Tata Consultancy Services (TCS) will not remain only a services-based company, N Chandrasekaran, chairman, TCS, told shareholders at its 27th annual general meeting on Thursday.
“I see the potential to be very large, the company will not only remain services based, it will do more of intellectual property work, more platform-based revenues and it will partner with leading companies in all the transition that is taking place in terms of digital, sustainability, supply chain and also in the new talent model.
“All these are big opportunities for the company, I express that the vision of the company is extremely strong,” he said.
Responding to a shareholder’s query on what his vision of the company is in the next 5-10 years, he said, “I cannot predict in terms of specific number, except that we have said that we will become a $50 billion company.”
According to recent media reports, Rajesh Gopinathan, CEO&MD of TCS, had told employees in an internal letter recently that the company is well placed to achieve its $50 billion revenue target by 2030. The company is already halfway, as it exited the financial year 2021-2022 with revenue crossing $25 billion.
Addressing the shareholders, Gopinathan said, “FY22 has been a very satisfying year for the company. Across all parameters, we had revenue growth of 16.8% in rupee terms for a revenue of `1,91,754 crore and we also crossed important milestone this year, crossing $25 billion in revenue, closing the year at $25.707 billion.
“It was also our highest incremental revenue growth in a year, clocking in at $3.5 billion. Importantly this revenue growth has come while we have sustained industry leading profitability with an operating margin of 25.3% and a net margin of 20%.”
Responding to a query on whether work-from-home has resulted in any cost efficiencies for the company, Chandrasekaran said that there were equivalent expenditures even in the WFH model and that the company is now going to be in hybrid mode of working.
“While it is my personal preference to encourage employees to come back to work and I would like to see a significant number of employees back in the office, the company is working with the employees. So, while we will be hybrid, we expect the employees to come back and return to the offices. So in the new paradigm the cost structure will have to be suitably adjusted,” he said.
On the efforts to curtail attrition, he said that as during the pandemic attrition levels had dropped significantly, to some extent it is also pent-up attrition. “There can be many reasons (for people to leave) and I cannot really explain or give a generic reason, but the company is focused on retaining people based on their needs and concerns. The attrition management is a key priority for the company and we will continue to do employee engagement initiatives,” he said.
Attrition at TCS stood at 17.4% in the quarter ended March 31, 2022 — a rise of 210 basis points sequentially.
Meanwhile, Chandrasekaran also raised concerns over global growth for the year with the rising inflation and the Russia-Ukraine crisis.
“As a result of many macro-economic factors, we are likely to face a low growth – high inflation environment. Global GDP is expected to grow at a slower pace of 3.4% in 2022, which is almost a 100 bps drop from the earlier estimate of 4.4%. Global inflation, meanwhile, is expected to climb to above 7%. In this context, India’s growth going forward will become even more critical. India will be the fastest growing major economy at 7.8%,” he said.
However, he said that with the number of disruptions seen in the last two years have had decades of experience packed into them.
“While these changes have had a serious impact on businesses and communities, they have also accelerated some important trends for the future with digital, energy, supply chain and talent transitions,” he said.
