‘We are poised for growth in a shrinking industry’
Tata Consultancy Services chief operating officer N Chandrasekaran speaks to Indulal PM about TCS.business Updated: Jul 20, 2008 22:28 IST
Tata Consultancy Services, India’s largest software exporter, has had a rather flat quarter. N Chandrasekaran, chief operating officer and executive director, TCS, said the company is aware of the concerns arising from the US, TCS’ largest market. He spoke to Indulal PM about TCS, which, with its diversified portfolio of services and expertise in various areas, is well-equipped to leverage ‘growth in a shrinking industry’.
Concerns in the banking, financial services and insurance sector (BFSI) have meant that TCS may need to diversify. Comment.
Over 40 per cent of TCS revenue comes from BFSI. We see much action in the US in this segment, including anxiety from investors and stakeholders on whether there is indeed a slowdown, and whether it would hit us. Personally, I feel there is cause for concern, but even a shrinking BFSI or manufacturing industry throws up opportunities for a company like ours. We have significant expertise in integrating corporate back ends to the factory, or the manufacturing process. When a company is cutting expenses, it will call us back for rationalising the system. Even there, we gain.
How has the consolidation in the financial services industry impacted you?
A consolidation will open more avenues for us. There are chances of better integration. Having said that, a reverse merger of one of our large clients did create a small set back for us in terms of growth in the Latin American revenues. We could divert the work force towards different contracts. We are working to reduce impact of such large consolidations in our revenue and equipping ourselves for the next big growth.
What has been the impact of the US slowdown on business?
The concern in financial services sector is at its peak in the US. But TCS could post a significant 4 per cent growth in the US, where we had the biggest concern. Moving forward, the US will remain as one of our key markets, but we are diversifying to other geographies such as Europe and emerging markets. We are diversifying our product range, which will help us to offer better services to the customers.
Are you working on any other significant verticals that may lessen TCS' dependence on BFSI?
We are strong in manufacturing, healthcare, insurance and third party administration.
We also have expertise in telecom and related software. These strengths, would help us tide over whatever crisis we could see in the BFSI sector. You have to constantly upgrade technology, even if you want to cut down on costs. This means, we will continue to get deals.
The number of 500 million and 100 million plus deals seems to be on the wane for TCS. Comment.
We announced a couple of large deals in the last quarter and are in the process of finalising a few more in the coming ones. Other than that, there were 34 other deals. While this may be lower than last year’s 50, there is actually no trend here. A few quarters back, we had announced close to 80 deals. This is a similar scenario.