N Chandrasekaran, managing director and CEO of Tata Consultancy Services, maintains that his company has proved its adaption to merging trends by reporting consistent growth. In an interview with Shivani Shinde, he talks about the new drivers here and the changing business portfolio. Edited excerpts:
The market is looking at TCS as the new bellwether. Is it an added pressure?
Pressure is always there. We have shown growth consistently in the last few quarters. At the end of the day, we have to develop a healthy business and stay focused about it. Though it might sound cliched, the mantra is to be clued to the customer, talk with them, discuss with them. This is where we will get new ideas and partner with them.
What are the growth drivers for the company in the current macro environment?
We need to be close to clients to be able to engage with them. There are enough opportunities; each sector and each industry that we work in has technology needs and everyone is trying to be more efficient. We work with global firms; a European company does not just have business in Europe, they want to grow their presence in other regions, too.
Then, you have new technology platforms coming in, including mobile, big data, social, etc. Each of our customers wants to adopt them. Our focus is deeper customer centricity and a broader services portfolio.
Additionally, our investment in certain geographies are now coming into play. Latin America, for instance, has grown 18 per cent. It reached a revenue of $300 million last year. We need to see similar growth in regions like China.
You said the revenue mix is changing. Does this mean ADM share in the revenue mix is going down?
Application development and maintenance will continue to grow but, yes, its share will go down. The reason is ADM will get redefined. So, an application that is maintained today in a custom-developed environment, when moved to a cloud-as-a-platform, becomes a platform business.
As we add new services and platforms, these shifts will happen. To give an instance, data warehousing, data mining and business intelligence have been around for long. What has changed is the way we deliver it.
When we say portfolio changes, it means the business needs are changing. To be able to keep up with this change, you need to be agile. One of my key priorities is, how do I keep the organisation agile?
Would this also mean change in pricing?
Pricing will move up or down. When in a particular quarter you have growth led by BPO (business process outsourcing), it is obvious that pricing will fall. But that does not mean margins are getting impacted. Margins are the play of efficiency.
Even in this quarter, when we said pricing is down by one per cent, it is happening due to change in portfolio mix. There is no pricing decline in itself.
Is it possible for the company to maintain strong volume growth?
For us, growth will be broad-based and that is what we wanted. For us, it is not about one sector, one geography.
Some of our verticals have done very well but all have grown. The growth in the BPO vertical is one of the best. It also highlights that in this environment, clients want to drive efficiency and they are ready to partner with us on the BPO side, too. We also grew in BFS (banking and financial services).
But India was a disappointment this quarter.
Everything in India is taking time. India performance is very volatile. We are trying to solve it but it’s taking time. The other area we need to work is China. It has a huge domestic market. Our inability to scale there is what concerns me.