidation deals are out in the play or as a trend, has that normalized now?
No, they continue to be. This flight to quality that we've spoken about in the past, Pankaj, is still a fairly large one because people, as they're going through this re-platforming, are using that as an opportunity not just to clean up their legacy estate, but they're also re-looking at their vendor landscape and seeing what can be done. There are multiple drivers to that. Best-in-class cost is a very big driver, but it's also about future-proofing and selecting vendors who are aligned to that technology vision and who can play proactively in that space. It's a complex set. It is not just a pure consolidation-driven play, but it is a fairly large opportunity set as people re-look at what is the kind of vendor landscape that they want and what is the kind of investments and commitments that they're looking for in this transformation opportunity.
A very large set of those opportunities are also in play and will continue to be there for the next few years.
Understood. Thank you and wish you all the best for FY 2022.
Thanks.
Thank you. The next question is from the line of Ankur Rudra from JPMorgan. Please go ahead.
Thank you. Congrats on another stellar quarter. First of all, I want to thank Ramki again for guiding us all with your insights, wisdom, and patience. Best of luck for the next innings. We will miss you. Closing on a high must be satisfying. Rajesh, you have indicated in the last quarter, and I think even on this call that double-digit growth for FY 2021 FY 2022 looks clearly certain. I think that's probably a low bar right now for you. How high should we think FY 2022 can be? Can TCS gun for industry growth leadership again, given the order book you have and the momentum you see in the markets? A related question to that, are there any headwinds you are wary of as you start the year? Is, for example, supply or talent availability a constraint?
Ankur, that's the easy part. I think supply is definitely not a constraint. Our model, as you know, is significantly organic. As Ramki also mentioned in his early commentary, the kind of investments that we're doing and the kind of platforms that we are building for reskilling is unprecedented. How high? I don't want to speculate on it. I think growth is not the main, what should I say, strategic factor when we look into in FY 2022 or the next few quarters ahead. Our bigger opportunity and our biggest strategic agenda is around this whole growth and transformation theme. How do we participate in that opportunity and how do we build on the early gains that we have made and really concretize that and consolidate that position.
That is where our key strategic focus is, and that is something that we are executing on across the full value chain. As I said, in the nature of opportunities that we are looking out for, we are trying to increase our participation on the upstream part and in conceptualizing in those kind of transformative engagements and being part of that whole chain. We are looking at the way we go to market on these models. We are experimenting with various risk-taking models. We are experimenting with various engagement models with customers. We are focusing on capability build to support the scale of the opportunity that we see. Highly integrated development plans that we have. Also bringing together multiple service practices into holistic solution combinations and structure changes inside. Similarly, I've spoken at length about our focus on innovation two, three years back.
From then on, we took our R&D capability and put a very strong explicit innovation focus to it and started externalizing that R&D capability and embedding it deeper into our business value chain. We have spoken about our investments in Pace Port, spoken about how we are actually looking at it as a new product development pipeline. We have embedded what we call innovation champions, more than 200, 250 of them in the field in various accounts. We are focused on creating those innovation forums that we do across the globe. We do 4 - 6 every year in New York, London, Europe, Latin America, Japan, et cetera. We were on a very large enterprise-wide transformation agenda post FY 2019. Last year, obviously, we had to step back and focus on the here and now and stabilize the organization.
We are now going back to that strategic agenda and making sure that we consolidate the gains that we see there. That, I think, is the transformative opportunity, and that is what will define who we are over the next five years.
Thank you for that detailed answer.
Ramki here. Thank you, Ankur, for your wishes. Thank you.
Thank you, sir. Thank you. Best of luck.
Thank you. The next question is from the line of Rushdi from Nomura. Please go ahead.
Hi. Thanks for taking my question. Rajesh, a question for you. Now, given the strong pipeline and given the strong upcycle that we are in, how do we think about the TCV trends in the next couple of quarters? That's one. To that extent, how should we think about translation into revenues as well? Any headings that we should be aware about, which would mean that the revenue translation might be slightly weaker?
We are in uncharted territory on this currently. I don't want to comment on what should be the trajectory forward. As you know, this is the highest that we have ever reported since we started reporting this. We have also called out as we see the mix changing over this. The year has been such a volatile year that I would hesitate to extrapolate further from here. Let it run for a few quarters, and then we should have better visibility. Smaller deals have a faster rundown and faster conversion to revenue. Larger deals, obviously, give us visibility over a longer period of time. The last couple of quarters, we have seen a fairly large volume of small deals.
