K. Krithivasan is undergoing a baptism by fire as he took charge as the CEO of India’s largest software company Tata Consultancy Services at a time when macro headwinds has slowed down the company’s growth trajectory. As he steers the company through a tough economic environment, he speaks to businessline about his targets for the company, and the role, smaller geographies and new technologies like AI will play in the growth of TCS.
Its just over 100 days for you as the CEO. Has it been tough to take up the leadership role at a time when the overall market has slowed down?
Yes, its 100 days as CEO but don’t discount the previous 34 years. I have been working with the team for many years so it has not been that difficult. When we wanted to do the organisation restructure, we discussed with the clients, our leadership, and everyone appreciated what we wanted to do. It has gone quite well so far.
As the company grapples with slowing growth, should we expect TCS to hit double digit growth this fiscal, or will you hover around the 8 to 10 per cent target?
Definitely double digit growth will be difficult this year. Because if you look at growth year-on-year, things are starting to taper. There will need to be drastic changes in the situation in Q3 and Q4 to get to a double digit growth this fiscal. I don’t want to give growth targets for next year. We have a strong order book , but the situation is that the ongoing projects are being optimised and are thus on a pause. Essentially, the world economic situation, which is causing ongoing projects to be paused or delayed. So if that doesn’t happen at the same pace as it does now, the situation will improve. Otherwise, our fundamentals are strong.
How are you navigating the prolonged uncertainty?
We are staying close to our clients, trying to understand what they are doing, what are their objectives and pain points. And to come up with a solution to address their immediate issues. Second is operational excellence. While the demand may not be strong at the moment, it is not like we have zero demand. There is demand, and how efficient you are at fulfilling the demand also makes the difference. So that is the reason that we are talking about going back to the basics, and how we ensure that we don’t keep anything off the table. It is important that we stay close to the customer and be proactive.
The pandemic clearly proved that tech spending is indispensable, and long term investment in tech is important for survival. So why is discretionary tech spending the first to stop when companies see economic headwinds?
First of all, tech spending is not optional. Companies have to make spending into technology. Whether they do it…like some large banks in house, and decide what they assign to partners. Or they may decide to do these tech spends maybe one or two quarters down the line. You (the firms) can choose what projects you want to do, but you have to invest in technology. The option of not investing in technology does not exist, if you want to survive and be competitive.
Geographies that contribute significantly to your revenues are clearly struggling at the moment, but you have highlighted that non essential geographies continue to deliver growth, will they play a role in recovery for TCS?
I will not go as far as to say that the small geographies will power recovery. In contrast, our continued good performance in the UK bodes well, since it is a material geography that contributes to 18 per cent of our revenues, so good performance here clearly provides support. But places like Nordics and small geographies, they are small in the overall scheme of things. But we continue to be focused here because it gives us an opportunity to increase our geography spread in these areas and gain market share. For instance, in Spain, we have set up a delivery centre, where we have 300 employees because we want to enhance our market. Germany will continue to remain a focus, because we are doing well there. Japan is another big opportunity. There are geographies where we have limited presence which provide a lot of headroom to grow.
India is also growing very fast. I think Indian enterprises are also a lot more confident about going digital. We are already increasing focus in India. All these small geographies put together can provide support.
A lot of global tech giants have pointed towards AI to have played a major role in rescuing them in the presently hard economic circumstances, do you see AI play a similar role for you?
At some point certainly, but not today. I would say at least not for the next two quarters. For the next two quarters, I would say that we are still at an experimental phase before technologies like AI, generative AI become mainstream.
Where do you see TCS in the short term and what is your long term vision for TCS?
I don’t want to quantify what we will gain in terms of some financial parameters. I would want to quantify it as an organisation that has a very strong engineering culture, an organisation that is agile because as you mentioned, new technologies are coming at an even faster pace. That is the way I would look at it because financial parameters are not completely accurate.
Published on October 16, 2023
