had a lacklustre start to the year putting a lid on its double-digit growth target this fiscal. Its new CEO and MD K Krithivasan is positive about a strong order book, a reflection of long-term demand cycle. He also spoke about macro concerns leading to reprioritization of deals that has resulted in deferring in non-critical projects. Excerpts:
TCS’s management sees a double-digit growth as a tall order. The $10
The strong order book is positive compared to the corresponding period last year and we have seen a significant increase for North America and the banking and financial services sector. What this tells us is the long-term demand is resilient, even though there could be a slowdown because of uncertainties in the short-term. But over a period, growth should return, and enterprises will have to spend on technology. We started the year with flat growth, hence a double-digit growth becomes tough to achieve.
The UK was good on the BFSI side, but we experienced a slowdown in Europe and North America. Some of the projects were winding up and one of our large clients got acquired and that had an issue. Once that uncertainty is lifted, there are certain industries where the opportunities are immediate. In banking, the deposits are quite high, and the interest rates are high which means that there are a lot of opportunities in lending. But in some sectors, the volumes are low like mortgage or capital markets and hence, the uncertainty is high. So once the market and uncertainty becomes clearer, you will find people spending more.
TCS HR head recently said women’s attrition has been higher than men’s attrition and it may be largely because of the company’s return to office policy. How are you getting more women back to the office? And was it factored in when you planned your hybrid work model
We have more than 200,000 women engineers at TCS. We’ve always been a very supportive work environment as far as our women colleagues are concerned. He (Milind Lakkad CHRO) called out that point for starting a discussion around that topic. But if you look at the fact the gap between the last quarter of the last year, the difference in attrition between the general population and women is only about 0.6% on an annual basis. The missing women in TCS are completely exaggerated. The gap over the years has been 1.5%, but it has nothing specific to do with the pandemic. We believe working from the office is good for the associates, customers and TCS. You’re talking only about work output in terms of how they deliver to customers, but how do they get mentored on culture? How do they get mentored on how they deal with customers and colleagues, which is very important for their career development? We are not a bunch of 600 engineers working on work-to-hire or get paid for the time they spend. We are very comfortable with the fact that all our associates come to work.
TCS has over 100 genAI projects in the pipeline. Do you see enterprise-grade mainstreaming of genAI later this year or next? In the medium-term, would it lead to shrinking your hiring targets?
I’m more aggressive in my thinking. I believe it (genAI adoption) will happen in the next two quarters. You will see some mainstreaming of this. NGS (TCS COO NG Subramaniam) pointed to the trustworthiness of this because it is as good as the trust you put into it — many of these situations have 95% accuracy , but it’s not good enough as it has to be 100%.The second aspect is what are the security and IP considerations and we will have to solve those issues before it becomes mainstream. The important aspect of it is the ability to create value, more opportunities, and benefits for customers in creating a competitive advantage. It need not all come only from code generation. It can come from new opportunities, products and services that did not exist before. With automation, you will be able to do more with a smaller number of people. Our hope is we will do much more work with genAI and it will have less impact on the number of people we employ. Our belief is we may not see a shrinkage in the overall workforce. We are going to train 100,000 associates in genAI. They will be more valuable to themselves, to the organization and clients.
What are the challenges of a healthy orderbook translating into accrued deals especially when discretionary spending is affected due to adverse macros?
We are converting deals on time and all of them are yielding the revenue as expected. However, a lot of technology investment happened in what was signed a year or two ago. Some of them are being reassessed and there are situations when many of our customers went for major cloud migration deals, and the consumption cost increased beyond what was originally planned. So, there’s a reassessment of those old programmes which is causing a bigger dent in the overall revenue and those programmes are getting reprioritized.