Tata Consultancy Services - the country's largest IT company- reported a
3.9 per cent sequential rise in constant currency revenue in Q2,
missing market expectations for the fifth straight quarter. NDTV
Profit's Prashant Nair caught up with TCS CEO and managing director N
Chandrasekaran.
Revenue miss: I think people are feeling the expectation mismatch for a few quarters in a row now, albeit the miss is 15-30 basis points maybe on a single quarter basis, but since it is happening for a few quarters in a row- I think four or five quarters in a row - I think people are getting worked up more. When you miss it on a continuous basis it all adds up, that seems to be the problem.
Fundamentals strong: If you see the core, it is intact, in fact it is doing well and we always expect an acceleration in Q1 to Q2, we have seen that. I think US is doing well, UK market is doing well, even Australia has done well, Latin America has done well this quarter, India has done well, Middle East has done well. From an industry perspective, all the core verticals - whether it is financial services, whether it is retail, life sciences, all of them have done well.
Manufacturing has suffered due to the softness we have seen in Japan, those kind of odd bits are there, otherwise the core markets, core industries they are holding up, there is no fundamental issue.
I feel that we are in a great spot as a company, because our client metrics are solid, we continue to improve on client metrics because what we do is build strategic relationship with customers and it continues to pay off.
Investments: We are making all the investments that are necessary whether it is in infrastructure, whether it is in cloud, whether is in various areas of digital and talent development, intellectual property, platforms.
Our platforms business has done well. We are making the investments and also seeing that those things are paying off and there is a lot of client traction. But finally we have to make sure that the expectation gap doesn't continue for too long.
Hiring: Last three years, our hiring has been higher than what we had originally projected. We are also seeing significant opportunities, it does take time to train people in digital also and our utilisation is at is 86 per cent, so we take a calibrated call.
Attrition: Our attrition is actually coming down. It is still not where I would like to be, I would really like to take it down further and we have seen a dip in attrition in Q2 compared to Q1, but it needs to still further go down- we are addressing that issue.
Revenue miss: I think people are feeling the expectation mismatch for a few quarters in a row now, albeit the miss is 15-30 basis points maybe on a single quarter basis, but since it is happening for a few quarters in a row- I think four or five quarters in a row - I think people are getting worked up more. When you miss it on a continuous basis it all adds up, that seems to be the problem.
Fundamentals strong: If you see the core, it is intact, in fact it is doing well and we always expect an acceleration in Q1 to Q2, we have seen that. I think US is doing well, UK market is doing well, even Australia has done well, Latin America has done well this quarter, India has done well, Middle East has done well. From an industry perspective, all the core verticals - whether it is financial services, whether it is retail, life sciences, all of them have done well.
Manufacturing has suffered due to the softness we have seen in Japan, those kind of odd bits are there, otherwise the core markets, core industries they are holding up, there is no fundamental issue.
I feel that we are in a great spot as a company, because our client metrics are solid, we continue to improve on client metrics because what we do is build strategic relationship with customers and it continues to pay off.
Investments: We are making all the investments that are necessary whether it is in infrastructure, whether it is in cloud, whether is in various areas of digital and talent development, intellectual property, platforms.
Our platforms business has done well. We are making the investments and also seeing that those things are paying off and there is a lot of client traction. But finally we have to make sure that the expectation gap doesn't continue for too long.
Hiring: Last three years, our hiring has been higher than what we had originally projected. We are also seeing significant opportunities, it does take time to train people in digital also and our utilisation is at is 86 per cent, so we take a calibrated call.
Attrition: Our attrition is actually coming down. It is still not where I would like to be, I would really like to take it down further and we have seen a dip in attrition in Q2 compared to Q1, but it needs to still further go down- we are addressing that issue.
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