It is also linked to this, what I said about our greater participation in these growth and transformation engagements, which by definition tend to be more project-centric and incremental project-centric. Many of the transformation programs nowadays get conceptualized as a series of sprints rather than as one single mega program. Along with our focus on Agile as a overall enterprise philosophy, we are quite comfortable with that kind of model because that enhanced engagement that the transformation opportunity gives us not contractual visibility, but gives us engagement which secures us the continued participation in the overall transformation agenda. Those are the kind of things that we are focusing and developing on.
Okay. Just one follow-up question on BFSI side. If you remove more or less the contribution from the larger deals side, obviously that's a part of the model. Still outside of that, if you look at the growth, I think it is similar to company average broadly. If you could just talk about the demand environment in this vertical and how do we think about various sub-segments here? Thank you.
Yeah. I think as Rajesh explained, we are very excited about participating in many of these smaller but very focused and value-adding engagements. Just to quote a few, for example, the first digital bank in Israel is something that we conceptualized it with the government. We established it. We onboarded the first digital bank into that platform in less than six months. These are the kind of engagement. Second is that when there is an opportunity for someone in Switzerland to come and say that, "Look, I'm going to have a completely crypto-driven private bank. How do I actually participate in it?" That's something that we have positioned our solution and then the whole value discovery framework that we came up with was exactly the kind of opportunities that are coming our way.
All the investments that we have made in the last two, three years, whether it is in the area of cloud, in the area of data, in the area of analytics. The whole idea is to really bring everything to the table, conceptualize and shape the opportunity, then say that, "Look, this is the art of possible." That's the kind of opportunities that we are getting. They are often conceptualized today as a series of sprints. It's important that you are there in the beginning, shape it, then contract it, conceptualize it, then execute it in the shortest possible time frame. The contextual knowledge, the agile frameworks, the way that the talent is managed across in a distributed fashion, all of that is helping us to participate in this.
That's the kind of opportunities that we see in the banking financial services space.
Thank you. The next question is from the line of Chandra Ranganathan from Moneyc ontrol. Please go ahead.
Hi, can you hear me?
Yes, we can hear you.
Hi, Rajesh. A great set of numbers. Just wanted to ask you what would be the two biggest challenges for you. Would it be talent? Would it be the second wave perhaps in Europe? If you can take us through one or two key challenges that you see going forward. Also a question for Milind. This quarter is when you will really hit campuses. Do you expect to hire at the same pace? Will it be +19,000 ? Will that continue to be the case? A question for N.G.S. on how the second wave in India has really impacted your thoughts on work from home, or is it business as usual for you? I want to wish Mr. Ramakrishnan the very best going forward since this is his last quarter as CFO. Thank you.
Yeah. We'll try to take it one by one. The key challenge, as I explained in one of the earlier questions, is not talent. We are very confident about our ability to both acquire as well as develop our own talent. Even more specifically, the kind of opportunities we are seeing are very differentiated. We believe that we need to grow the talent internally because the philosophy that we are bringing to this growth and transformation agenda is very unique and the first of its kind in the industry. The typical approach to this has been what we call the legacy consulting model which is a very outside in throw everything that you have, replace it with the shiny new template.
Our approach in line with our strong beliefs that we have internally and we have always been building on, is that it is better to take internal organic approach towards transformation. The contextual knowledge, the collective knowledge that resides inside the organization is the one that should be harnessed. Having known us over the years, you would have seen that we have always believed in this, and we have executed on this internally. The more we speak about it to the customers, the more they find this as a very refreshing change, and therefore, they're quite excited about partnering with us. The skill set that we are bringing to fore is very unique and very organic. We are quite confident about that talent availability because it is coming from our own people and our investments in our own people.
We're quite confident about it. The health challenges that you laid out, and we've asked Milind and NGS also to address. We are obviously very concerned. I'll let Milind talk about what we are doing about dealing with it proactively and in a positive way. Over to you, Milind.
Thanks, Rajesh. I think just to continue on the health front first, we have been continuing to do this for the last 14 months. Associate health and wellbeing has been our top priority in making all our business decisions. That continues to be like that even more so now in the second wave. Significantly increasing our communication with our people, basically continuing to use our own isolation centers and reimagining what else we can do for our people in this context of really bad situation right now in India. Many other things in terms of how do we take care of vaccinations, enable and also encourage people to get those vaccinations. All of that is happening in a very systematic manner. We'll continue to do it day in and day out, continuously connecting with our +480,000 people on an ongoing basis across the globe.
