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TCS management says it is confident that pricing will remain stable for the next 12 months and the next quarter won't see any decline in realisation.
We will not have a direct correlation with the EMs. I continue to maintain that and I do not see that changing at all
CEO & MD
After posting 16 percent year-on-year rise in net profit in the first quarter of 2014, India's largest software services exporter Tata Consultancy Services is all set take advantage of likely delays in immigration bill and a weaker currency.
Continuation of such financial outperformance will likely help TCS maintain its premium valuations within the sector. Speaking to CNBC-TV18, Rajesh Gopinath, CFO confirmed that the outlook for FY14 is good as the company has a fantastic pipeline of deals. N Chandrasekaran, managing director and chief financial officer; Ajoy Mukherjee, EVP & Global Head-HR, and Phiroz Vandrevala, director, too shared their views on the company's outlook.
Q: What do you make of the return of Murthy at Infosys ? The reason why I am asking is, because you have seen some pricing pressure this quarter. I know you have maintained in all your commentary since last evening that this is not going to be a continuing trend, yet I am just wondering whether the competitiveness on the field has increased and whether there is some new energy in Infosys that has contributed to it?
Chandrasekaran: With respect to Murthy, I think he is a legend. We have huge respect for him. I think that they are great company.
Q: Are you seeing new energy on the field? Is that part of the reason why you are seeing pricing pressure this quarter?
Chandrasekaran: I would not like to link many things, because it is a very large industry and each company has its segments and each company has its customers. The pricing drop that one saw is more of a realisation drop. It is not really a pricing drop and we had seen a pricing uptick two quarters before. We had cautioned everybody that it is not a pricing uptick but more of a realisation uptick.
Pricing in the last couple of years and also for the next 12 months will be more stable. Realisations will keep going little bit up and down. One of the analysts has correctly written today that we should not try to split between volume and realisations so much, because industry is changing. I would agree with that view. I do not think that one should read too much into pricing with respect to competitive pressures or anything like that.
Q: So when you agree with the analysis that the industry is changing, tell me what your assessment of these changes are that has led to this distortion in realisation?
Chandrasekaran: Realisations change because of multiple reasons.
Q: What has changed this quarter because that is what everybody is interested in knowing why have realisations dropped this quarter and why do you believe that is not going to necessarily be the trend over the next few quarters?
Chandrasekaran: It will not be a trend over the next few quarters because realisation is a phenomenon that happens not only with time. Realisations are also because of distribution of the work force that we put in different locations. So, many factors contribute to that. It cannot be just explained in two sentences. Hence, I have been cautioning that one shouldn’t read too much into that.
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1701.34 -4.21 -0.25%
video of the day
Chandra says satisfied with TCS' FY14, FY15 to be better