Flexibility will be key going forward: TCS COO N Ganapathy Subramaniam

IT services major Tata Consultancy Services (TCS) reported 7.3 per cent year-on-year (YoY) increase in consolidated net profit for the quarter ending March 31, 2022 at Rs 9,926 crore. The company announced its highest-ever order book at $11.3 billion in Q4 while $34.6 billion in full-year 2021-2022. 

N Ganapathy Subramaniam, chief operating officer, and Executive Director, TCS, in an exclusive interaction with Business Today, opened up on the Q4 results as the revenue crossed the Rs 50,000-crore mark for the first time. He also spoke on the IT firm’s strategy and future outlook. Edited excerpts.

 

BT: What remains some of the key growth drivers this quarter? And, how do you expect the financial year 2023 to be for TCS? Given the kind of growth that you've delivered this time around, and why it was perhaps expected by the analysts, there was a part of the market that was thinking that we would start to see the beginnings or the indications of a slowdown, clearly, that did not happen. 

NGS: More and more businesses are getting embedded into technology that’s the first impression and first foresight, right. The result is that almost all businesses, whether it is big or small, whether it is airlines or banking or capital markets, or retail, they're all investing in technology and that is the key thing to know whether they want to grow, they want to optimise, they want to be resilient. 

They want to secure and they want to participate in ecosystems. Maybe one of these cases I think technology is the enabler and they all have seen that in a pandemic situation. When people could not attend office, technology actually built it out. I think that's the biggest realisation. 

 The second thing I will say is that you know, we have invested in building skills, the skills that we need on digital technologies massively for the last three or four years. And, we also found the specific offerings around cloud, agile, automation, intelligence, data analytics, all of that. So, when you put all these things together, then what we find is that our products and services are a lot more relevant to our customers. 

BT: Talking about some of the big deal wins, huge momentum, of course, the key positive surprise, the $11.3 billion total contract value (TCV), which includes two mega deals now, when will they start adding up tell us a little bit more about the contribution from these and what they're all about? 

 NGS: Both the mega-deals, we have already started to execute them. So, the revenue from those deals will start to accrue from Q1FY23 onwards, even if we exclude those mega-deals. And, still, you know, we are having $9.5 billion as the revenue as the order book rather, which is a very good number. We have been talking about 8 to $8.5 billion as the order book will last several quarters. So, our efforts have always been to move that median number, right. So, I'm glad that we are finishing it to $9.5 billion and we hope to do justice to the kinds of products and services we have. We have the momentum and keep improving our performance in FY23. 

BT: You spoke somewhere about massive reorganisation going forward in April. Can you tell us a bit more about that? 

NGS: Traditionally in our business there are three dimensions to the structure. One is that the geography or infrastructure, right, so you've got countries markets to operate in, we've got verticals like banking, insurance, things like that. So, the verticals are another way of looking at it. Then there are service lines, like for example, cloud is a service line, growth and transformation programmes is a service line, things like that. So, these are three dimensions we used to have. And, we continue to have those dimensions. 

 And, then it's a collaboration between the markets team and the vertical teams, and the service teams come together around the customer requirements and execute them as projects and projects typically operate as the P&L (Profit and Loss statement) and deliver the value and they do all the numbers pretty much right? So, we are here to pretty much watch and then take it and report it. 

 Now, what we have done is that we have added one more dimension to those three, which is really you know what we call is the customer journey dimension. So as customers start the journey with TCS, they sometimes start small, sometimes they start big after going through a process what's important for them is the experience that we give them as they come and do projects with us. 

 You never get a second chance to make a first impression, so what we said is that look, okay, how do we curate that journey, so as they come in, how do we actually stay close to them? And, how do we make sure that we deliver impeccably to the promises that we make as they come? So then you know, you have solidified your relationship with them, and then they understand the way of working the TCS has, we bring in and set up all the processes tools that are required so that on that platform, you could just go and harvest more of the customer suspend, right in terms of offering all the things that TCS has. 

