IT major Tata Consultancy Services (TCS) has announced that the strongest Q3 growth in the past nine years despite being a seasonally weak quarter. October-December quarter (Q3 FY21) was a beat on almost all counts with strong deal momentum operating margins at five-year high and cash conversion rate at an all-time high.
In an interview, Gopinathan states, “Believe What We are witnessing is fairly long cycle technology upgrade opportunity, most important aspect it is at multiple levels, whether it is from a technological perspective, operating model perspective and even more importantly from customer biz transformation positioning perspective.”
He further adds, “There is absolutely no doubt that TCS is going for double-digit growth (even beyond Fy22), rest of the stakeholders will have to take bets, you can bet on us or bet against us but we are going for it.”
TCS has consistently created products and platforms and created stickiness, said N Ganapathy Subramaniam, COO & ED, TCS. Products like ignio, CogniX and few others are creating beautiful strategies and there are multiple angles by which TCS is focusing on gaining market share. Recent investments in forming distinctive cloud units for hyperscalers augur well for growth. TCS has launched CogniX platform which is bringing multiple technologies together. CogniX is a reality that will drive productivity, self-learning and that augurs well for growth.
According to Gopinathan, the strategy is to have the full portfolio of services, products and platform. He believes, “services business model if executed right, this Idea of purpose-led transformation partner who stays with the client through multiple cycles if executed right is as powerful as and even more so than the platform or a product”.
In Q3, TCS has operating margins and expanded up to 26.6 percent which is the highest in the past five years even after providing salary hikes. “TCS already has the highest margin in the industry,” said, V Ramakrishnan, CFO, TCS. Customer relationships are top priority for TCS and margin realisation, pricing is part of the overall equation. He added, “Can’t be opportunistic on margins just because growth has come back, this is not a very price inelastic industry”, we need to realise true pricing for value and this is an active pursuit depending on opportunity & deals. Ability to execute well has been a big driver for margins. Technology, training, methods that we use, the benefit of our own research & innovation come into play on margins, he added.