That has been there from day one, and that continues like that for the entire year. That is about the health part. With respect to your question on the overall numbers, like last year, our overall numbers from the campus will be similar, if not a little more. That would be there. We continue to hire. Basically, like Rajesh said, one of our key source of our talent is internal and strategic talent development, which we do quarter after quarter, and looking at the longer horizon as well as mid-term goals. Both of that happens, and basically, we depend on people from campus, internal talent development, and then whatever we need from the market in addition. These three together, yes, will drive our numbers from a supply side. I don't anticipate any challenge on the supply side.
Will it continue to be 19,000, 20,000 a quarter, sir?
No. What I can tell you is we'll hire similar kind of numbers from the campus. We will continue to do internal talent development, and we will actually also take it from the market. What number would it be depends on how we do on all fronts. From a talent standpoint, from a supply standpoint, we'll be ready to deliver those numbers.
Okay.
Thank you, Chandra, for that question. I think three quarters consecutively delivering 4% and above sequential growth wouldn't have been possible but for the can-do attitude and the resilience that has been shown by our associates. I just want to, first of all, thank them for their focus, passion and commitment towards customers. Overall, I think the SBWS that we launched and that 25- by- 25 operating model, the elements of it that we have rolled out, they're all auguring well, and we have been able to sell, contract, execute, onboard people, associates and customers all remotely. Our HR has also done a remarkable job in terms of connecting one-to-one with almost every one of our employees at least once a quarter.
It's been a tremendous achievement because you just imagine our strength of about +400,000 employees to be contacted at least once every quarter and on a need basis. It's been a remarkable achievement, and I again want to salute our HR officers for that. I think the focus is really about moving to a mobility-based infrastructure and enabling people to work from anywhere in a secure basis. I think that will continue. The demand environment looks positive for us. I do hope that the second wave is not going to bring in a lot more surprises than what we have already faced. I think we seem to have managed many of the levers as it applies to our operating model. Wish us well.
Ramki here. Thank you, Chandra, for your wishes. Thank you.
Thank you, sir.
Thank you. The next question is from the line of Manik Taneja from JM Financial. Please go ahead.
Hi. Thank you for the opportunity. Rajesh,
I'm sorry, Mr. Taneja. We cannot hear you very well.
Yeah. Is this better now?
Yes. Thank you.
Yeah. Thank you. Rajesh, just wanted to pick your brains around the pricing trends. Just wanted to understand if customers are much more open to skill-based pricing rather than location-based pricing as they've got used to the global delivery model much more with the pandemic reinforcing the model.
See, the initial quarter and all, there were obviously, as you said, different customers and different situations, and we were very accommodative and supportive to longstanding relationships. As the recovery has panned out across multiple industry segments, the pricing scenario has changed significantly. It's much more stable and supportive.
Beyond that, trends are not very different from what it was pre-pandemic also. Higher quality service areas command a premium, and higher quality vendors also significantly command a premium, and that has improved post-pandemic, where the value of quality is much more explicitly recognized and rewarded, either through market share or better pricing or both.
Sure. Thank you. All the best to the team.
Thank you. The next question is from the line of Dipesh Mehta from Emkay Global. Please go ahead.
Yeah. Thanks for the opportunity. Rajesh, you earlier alluded about growth and transformation initiative is the now focus area for next three to five-year perspective. Do you think it could have any implication on your deal win and tenure kind of thing? One should be mindful of any implication on reported those metrics on going forward basis. Second question is about your salary hike and what would be our thought process on salary hike, whether because of six months it would be adjusted for it, or you consider it as because we have delayed it, salary hike last year, now it would be normal kind of impact. The last question is Japan market. We have made investment in that market. If you can provide some update about Japan market. Thank you.
Yeah. The G&T opportunity should unlock newer segments and should be a net new opportunity. Overall, it should be supportive to our business model, especially because, as I said, we are building upon it in a fairly organic and systematic way. We've been putting together the building blocks of it for many years now. Overall, I think it is a net new opportunity. Size and scale of it, we'll have to wait and see how it pans out. We are quite excited about opening up a new segment and participating strongly in it. We are at early stages and we'll have to take on the incumbent base one by one. I'll answer the Japan one and then hand it to Milind on the salary hike side.
