The positive mood is palpable at TCS House, the global headquarters of the country’s largest software company. Tata Consultancy Services (TCS) officials seem optimistic about the next 12 months, despite the challenges such as the restrictive proposals in the US Immigration Bill and overall softness in developed markets.
‘Caution’ is no longer a part of the top management’s lingo, it has been replaced by ‘growth’. For the first time in Q4, the company crossed $3 billion in quarterly revenues. The Tata group company expects to grow faster than industry body Nasscom’s prediction of 12-14 per cent in this fiscal, says its Chief Executive Officer and Managing Director N. Chandrasekaran. Excerpts from an interview:
In the earnings presentation, you mentioned that the order pipeline looks good. So the year ahead looks good?
I look at it from two perspectives: One is what I am hearing from large clients and the second is the sense I get from our internal teams. From the clients’ perspective, I find comfort levels are much higher compared to the same period last year from across all geographies.
Last year, the talks centred on the crisis in Europe, and the US elections. Now, technology is the focal point of all these discussions. The second data point is from what my team is reporting to me, in terms of a robust deal pipeline. And this pretty much resonates with what I hear from clients. In all, I feel we have a better momentum this year than the last.
TCS expects to grow faster this year, compared with FY13. However, this does not reflect in your plans to hire 45,000 employees in FY14, lower from 69,000 a year ago.
IT industry, analysts and the media have been using some metrics to gauge the performance of IT companies in the last 20 years. These metrics were helpful in making projections when we were a smaller company. With our size today, some of these metrics need to be re-evaluated.
First of all, I think that utilisation (staffers on projects) is a big driver. We will move utilisation, both including and excluding trainees, up. Excluding trainees, the utilisation is 80-82 per cent on an average for the whole year. We will try and push it to 85 per cent.
We are also doing deals wherein we take over the client’s employees. We have to factor in these kinds of arrangements in our hiring plans. Then there is the non-linear (where more employees does not necessarily mean more revenues) part of our business, which is doing well. Some of the other non-linear platforms are still maturing. They do not give us big numbers yet do contribute to incremental numbers every quarter.
So, will you be hiring more personnel that you have announced?
At the end of the day, if we see the need for hiring more people, we will. Our current estimate is 45,000, which is something we are comfortable with for the time-being.
With offshoring laws stringent in France and not much leeway to lay off staff, what are TCS’ plans for Altis employees?
We are hiring for growth, and we also made the acquisition for growth. We have not acquired Alti for taking costs out of the equation. We have a team of about 1,200 personnel and have a good client interface. We will integrate Alti and TCS.
What happens to the employees? Will they stay on?
If the new US Immigration Bill (that calls for limiting the number of workers Indian companies can send to the US) gets passed, what will be TCS’ game plan?
It is an important Bill whose final outcome will give a clear picture of the impact. Our immediate reaction will be to engage actively in the process, with Nasscom and other companies, to come out with a clear articulation of our views.
We do not know what final form the Bill would take and so we have to worry about the various scenarios that could emerge, and the impact on TCS.