TCS upbeat on IT demand, worldwide client spend

CEO Chandrasekaran specially bullish on Europe

Tata Consultancy Services (TCS), India’s largest information technology (IT) services exporter, on Saturday said the overall demand environment continued to be good, with clients starting to spend on discretionary projects. The company said while it expected growth to be spread across markets, growth in Europe would be more rapid than in other markets.

Chief Executive Officer and Managing Director N Chandrasekaran said, “The overall demand environment is quite good. The demand is being driven by a number of initiatives. Customers are looking at optimising their IT infrastructure---applications, solutions and operations. If you look at the overall spend in terms of optimisation and discretionary spending, both are picking up, as clients are looking at transformation and new digital initiatives.”

He said while all markets where TCS operated were showing growth, he expected the European market to grow much faster. “We are seeing pick-up in Europe. I think our growth in Europe would be better, with sequential improvement,” he added. In the quarter ended June, TCS had reported growth across most of its major markets. Growth in the UK, the largest market in Europe, stood at 14.8 per cent, while growth in continental Europe was 4.3 per cent.

However, he added among all industry verticals, growth in the financial services space would be slowest, since “discretionary spending is not happening at the same level as it used to be”.

On the National Association of Software and Services Companies (Nasscom)’s projection of 11-14 per cent growth for IT services companies this year, Chandrasekaran, also the chairman of Nasscom, said this estimate would be reconsidered after the second quarter results of IT services companies, expected by October. Talking about TCS, he said, “We have maintained we will grow above the Nasscom guidance.”

Earlier, S Gopalakrishnan, co-chairman of Infosys, had said the company was seeing discretionary spending in key markets, though decisions on large transformation projects were still taking long.