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earnings | IST

TCS Q3: 2022 will see strong tech investments; focusing on building capabilities organically, says management

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To get more insight into the TCS' Q3 performance, CNBC-TV18 spoke to Rajesh Gopinathan, MD & CEO and N Ganapathy Subramaniam, Chief Operating Officer & Executive Director.

TCS reported a profit of Rs 9,769 crore for the December quarter of 2021. Its revenue for the period under review stood at Rs 48,885 crore, up 16.3 percent on a year-on-year (YoY) basis. The IT major’s EBIT came in at Rs 12,237 crore, up 2 percent on a quarter-on-quarter (QoQ) basis.
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To get more insight into the company's Q3 performance, CNBC-TV18 spoke to Rajesh Gopinathan, MD and CEO, and N Ganapathy Subramaniam, Chief Operating Officer and Executive Director.
Gopinathan affirmed that it was a strong quarter for the company in terms of growth. He said, "This quarter has been a very strong growth quarter. And it reiterates the confidence that we had expressed about this being a significant technology upgrade cycle that we are participating in, and we believe that we are somewhere in the middle of that kind of a cycle. Though the pandemic has been a bit of a dampener in terms of the speed at which we would have liked to progress on it."
Gopinathan mentioned that his interactions with clients further indicated that 2022 will be equally strong in terms of tech investments.
He said, "Our discussions with the clients have indicated that they believe that this year (2022) will also continue to be a strong investment, with respect to technology."
Gopinathan mentioned that the company isn't opposed to acquisitions, however they plan to build capabilities organically for now.
"We are not against acquisitions. If there are opportunities and the need for point acquisitions to enhance capabilities, either in a vertical or in a specific horizontal area, we will go about doing it. But the history of this industry shows that trying to build this capability through acquisitions is not a very successful one and that's why we are going about it in a very systematic, organic way," he said.
In fact, Gopinathan is convinced that the company is making the right investments. He believes the opportunity in the industry at the moment is huge. He explained that the primary focus for the company is on building a strong franchise of revenue growth along with strong margins. Additionally, he specified that they are focused on capturing the change in the technology sphere and stepping away from the traditional space where they usually operate.
He said, "The opportunity is tremendous and we are making all the right investments. I am very confident that the systematic way in which we are going about it will stand us in good stead both as a company as well as from our customer and employee perspective."
"We believe that the market and the demand environment and the overall opportunity size, clearly points that there is a great opportunity to build a very strong franchise of both revenue growth and profitable revenue growth, which maintains the margins. On the revenue growth perspective, the whole approach has to be about sustainable momentum and we are focused on that," he added.
Subramaniam further elaborated on the company's growth by mentioning that it is seen across verticals. He believes there’s no worrying factor at this point . He added that apart from seasonality in the case of financial services and manufacturing, there are no trends that can be called out.
He said, "There’s nothing to call about in terms of worrying factor at the marketplace. Banking financial services have grown 18 percent in Q3, and most of our verticals have also grown 15 percent and above."
"Barring the seasonality that we typically see in terms of furloughs and banking, financial services and parts of manufacturing, we haven't seen any other trends to call out. So we are confident of the demand, we are confident of the momentum that we see across the major markets that we operate," Subramaniam added.
Watch the video for the full interview.