Hired about 200K in 2-3 yrs, but some never came to office: TCS COO

We have decided that people should come back to office, says N Ganapathy Subramaniam

The second-quarter (Q2) results of Tata Consultancy Services (TCS), India’s top IT services player, missed estimates. N Ganapathy Subramaniam, chief operating officer and executive director, in an interview in Mumbai with Shivani Shinde, talks about high total contract values (TCVs) but soft revenue growth, the back-to-office mandate, the UK leading the growth charts, and hiring about 200,000 in two-three years, with some never coming to office. Edited excerpts

Is the uncertainty more this time around? Especially in the light of the Q2 performance and no clarity on customer spend.

There are broad macro indicators and every sector has specific issues. One is the overall economy. Initially there was concern that there’s going to be recession. Then talk on inflation took over. While there is recession, unemployment is at the lowest. Two, suddenly out of the blue Silicon Valley Bank happened and people turned cautious.

From a macro indicator there is some uncertainty. The second issue is when industry leaders talked about bubbles in the economy, caution set in.

Added to this are the trends the banking industry has pointed to — consumer savings being at an all-time low and the outstanding going up. This makes banks cautious. Similarly, manufacturing is facing changes, predominantly driven by auto and rise in electric vehicles. And until these small issues do not ease, spending will not happen.

A project is taken up if there is visibility on return on investment (RoI) in two quarters. A programme in which it is six quarters or more is put on hold.

This is also an election year in the US.

Would it be fair to say this is the lowest hit we will see this financial year?

We have to wait at least one more quarter. Irrespective of how the economy turns around, this is a seasonally weak quarter because the number of working days is fewer. What we are aiming at is managing Q3, start preparing to sprint in Q4, have a good exit rate in Q4, and then get a good FY25.

The second quarter had a TCV of $11.2 billion. This is the successive third quarter when the TCV is $10 billion and above. What is driving this?

I cannot break that for you. But in this $11.2 billion, we had two mega deals -- Jaguar Land Rover (JLR) and Bharat Sanchar Nigam Ltd. The latter is all about new spend, setting up new infrastructure, etc. In the case of JLR it’s about electric vehicles, the use of algorithms, supply chain optimisation and bringing more intelligence into the car… all AI interventions.

What is driving TCVs is clearly cost and optimisation outsourcing, but that is one part of it. There are small and mid-sized deals too. Vendor consolidation is a big part of this.

With TCS calling employees back to office, do you think this will lead to higher attrition?

As a company and as an industry, what is the need of the hour? What is it that the customers loved about India? One thing that they love about India’s IT industry is the work culture and ethics.
 

It's important for the industry to recognise that work culture is something the industry is known for and that it should stay intact. If you superimpose this with the TCS way of doing things and create a bond called a “TCS family”, we need to know the people better. As a company we added roughly about 200,000 people in the last two to three years and some of them never come to office. We understand there is flexibility in being hybrid … and we will get there. We have the experience and tools/techniques to do it. We have come to the decision that the people should come back to office.

The UK market has done well for TCS. With the US market in slow lane, is this sustainable?

We have been in the UK for a long time. Also we won some large deals. For instance, through Diligenta we had some platform opportunities that we won and they are being executed now. We are creating revenue streams. The UK went through recalibration ahead of everybody else because of Brexit. Almost every industry was working towards operating in a non-Brexit world. Both the government and industry started to rethink and work on redefining many things. Those investments — and we were able to participate in some — are now paying off. The UK government is making some huge bets on transformation.

You say BSNL is a more than $1 billion deal, but there was news that Tejas has to be paid $900 million, etc. How is the billing process being handled, and when will the rollout happen?

TCS is single point of accountability for BSNL.The deal has multiple elements-- hardware and software, and install data centres. All of this is based on milestones. We pay our suppliers.

We are looking at 12-18 months for the rollout of both 4G and 5G. There are 100,000 sites. About 38,000 are 5G, the remaining are 4G and 5G. Our goal is to deliver to BSNL a good network as quickly as possible.