TCS tweaking business model to tackle US visa headwinds

Pointing to "headwinds" in the US like limited number of H1-B visas being issued and higher visa fees, IT major Tata Consultancy Services (TCS) on Thursday said it is proactively addressing these concerns by making changes to its business model.

"From headwind point of view, I think there will be some visa regulatory changes. There are two possibilities, especially when you look at the US visa. One with regard to the visa fee...The second is a commentary on the number of visas one will get. I think we are addressing both very proactively," TCS MD and Chief Executive N Chandrasekaran told reporters here.

He said more than a year ago, the Mumbai-based IT firm had decided that it will have to operate in a "visa constrained regime" in the future.

Its US visa applications narrowed to 4,000 in 2016 as against 14,000 in the previous year and only a third of them were granted last year, he said.

Already facing a slowdown in growth, the Indian IT sector is concerned the incoming Donald Trump administration under may take steps, including tightening of visa norms. These would impact margins of the Indian IT companies that get almost 60 per cent of their revenues from the US market.

The TCS chief said US presents a "mixed bag" with a rise in GDP which can benefit companies like his but protectionist tendencies may dent it.

"You've to take the positive as it comes and face the negatives. It has become a norm, a normal course of doing business to calibrate and operate on a day-to-day basis."

Chandrasekaran pointed out to a comment by Trump on focusing on local manufacturing, which he said, represents an opportunity for software companies.

Elaborating on the strategies which the company is deploying in the face of the headwinds, he said the business model is being tweaked.

"We have been able to successfully execute by making changes to our business model. So we believe we are preparing ourselves well to handle the headwind, should it arise."

He explained the company has taken steps to ensure that it has the right mix of resources (expats deputed to the US, locals and sub-contractors) and also leverages its near- shore and global centres to execute projects.

Chandrasekaran exuded confidence the company will be able to maintain its pre-tax margins guidance of 26-28 per cent despite any eventuality and pointed out to its ability to be resilient over the last year amid a sharp reduction in visas as a measure of its success.

He said TCS leads among Indian outsourcing companies when it comes to local hirings in the US and will continue to pick up talent both laterally and freshers from campuses.