For TCS, beating industry growth in FY16 is just another day in the office

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Mumbai | Published: February 12, 2015 1:33:02 AM

In general we have come ahead of Nasscom estimates for the past so many years, though we will give our final commentary in April, said N Chandrasekaran, TCS chief executive officer

Tata Consultancy Services (TCS), India’s largest IT services exporter, has expressed confidence that it would exceed Nasscom’s guidance of 12-14% growth for the industry in FY16. TCS CEO N Chandrasekaran said, “In general we have come ahead of Nasscom estimates for the past so many years, though we will give our final commentary in April.”

TCS has decided to bet big on digital, where it expects to generate revenue of $5 billion over the next few years. “It is a trend where everything is soon going to be digital. There is going to be a lot of adoption,” he said.

Nasscom on Tuesday provided a growth guidance of 12-14% for FY16, which was lower than the 13-15% for FY15. The reason the IT industry body cited for the lower number was macroeconomic volatility. The TCS CEO, however, said his company has good momentum. “We will deliver outperformance,” he added.

For Q3FY15, TCS had reported muted numbers with sequentially flat growth in revenue ($3.93 billion) and net profit ($873 million).

Chandrasekaran said TCS was seeing some headwinds in energy and insurance, but it expected more broad-based growth for other verticals.

He said the key three technology business themes for the year would be: Simplification, adoption of digital, and regulatory and risk compliance.
TCS, which gets the bulk of its revenues from the US and Europe, is expecting higher growth from regions such as Japan and Latin America.

“We have a good presence in Japan and Latin America that will drive some growth but the base is still small,” he said.

On acquisitions, the TCS CEO said the company was actively looking at deals in the Europe and US, across industry verticals. The IT major’s last major acquisition was that of a France-based company, Alti, in April 2013 for 75 million euros.

On TCS’ non-linearity thrust, Chandrasekaran said it will continue to contribute incremental growth but not replace its current business model.

“The current business model is robust and will continue to grow. These two will coexist and there is going to be good adoption of automation technologies,” he said.

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