So, the journey dimension is that like, okay, you acquire them, you incubate them, and then you harvest more of the relationship-minded and then become a trusted partner and transform them. So, that's the journey dimension that we have added. We have found specific groups. 

BT: Given the context that some of these major deals will continue to now contribute in the coming quarters do you expect to maintain this kind of growth trajectory? Do you see any macro headwinds?  

NGS: See, all the macro-level indicators are the economic indicators that are being pointed out is something that for us to note and we have to keep track of those indicators how they pan out whether it is the inflationary trend that you see, or the war situation that how it was going to pan out, or the pandemic. People say it's not over, for example, some countries are already witnessing something, but we have to keep all of that you know, on the radar and then see, but at the same time, even [in] the toughest of situations, people now believe that business has to go on, and technology is the one which is going to help them to re-execute it. So in that context, look at our customer base, that is what they're doing, what is it that they want us to do. Keep very close to them, and then start executing some of the offerings that we have. 

So, in that context, while macro indicators are there, the demand momentum that we see is really positive and we see, we signed rightly pointed out $11.3 billion dollars for deals, and we see a good pipeline of deals on which we are working.  

So, you know, we just have to stay focused on what we need to do and how we need to execute it. At the same time, stay agile to see what's happening around us. So overall, while I am a bit cautious about some of the indicators that are coming to us, but we see with our clients and prospects base that we have, there is good momentum, and we want to capture the momentum and continue to perform well.  

BT: When you're talking about growth, is it broad-based in terms of verticals and geographies, or are you seeing strength more specifically, in certain pockets? 

NGS: No, it's a broad-based growth across markets as well as verticals. North America contributed to nearly 50 per cent of the $11.3 billion deal, but then, we have got deals in Europe, and Australia in emerging markets. All over, I think it's very broad-based across verticals also. It's quite encouraging to see that. 

BT: Attrition rose to 17.4 per cent. Firstly, do you see yourself continuing with the kind of hiring momentum that you've seen so far through FY23? Secondly, what's leading to the higher rate of attrition? I think incremental addition and attrition has gone down, but what do you see as the trend going forward? 

NGS: We see the attrition getting to some kind of a stable situation in about six to eight months' time. This is what we hope so far, that's the indication. I see the curve and how it pans out. There is a belief that in six to eight months' time the supply side should remain stable and the demand side also should be stable. 

The thing to note is that this is a big investment cycle. That's coming and we started to upskill and hire a lot of people during the pandemic as well and started to train all of those people so that we have the skills that we need to execute that demand. The demand environment is really great and the industry, as well as some of the competitors, needed those trained skills. 

 The result is that look TCS naturally has those skills, so people came and started to hire people from TCS as well but the key thing to notice is that we are an employer of choice, and, we continue to attract talent both laterally as well as you know from our freshers perspective, the investment that we made in terms of democratizing that talent hiring, you know, in terms of the national qualifier test, etc., meant that, we have the wherewithal to hire 100-1,000 freshers last year. When we said that we'll have 40,000 and the demand shot up. With attrition we had to then hire more people. We had the database to reach out to people and bring them on board, train them and make them relevant. 

BT: You started to bring people back to offices and you're encouraging them to come, you're giving them the flexibility, to begin with, how are you managing the transition from work from home? 

NGS: We had our first customer summit in Lisbon, about three weeks ago, and almost about 250 plus clients came in and participated with us in the first physical event that we hosted in about two and a half years. The experience is great. People like it, and clients like it. And, we also started to get clients coming in, last week we had three client visits in Bengaluru. And what I saw in the initial set of people coming back to work is that they are bubbling with energy. The energy levels are great. 

So, I think you know more and more people will come back to offices and we will always calibrate it with the employees' safety in mind. In some ways, we have always prioritised it, but we are encouraging our associates to come back to the office with a certain amount of flexibility that they can leverage. 

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