Surpassing FY14 this year now a challenging task: TCS CEO N Chandrasekaran

Written by fe Bureau | Mumbai | Updated: Oct 18 2014, 18:25pm hrs
TCSTata Consultancy Services (TCS) CEO N Chandrasekaran believes FY15 may not be too much better than FY14. (Reuters)
Even as he readies to run the New York marathon, which his company will sponsor for eight years, Natarajan Chandrasekaran says the next couple of years will be a time of consolidation for Indias largest IT services company. The CEO and MD of Tata Consultancy Services says his firm is all set for the next years whether in terms of anticipating changes in technology or arming itself with the right team. With the numbers for Q2FY15 having come in a shade below estimates, however, Chandrasekaran believes FY15 may not be too much better than FY14, as he had been hoping. Edited excerpts from an interview to FE:

Its been a somewhat disappointing quarter...

Actually, weve clocked a fairly good volume increase of 6% plus, utilisation rates have been robust at 86.2% and weve grown in most of our markets save Latin America. However, its true that were short of revenues by about $20-25 million compared to our internal estimates, due to continuing softness in the insurance space and a slower ramp-up in the retail vertical and in Latin America. So to that extent, turning in a meaningfully better performance this year, compared with FY14, will now be much more challenging. But we are a $15-billion firm and well-placed to cash in on the addressable opportunity.

Is the slowdown in global growth, led by the European region, a worry

We shouldnt always draw a direct correlation from the macroeconomics. But even the macro situation is much better than it was a few years back. In continental Europe, which now accounts for about 12% of our revenues, for example, we have done fairly well during the last quarter and we find that customers are looking to spend; its up to us to make the most of it. Spends on digital services will go up and we are well-positioned to take advantage of that.

How is Japan shaping up

This is the first quarter of integration with Mitsubishis IT services arm and it has contributed $103 million to the revenues. We dont expect it to materially affect the overall margins. We have the customers and from here on we must grow every quarter. We must scale up the business. In China, our presence is small, though its a big opportunity.

When TCS scouts for buys, which segments does it look at

We would like to build scale in the healthcare vertical and certainly we would be looking for a much deeper penetration in Europe. So our acquisitions would keep in mind these two objectives. We need to keep pace with new technologies too.

On the HR side, does TCS have a large enough team

Yes, we have hired very well and we have a solid bench. Fortunately, we are able to find quality talent at all levels.