Our Foot­print in Q4 was Good, Mo­men­tum to Con­tinue in FY17

The Economic Times - - Smart -

In an in­ter­view with Nikunj Dalmia of ET NOW, TCS chief ex­ec­u­tive of­fi­cer N Chan­drasekaran said that he is very happy with the mo­men­tum and the foot­print in the fourth quar­ter. He also said that dig­i­tal is at an in­flec­tion point and TCS has made the right in­vest­ments. Edited ex­cerpts:

Q4 was very un­usual for TCS. How much of that is be­cause of busi­ness mo­men­tum and how much is due to a di­luted Q3? I can say it with cer­tainty that all of Q4 is due to busi­ness mo­men­tum. There is noth­ing due to di­luted Q3 be­cause those rev­enues that went away could not be re­cov­ered. You can look at the over­all num­bers and TCS beats the Street. For me, the data points or vol­ume growth, 3.2x, com­ing off a very bad Q3 and sea­son­ally weak Q4, looks very-very good.

To me, the sense about this quar­ter is the foot­print is good. I feel the mo­men­tum is good and I feel very con­fi­dent. But we need to wait be­cause the ex­its this year are lower than the ex­its last year. We would watch and are go­ing to de­liver num­bers for the next two quar­ters.

What is your out­look for FY17? I say the exit rate is lower com­pared to last year’s but the head­winds are out of the way. So given that we feel pos­i­tive, we see a good mo­men­tum in dig­i­tal where we have en­tered into trans­for­ma­tion deals. We have made sig­nif­i­cant in­vest­ments in ta­lent de­vel­op­ment, dig­i­tal learn­ing plat­forms, de­sign stu­dios, ex­ec­u­tive brief­ing cen­tres. We have in­vested in cre­at­ing the in­tel­lec­tual prop­erty in hor­i­zon­tal plat­forms, in­dus­try re­lated plat­forms, Ignio which is an au­toma­tion prod­uct. We have in­vested in very strong al­liance net­works and a good startup ecosys­tem. Given all this, I think we are well-placed but you should give us some time. What will be the busi­ness im­pact of Epic Sys­tem case? I would not like to com­ment on the case be­cause it is sub ju­dice. With re­spect to the busi­ness im­pact, we do not see any­thing ad­verse. I think we see good mo­men­tum.

How do you plan to han­dle the case? We have very strong track record and we have demon­strated time and again the com­mit­ment that we have for higher val­ues or ethics, in­tegrity or in terms of the re­spect we have for in­tel­lec­tual prop­erty of our own, of third par­ties, of our part­ners and also our track record that we have built over decades. In this case, we have not vi­o­lated any in­tel­lec­tual prop­erty. So I do not see any is­sue.

How to judge the cur­rent en­vi­ron­ment for the IT sec­tor be­cause each firm is giv­ing a dif­fer­ent in­di­ca­tion? IT com­pa­nies have grown to be large com­pa­nies to­day and they all have dif­fer­ent port­fo­lios, dif­fer­ent mixes, dif­fer­ent mar­ket ex­po­sures and each of them is at a par­tic­u­lar point in time com­ing from dif­fer­ent growth cy­cles. So with­out get­ting into specifics, I think you got to read those com­men­taries in the con­text of those com­pa­nies. There may be some com­mon mes­sages which you can try to take and an­a­lysts try to do that.

Com­ing back to TCS, 15% com­ing from dig­i­tal and dig­i­tal grow­ing at 50%. That is the J-curve which you are get- ting be­cause of the dig­i­tal busi­ness. Dig­i­tal, I think, is at an in­flec­tion point. We see tremen­dous op­por­tu­ni­ties and we have made the right in­vest­ments. We have the nec­es­sary ca­pa­bil­ity and the ca­pac­ity and the tools and in­tel­lec­tual prop­erty to be able to very ac­tively par­tic­i­pate in that mar­ket as it de­vel­ops.

Even though dig­i­tal is a $2.5-bil­lion busi­ness for TCS, it is still at in­flec­tion point? Yes.

So you ex­pect that busi­ness and deal mo­men­tum will be pretty much all around? Yes.

Is there a J-curve which will come in your com­pany when the dig­i­tal busi­ness takes over the IT busi­ness? Our in­vest­ment cy­cle on dig­i­tal will be very strong so we will con­tinue to in­vest be­cause we are build­ing ca­pa­bil­i­ties, we are build­ing new in­tel­lec­tual prop­erty line. It in­volves a lot of in­vest­ments and that is why say that give us a band and do not mi­cro­man­age the band with us in your ques­tion­ing. We will have to make calls on in­vest­ment, which we will do. We should not want be very wor­ried about this.

The US and the Euro­pean busi­nesses have staged a phe­nom­e­nal growth. Do you ex­pect FY17 to be no dif­fer­ent than FY16? It has been so for the past sev­eral years, so let us see.

Has Q4 ended on a note which is slightly higher than your ex­pec­ta­tions? From fi­nan­cial point of view, I am happy be­cause we have to de­liver. From the foot­print point of view, I am a lot more hap­pier. The

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.