‘See opportunities coming in from vendor consolidation’ | The Financial Express

‘See opportunities coming in from vendor consolidation’

UK. N Ganapathy Subramaniam, chief operating officer, TCS, talked about the company’s growth strategy, client budgets, and technology focus areas, in an interview with Ayushman Baruah.

‘See opportunities coming in from vendor consolidation’
Tata Consultancy Services (TCS) (File)

Tata Consultancy Services (TCS) clocked revenues worth $7.08 billion in the December quarter, crossing the $7-billion quarterly revenue mark, driven by cloud services, market share gains through vendor consolidation, and continued the momentum in North America and UK. N Ganapathy Subramaniam, chief operating officer, TCS, talked about the company’s growth strategy, client budgets, and technology focus areas, in an interview with Ayushman Baruah. Edited excerpts:

Is TCS making a conscious effort to increase its wallet share from existing clients?

This has always been our conscious effort because once we acquire a client, we stay invested for a long time. Generally, our relationships are long term and more than 95-96% of our business is repeat business from existing clients. So, in that sense, once we are in a particular client account, we make a conscious effort to spread ourselves and work with every opportunity that we come across, whether it is in the IT, business, or operations side of it. We are always looking for opportunities. 

But what is special in the last quarter is that most customers are going through the cycle of vendor consolidation. With too many vendors, some of them are able to scale and offer multiple services together but some are not. So, clients typically go through a consolidation phase where we see opportunities coming in.

What were the key growth drivers for the banking, financial services and insurance (BFSI) sector in Q3? 

In BFSI, there are multiple focus areas for financial institutions. One is that everybody is looking at data localisation and data anonymisation. For example, if the data are to be based in Switzerland or Europe, localisation of data is important. But if the data needs to be shared across with another country, say to India or the US, customers are looking at ways to anonymise the data. The second growth driver is around cloud re-engineering or re-architecting as people who have moved systems into the cloud are looking to move to the next stage of optimisation. The third area is around payment infrastructure because digital payment is fast catching up and customers are looking at payment modernisation, payment infrastructure modernisation, etc. 

There is slowness in mortgage processing or in the case of some insurance accounts. But areas like wealth management and retirement services are getting a lot of attention because they are applicable for retail banks as well as for insurance companies and brokerages.

Do you see a slowdown in client budgets? Please give a sense of it across the US, UK, and Europe.   

We are not seeing a demand contraction or spend contraction from the US and the UK. Both these markets have grown 15.4% year-on-year in constant currency during the third quarter. In Europe, there is a situation where the discretionary spend is being held and there is some amount of caution being exercised. Most of them are focused on optimising and conserving their cash. But except for Europe, we do not see any slowdown in thinking or decision-making across the board. What we see is they all want to go ahead with cloud modernisation and IT infrastructure modernisation and adoption of automation and machine learning techniques for both technology and operations.

What are some of the key technology areas clients are willing to invest in?

Data consolidation and data localisation or anonymisation is one type of opportunity. Payments technology is another type of investment. In wealth management, we are seeing client-specific investments on analytics-driven personalised advisory. Broadly, we are seeing regulatory-related spends as clients are moving towards the cloud and re-architecting their existing systems. In case of manufacturing, retail, and sometimes even in financial services, clients are looking at adopting IoT (internet of things) and digital twins kind of setup. In the automobile industry, massive investments are taking place in electric vehicles, embedded systems, charging infrastructure, etc.

Where are we in terms of metaverse adoption?

We are still in the early stages. People are doing some piloting but leveraging the metaverse as an alternative channel for doing business is yet to happen. In my opinion, the current set of caution that clients are exercising from a macro-economic perspective should ease a bit before they can really look at adopting the metaverse and related technologies like augmented reality for business purposes. While the interest has not died and people are looking at pilots, they are not using the metaverse in mainstream development work right now.  

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First published on: 11-01-2023 at 03:05 IST