Information technology spends to increase next financial year: N Chandrasekaran

Interview with Chief executive officer and managing director, Tata Consultancy Services

N Chandrasekaran, chief executive and managing director of Tata Consultancy Services (TCS), India’s largest information technology (IT) services company, has always been more upbeat about demand in the IT sector than his peers. With the entire sector starting to report better-than-expected financials, signalling a revival in demand, Chandrasekaran says based on initial discussions with clients, the next financial year is expected to be even better. He shares his thoughts with the media during a chat with the media at the company’s office in Delhi. Edited excerpts:

On the outlook

At the beginning of this financial year, Chandrasekaran said it would be better than the last. The year has been good for the company, he says, adding he expects 2014-15 to be even better. The company is seeing good growth in Latin America, the US, the UK and Asia, and is preparing itself for this. He says initial discussions from clients indicate there will be an uptick in spending, especially in digital. On whether it is safe to assume the worst is over, Chandrasekaran says he doesn’t know for sure. However, “The company is seeing some positive momentum for sure,” he says, adding companies are seeing growth opportunities and an uptick in discretionary spending is also expected.

On digital

While normal business is expected to increase, TCS feels the biggest opportunity will lie in the digital space through the next two-three years, Chandrasekaran says. This includes areas such as social, mobility, cloud and analytics. Companies are re-imaging their business, keeping in mind changing digital trends. To develop new technologies and cater to changing customer needs, the company has opened a centre in Silicon Valley.

On pricing

The pricing environment is stable and some higher-end services such as digital are commanding higher prices, Chandrasekaran says, adding the overall contract size of digital projects has increased from just a few million dollars. Now, TCS is addressing a larger number of contracts in the market due to an expansion in the company’s operations in various geographies. Areas driving customer spending include simplification of technology, risk and compliance, digital push and horizontals such as security, he says.

On India business

Chandrasekaran says while all his projections are based on the assumption that the currency remains constant, it is difficult to predict the rupee’s movement in the near future. The company’s India-centric business continues to be volatile, as it is based on discretionary spending, he says, adding given the general elections are around the corner, delay is expected in government business.