‘Today, business is getting embedded into technology’

Varun Aggarwal Thomas K Thomas Mumbai | Updated on January 16, 2018 Published on October 16, 2016

N CHANDRASEKARAN, Chief Executive Officer, TCS

Digital adoption is happening rapidly, says N Chandrasekaran

The last two quarters have not been the best for IT major TCS with macro headwinds hurting the company’s growth. While analysts question TCS’ ability to move fast enough to capture the changing needs of the market and technologies, CEO N Chandrasekaran said in an interview with BusinessLine that he is confident the company is on the right path and that growth will return soon. He says its like running a marathon where tough stretches do not mean losing the race. Excerpts:

You termed this quarter ‘unusual’, which, in itself, is unusual. You have been the CEO for a while now and before that, the COO. Do you see the current situation as being very different from what you have seen in the past?

I’ve been fortunate in this industry because it is a very exciting industry. All through my career, I’ve seen generation after generation of transformation. Every time there’s a new technology, it doesn’t simply replace the old one, it brings new possibilities.

What is happening now with digital is there are different ways in which people define it but for me digital is about helping enterprises become efficient, become agile, become smart and to have the capability to respond.

This is one of the biggest transformations I’ve ever seen and it is not just a technology transformation. Technology was embedded in business in the time of internet; but now, in the digital time, business is getting embedded into technology.

TCS has been gearing up for a digital transformation for a few years now. Why is it not leading to higher revenues?

TCS has knowledge about the industry. We also make the investments necessary — investments in talent, investments in IP, in partnerships, in terms of incubations. We are working with many customers and in some cases we are implementing solutions we have built and that have matured. In some cases, we are implementing, in some cases we are developing.

For example, in Blockchain, we are engaging with 40 global banks. There are different levels of innovation. They are not ready yet and are all pilots. At some stage, when the solution becomes industrial strength then we’ll go for larger implementation.

The digital adoption is happening rapidly but at the same nobody is going to do everything I’m saying in one shot.

Neither is there bandwidth nor is there talent. My only assessment is that we are in great shape to contribute and capture. So, we will get back to high growth rates. But we can’t say if it’ll be in the next quarter.

Banks and enterprises that we speak to say they are all big on digital. Is there some disconnect because this should have added to your revenues?

The market is extremely short-term driven. But the softness I feel is temporary and it should get better. And once that happens, digital growth will happen.

This year we have been focused on execution. It is very important for us to deliver on the 26 per cent margin. Yes, there’s been a miss in the growth and I’m not very happy about that, but there is softness. But our focus is to exit FY 17 as good as we can so we can prepare for FY 18 better.

Are Brexit and the US elections impacting growth?

Maybe they are contributing but I don’t want to say because of this the results are bad or because of something else the results are bad. I don’t have proof-points for that.

These kind of factors are not in your control. In any one of these factors if you ask five experts, all five will have different answers. So, I think there is some impact from these macros in the way customers are making their decisions — and that is a conjecture; it is a statement I am making by the process of elimination.

Despite the headwinds faced in the quarter, how were you able to come back to the 26-28 per cent margin band?

We’ve done a number of things. Most important was execution. In 2009, we decentralised and organised into multiple units with separate P&L responsibilities. It is not that I can centralise overnight and tell them to take ₹500 crore cost out. That doesn’t happen like that.

I’m very proud of the fact that my team delivered on margins. We wish we delivered on revenue but it wasn’t for the lack of trying.

Are you going to do anything different from here on?

Nothing. I think we are on the right path and we just need to accelerate our path. And whenever we are not able to meet numbers, we get a lot more details, find patterns and look at that.

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Published on October 16, 2016
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