The Hindu Business Line : ‘Growing talent globally is key focus for TCS’

Bangalore, Sept. 9 TCS recently expanded its board by inducting four of its senior officials. Mr N. Chandrasekaran, former head of global sales and operations, was one of them. Business Line caught up with him a day after he was ind ucted into the board and appointed COO. Excerpts:

How do you see the demand environment now considering the prevailing sub-prime crisis and the talk of a recession in the US?

The demand continues to be strong in the US. We have not been impacted by the sub-prime crisis. Our direct exposure to the sub-prime market is negligible. In terms of indirect exposure, so far we have not seen any impact. Our financial services business continues to be healthy.

But are you seeing any changes to the sales cycle due to this crisis?

If we separate financial services and other clients, there is no change in other sectors. But when it comes to financial services, there is a lot of discussion. We are carefully watching it. At this point of time there are no budget cuts or anything of that sort. We are in touch with clients and our sales team is pretty bullish. So far there has been no cause for worry. But we need to watch.

Is there any pressure on the revenue growth or on the pricing front?

No. In terms of pricing we have been signing new deals at over five per cent higher than average rates. Also, we have been able to get a 3-5 per cent hike in rates from our existing customers.

What per cent of your existing customers are agreeable to a price hike?

On an average, all our contracts are for three years. And every year, about 30 per cent of our contracts come up for renewal. We are negotiating for price hike with the clients coming up for renewal. The deal pipeline is very healthy and we should be announcing several new deals soon.

I believe TCS has signed a mega deal with Prudential!

I cannot talk about any specific deal.

What are the new challenges that you see emerging in the current scenario?

I think the challenges are growth in term of people. How do you grow the employee base and sustain the talent, especially in our case, because we have been recruiting globally? How you are going to integrate the talent globally? That continues to be our key focus. Then, challenges in terms of surprises such as rupee appreciation, etc., will continue to be there.

What percentage of your workforce is non-Indian?

About 9.6 per cent. And it’s expected to go up to 15 per cent over the next three years. So far we have been successful as we have penetrated organically, except for the couple of acquisitions such as Diligenta and Comicrom that brought in about 1,000 people each. Both the acquisitions are delivering results as per plan.

Will the growth in global workforce be driven by inorganic growth?

We don’t have at this point in time a specific targeted growth due to acquisition. Acquisition is more seen as a means to develop strategic capability. So, if we end up doing an acquisition because of that, then we will have people.

Any plans to expand your products portfolio from financial services to other verticals?

The intellectual property that we had in financial services sector is pretty comprehensive. That’s why we went ahead and created the separate entity. We don’t have that kind of a plan for other verticals at this stage.

Are you looking at an aggressive growth in the domestic market to offset any kind of possible slowdown in other markets?

TCS has been in the domestic market for three decades and we continue to be there. I think we are not developing a strategy of domestic versus other markets. We do about 10 per cent of our revenues from the domestic market. Even to maintain this 10 per cent on a growing TCS base is going to be substantial effort in increasing domestic revenues.

Do you expect the growth momentum to be sustained, say for over the next 3-5 years?

Three to five years is a long time. At this point in time, for this year I can tell you growth is pretty healthy and sustainable. We need to see how it is going to be in 2008-09.

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