This quarter is all about consolidation of growth momentum: TCS CEO & MD

'Two years back we experimented and took in 32,000-35,000 freshers in the first two quarters and this allows us to bring freshers into the company in an accelerated way', said Gopinathan

Tata Consultancy Services’ (TCS’) Q2 FY22 numbers marginally missed street expectations on revenue growth. But Rajesh Gopinathan, chief executive officer and managing director, TCS, believes that this is one of the best ever quarters because growth was broad-based. Every geography, including India, and vertical have reported double-digit growth. In an interview with Shivani Shinde, Gopinathan talks about the performance and the next stage of growth at the company and how it is tackling supply-side issues. Edited excerpts…

TCS has reported double-digit growth across geographies and verticals, but revenue growth was a tad lower than expectations. Also the total contract value (TCV) looks soft compared to the equivalent period a year ago and sequentially. Why this divergence?

This has been a great quarter. If you look at the deal win segments, every aspect has come back strongly. For instance, North America, which was weak for a couple of years, has come back strongly and reported good growth in the last few quarters and this quarter has been outstanding. Similarly, large verticals like retail and manufacturing have all done well. As for TCV, Q2FY21 had a large mega deal; if you remove that the growth is upwards of 20 per cent.

When you look at growth, it has been driven by three core aspects — increased outsourcing, building a digital core, and the growth and transformation agenda of clients and it is evident in Q2 too.

From an overall portfolio perspective, I am happy and this growth momentum is evident in the customer metrics. We are above the pre-pandemic baselines. Each of the layers of our pyramid of customers has grown. This quarter is all about consolidating the growth momentum and visible across all segments.

The first half of the year is generally the strongest. Do you think the momentum you have picked up now will sustain over the next two quarters?

There are two themes running parallel. First, this growth momentum we are witnessing will continue, because the demand environment is strong. But then there will be seasonality of demand and operations that will be specific to industries and regions. The seasonality theme will not go away, so it will be wait-and-watch mode. But medium-term growth will not get impacted by these one-offs.

Attrition has gone up. In FY22, TCS will onboard more than 70,000 freshers. How are you making sure that TCS is not impacted by supply constraints?

Our earlier approach was to bring in freshers in an even stream throughout the year. Two years back we experimented and took in 32,000-35,000 freshers in the first two quarters and this allows us to bring freshers into the company in an accelerated way. And the model was successful. That is what we did this time too.

Our skilling strategy has also shifted with multiple platforms now available. Rather than look at fresher training as a standalone activity it has been deeply integrated into business units themselves. This has meant a change in the way the curriculum is being set, and the focus is in tune with the business units. Our training is more aligned to where the demand is.

You have been talking about growth and transformation (G&T) as being the next phase of growth for TCS. What does this mean for the company?

An exercise we have been doing, internally, for the past few years has been identifying the value of what we do. There are multiple G&T projects TCS was and is participating in and executing them well, but what we did for the past few years was to become more aware of which part of the customer agenda we are partnering. We found that internally, there was not enough appreciation of the role we play in the customer ecosystem. Creating that awareness and articulating what we are doing, both internally and externally, are the key part.

This has several ramifications. It impacts the way we deliver services and also how we get acknowledgement from clients.

How difficult was it to get the mindset of TCSers to change to this new pattern?

Yes, the challenging part was the internal mindset … but this is not moving away from our values, it is about claiming what is ours. By talking about what is rightfully ours is not the negation of it (core values) but a logical extension. This is important because of the size we have and our aspirations.

Do you think this will allow you to close the perception gap between TCS and players like Accenture and IBM services?

Who we are depends on the eye of the beholder or the clients we work with. I am not a consumer brand which needs recognition from other brands. I am not worried about who says what about TCS. What matters is that we are relevant to our customers. Today we have over 1,000 customers and 98 per cent of our business is repeat business. Our relevance to customers should continue and increase.