Even though TCS, India’s largest IT services firm, posted strong Q1 numbers, there are doubts over whether the company has returned to its former glory. Sluggish growth in the BFSI vertical, lower margins, and concerns over macro-economic headwinds seem to have spoiled the party for the company. Clearly, this is a challenging time for CEO and Managing Director N Chandrasekaran, who has had a good run since he took change in 2009. In an interview with BusinessLine , Chandrasekaran explains how he sees an opportunity even when things are not perfect. Edited excerpts:

Analysts say that your Q1 results are like a student who used to score 100/100 now scoring 90/100. It is still a great score but there are expectations of 100/100. What is your view?

Stock market and analyst rating depends on many things. It is important to keep that in mind and then manage the expectations.

That cannot be a primary driver because at the end of the day, parameters that market moves by are so complex that I don’t think anybody can figure them out all the time.

It also depends on the thesis they build. All of them have a thesis and they’ve got a model based on which they come up with multiples and price. It need not always be consistent.

Overall I’m pretty satisfied with the footprint. I also said that BFSI is muted at 1.7 per cent — in Q1 you would expect more. Yes, incrementally from Q4 to Q1 it is better but in Q1 you always expect strong BFSI. But apart from that if you see the footprint, every other vertical has gone up. Our Margin is good considering it’s Q1 and such a huge wage increase.

The attrition has been fantastic. So it is a very holistic set of numbers. But headwinds — Brexit, currency — exist. We are doing fantastic in the cloud segment. We are strong leaders in infrastructure. Our job is to bring these technologies, whether it is IoT, Big Data or analytics, in light of a particular business model and that’s where we score.

In the process of transforming others’ business, how much did TCS itself have to transform?

We are transforming very significantly because when I say I have trained 165,000 people in digital in the last 15 months, it is not a small transformation. And we are transforming people the way we develop software. Because people used to do what we call a ‘waterfall model’. Now, people are developing software in an agile model.

If you go to our delivery centre, you’ll see how they sit and how they operate compared to these cubicles before. If we can’t transform ourselves, we can’t transform customers.

You talk about digital playing a big role. Many companies have started separating digital from cloud. What is your view on reporting separate cloud revenues?

You can’t. The word digital is an all encompassing word because a solution requires digital and application. They ask me: separate your application and digital revenue and cloud revenue. We can’t do that. You need to say: what’s your total composite revenue. You can’t just go by split application, split infrastructure, split cloud.

You mentioned that margins were good considering you had to absorb a wage hike. In the past, you have absorbed wage hikes and still maintained a good run rate at margins.

Q4 to Q1 there is always a drop of more than 200 basis points in constant currency and we make up some. Some quarters we have benefited.

For example, last year, same time, we were hugely currency positive. This year currency was a headwind. So, sometimes we are lucky but otherwise to manage a Q4 to Q1 drop to 100 basis points is spectacular.

Do you expect the weakness in BFSI to continue?

At the end of the day, nobody has an answer for macro events. How do you factor in Brexit; how do you factor in the US election? These are all the things we cannot factor in.

But these issues are going to get severe this year...

What it means, we have to see. Some will throw up opportunities, some will throw up challenges.

When I say Brexit, it can also throw up opportunities. The main thing is that fundamentally we have to understand where the customer is going and what is happening in the world macro and micro level that is affecting the customer’s business model.

You said you were in Europe recently where you met customers. Are customers holding back on investments while waiting for Brexit to play out?

Not yet but everyone’s watching what is going to happen. As of now, there is no pause; they are growing. But this was just 2-3 days after Brexit.

You should give it some time. In August, I will take a poll and July-end you’ll start to know. By August I will definitely know. If there’s negative news, we need to communicate.

In order to cope with the change, are you looking at acquisitions or are you trying to build everything internally?

For me, it doesn’t matter where it comes from. So, just because we don’t buy stuff, people should not think that we don’t do things.

We have a distributed team with so many people. Each unit is run by a very exceptional leader. We have an M&A group, they engage and everybody is allowed to come up with a proposal. As long as they want to buy, we encourage. But if they don’t want to buy, that’s okay, too.

In 2013, you said you want to be the best performing company, you want customers to feel where you are different and that all operating metrics should be excellent. Three years on, do you think you’ve achieved what you aimed for?

I think we are a fantastic company — all our metrics are great. All our customer metrics are world class. If you see our customer survey result, in terms of: do you think TCS is the leader or do you think TCS is a partner of choice, we get fantastic feedback.

We are number one in customer satisfaction across Europe and the US. It’s not to say we are absolutely on top of every metric. There’ll never be a situation where you are on top on every metric. But incrementally, we have gone better year on year.

I think we are doing very well but we have a distance to go. It’ll be too arrogant to say that everything is perfect.

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