Japan is a market of strategic focus, as everybody knows and we've spoken about it's a market that tests patience. We have been systematically developing it, where our delivery models, our relationship with customers, et cetera, are being the major focus rather than immediate listings. We currently have about 35 priority customers there with whom we have substantial growing business. Slowly the focus is to move the portfolio into lesser number of clients but larger relationships, which is the typical model that we have always had globally and which was different from the business model that existed from the acquired entity. We are making steady progress on that strategy. It is a long haul. The payoffs of it are also worth and the faith that it demands. Beyond that, we'll have nothing more specifically in the short term to add to it.
Over to you, Milind, on the salary hike.
Yeah. Thanks, Rajesh. I think a short answer to that question about salary hikes is it will be similar to what we have been doing in the past. No differences on that front.
Thank you.
We have already, as you know. We were the first to announce salary hikes last year. The moment visibility came back, we announced and immediately rolled out, starting October 1st itself. Once again, we have been the industry leaders in announcing our salary hikes for April and committing that it will be rolled out from 1st April. Both are in line with our historical trends over the last few years. We are fully on the trajectory, both on salary hikes as well as promotions.
Thank you.
Thank you. The next question is from the line of Shyam Sundar Sriram from Sundaram Mutual Fund. Please go ahead.
Yeah. Hi, sir. Good evening. This is Shyam Sundar from Sundaram. Thanks for taking the question. From a competitive landscape perspective, you were alluding that this quarter, for example, we saw more of small deals, small-sized deals than the large-sized deals. Is there anything to read into it in terms of our strategic priorities looking at more of these smaller-sized deals as compared to the larger deals? Is there any heightened competition that we are seeing in the marketplace that is making us look at these smaller deals? I just wanted to get your perspective on that.
No, Shyam, I think you misunderstood what I said. Answering to Diviya's question, I said in two quarters back, we had called out that there were significantly more small deals compared to larger ones. Whereas last quarter and this quarter the larger deals are also equally there. The only area that I pointed out is that in the enhanced TCV that we have reported, the strength of small deals that we saw a couple of quarters back has continued. It has not been replaced by large deals. Large deals are come and added on top of it. I think it emphasizes our competitiveness, both in the large deals as well as in the smaller deals. Our strategic focus that I spoke about on the growth and transformation, the nature of those deals will be smaller. That's the two different things.
Understood, sir. Thanks very much. My second question is on the margins, per se. You clearly said supply-side pressures are not there, and you have very well managed the talent pool, the development in-house, per se. Just trying to understand when we think of some of the margin headwinds as we head into the next year, would it be some of the subcon flex pool that we spoke about that could rise in lieu of the travel restrictions, or it could be higher local hiring? What could be some of the margin headwinds that we could think of as we head into the next quarter? Thank you.
Yes. The one immediate one is, of course, the normalization of some of our operating expenses that in the current year is slightly artificial in the operating model perspective. That is obvious one. Otherwise, what you said are all there. Which is if we are not able to short-term talent requirement in various locations, if supply is constrained, we'll have to do something on subcontractors like you saw it spiking this quarter, et cetera. Structurally, there are no major issues that we see out there in the immediate horizon. More tactical and operational ones, some amount of normalization, some amount of individual ones. Otherwise, no structural headwinds.
Sure. Thank you very much.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.
Thank you, operator. To sum up, strong demand for our services has helped us build up an all-time high order book and strong momentum as we enter the new financial year. We continue to enjoy very resilient industry-leading profitability that gives us the wherewithal to continue investing in building newer capabilities that will allow us to increase our share in the growth and transformation opportunity. The growth and transformation opportunity represents a significant expansion of our addressable market, and it will continue to expand as enterprises depend more and more on technology to differentiate themselves and drive their top-line imperatives. Our investments in our people in research and innovation, intellectual property, alliance partnerships, and in new business models, all of which I spoke about, has helped us gain a beachhead in this opportunity.
Our focus for future will be to expand our footprint while continuing to dominate our traditional area of strength. We are investing in new initiatives to deepen these capabilities to enable this, and the launch of a new brand statement is also an important initiative to support this aspiration. We look forward to your support and good wishes in this journey. To conclude, I will also want to call out Ramki and the role that he has played across TCS and also in the larger group, and to thank him for his contributions and his being a pillar of strength for the company in its own growth journey over the last many decades. Thank you all for participating, and over to you for Margaret to close. Thank you.
Thank you.
Thank you, members of the management. On behalf of TCS, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.