TCS, which accounts for 15% of India’s IT exports and employs over a tenth of its total workforce, delivered
street-beating third quarter results as businesses across verticals and geographies showed growth. Gopinathan said the software services exporter’s financial strength was critical in its ability to invest ahead of the curve. Edited Excerpts:
What kind of near-term trends are inspiring confidence for you to say that TCS will get back to double digit growth in financial year 2022?
It is long term trends that are inspiring confidence. The consistent belief that technology change is best addressed by significant investments in training, and the continuous focus on our own associates has been at the heart of this whole transformation journey that we are in. So that’s one part of it. The second is our ability to consistently invest ahead of the curve, keep building up assets and knowledge base and partnerships in emerging technology areas. It is not that suddenly our confidence has changed. We have always been confident but the articulation of the confidence changes. In March-April, we were confident. At that time, people were sceptical about why we were saying that the impact will be similar to the global financial crisis. Today, we are confident that we are now on a good track and we have visibility to the next year forward.
Is there consolidation in the market? Has your financial heft and service delivery during the Covid-19 pandemic helped in attracting bigger deals from customers?
Our financial strength is critical in our ability to invest ahead of the curve. You’ll see consolidation in the market. It’s a flight to quality. In stable times the market tends to get fragmented, whereas it is in scenarios like these that the investment value becomes more directly visible to a wider customer universe. The financial performance is important because it gives us the ability to invest ahead of the curve and it is those investments that are resulting in this flight to quality and the position that we are seeing. The consolidation is not us buying out other competitors and consolidating the market, it is being driven from the customer end, where the customer is choosing to focus more on us as a strategic partner. If you look at our customer universe also there is a fair amount of similarity … They have gone through multiple cycles in their own industries.
Are large banks back to spending? What are they investing on?
Wealth management was originally targeted at a very narrow segment of the client universe, and the larger client universe was given fairly standardised products. Now, there is pressure from below where the commoditised products are being taken away by best of breed providers (fintech players) — whether it be home mortgages, or auto loans or various forms of savings products. There is a greater need to provide holistic wealth management as a purpose-led proposition rather than savings or loans as a product. The other big thing that is going on is actually the reverse of it. Let’s say payments as a functionality is being exposed (through APIs) by banks, and they’re trying to convert themselves into platforms that will provide this functionality to a wider universe. They push payment as a product deep into the value chain of retail, logistics, or various other providers. Being able to expose their (IT) systems and create business models allows them to actually be seen as a portfolio of functionalities. With blockchain, validation/trust becomes another service that they can provide in a disaggregated manner.
Do you think at some point the top cloud players will become competition?
In our industry, co-optation is a word. We have more to gain through collaboration. They provide technology as a cloud, we provide talent as a cloud, both of us are focused in delivering transformation to the customer. Once large-scale transformation and migration are over, who will provide what service — that we will have to see. They will definitely have aspirations to increase their pie, we will have aspirations to increase the leverage that we think is possible. But broadly, we have complementary and mutually exclusive business models.
