TCS Q1FY22: Customers going through technology transformation, says CEO Rajesh Gopinathan

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TCS reported a 28.5 percent jump in its net profit to Rs 9,008 crore for the quarter ended June 30, 2021. In the corresponding quarter last year, the company posted a net profit of Rs 7,008 crore. CNBC-TV18 caught up with the full management of the IT bellwether -- Samir Seksaria, Chief Financial Officer, Milind Lakkad, Chief Human Resources Officer, Rajesh Gopinathan, MD and CEO, N Ganapathy Subramaniam, Chief Operating Officer and Executive Director -- to discuss the first quarter performance and the near-term outlook.

Tata Consultancy Services (TCS), the country's largest software services exporter, on Thursday reported a 28.5 percent jump in its net profit to Rs 9,008 crore for the quarter ended June 30, 2021. In the corresponding quarter last year, the company posted a net profit of Rs 7,008 crore.
The CNBC-TV18 Poll had predicted a profit of Rs 9,352 crore for the quarter under review. The IT major posted an 18.5 percent growth in consolidated revenue at Rs 45,411 crore in Q1 FY22 as compared to Rs 38,322 crore in Q1 FY21.
CNBC-TV18 caught up with the full management of the IT bellwether -- Samir Seksaria, Chief Financial Officer, Milind Lakkad, Chief Human Resources Officer, Rajesh Gopinathan, MD and CEO, N Ganapathy Subramaniam, Chief Operating Officer and Executive Director -- to discuss the first quarter performance and the near-term outlook.
“We are seeing an unfolding of yet another chapter in the ongoing technology transformation agenda of our customers,” said Gopinathan.
TCS' conviction in the cloud has grown based on witnessing multiple instances where enterprise adoption is accelerating.
"We are quite confident about the fact that this is now one-way street, the pace will vary depending on industry, region, individual customers but the shift in architecture is now an inevitable shift and we are well-positioned to participate in it,” he added.
When asked if robotic process automation (RPA) is a threat to a company, N Ganapathy Subramaniam replied, “RPA is an important first step towards automation. However, it is a long-term problem. The next wave of automation is converting all the series of RPA into algorithms so that the algorithms can scale the automation benefits that an organization will have.”
He believes that 40-50 percent of what the company is doing need not be done in the future. “However, in this business, whatever we have disrupted and whatever we give back to customers as productivity has only come back many times over,” he said.
Excluding regional markets, Japan and India, TCS has shown strong growth in core markets and verticals at 4.1 percent.
“India and many other regions went through the peak of the pandemic in April and May and then things started improving. If the trajectory keeps improving on the same trend, we should see the growth come back in the impacted markets but we will have to be always cautious and watch out for,” Seksaria explained.
He expects the discretionary expenses to go back to pre-pandemic levels by the end of this year.
“Growth remains our biggest lever on the margins. In a normal situation we are very confident to maintain and sustain margins,” Seksaria said.
Milind Lakkad, the company's HR chief, expects the attrition level to go up in the coming quarter as at peak, when the job market was hot, the company has seen 13-14 percent attrition levels.
“We make all efforts to retain the talent and we will continue to do that but from a business standpoint we will be okay even if the attrition goes up and I expect the attrition to go up in the coming quarters,” he explained.
On the quantum of wage hikes, Lakkad said, “It has been similar to previous years. We have given wage hikes in six months and both the times it has been similar to what we have been doing in the past and we will continue to do that.”
For the full interview, watch the accompanying video.

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