TCS expects better growth in Q4; pricing to remain stable

N Chandrasekaran, CEO and MD; S Mahalingam, CFO; Ajoy Mukherjee, Head-Global HR and Phiroz Vandrevala, director at TCS join CNBC-TV18 for insights beyond the numbers.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: How was the quarter? Was it a bit sluggish by your standards?

Chandrasekaran: No, it was a good quarter. We had said at the end of last quarter that Q3 is weak primarily because of couple of working days less and also some of the manufacturing plants had indicated that they will go on for losses. So considering that, I think the volumes have been in line, taking Q2 as a base. So it’s been a good quarter and we are quite happy where we are.

Q: Should one be worried at all that in the Banking and Financial Services Industries (BFSI) space, the growth number has been a very low single digit this quarter?

Chandrasekaran: Not really. I think we studied very hard all the BFS clients, especially the large ones. We are not seeing any indication of a slowdown in the type of engagements that we are doing. So I wouldn’t be raising any alarms.

Q: Europe?

Chandrasekaran: Europe is in fact very good. It has led the growth for the second sequential quarter. Deal signing in Europe has been very good. We have four deals between UK and EU. So I think Europe is going to do well because our base is small comparatively, and the deal signings have been better than Europe on that base. So that will continue to deliver growth in the coming quarter and the quarters after that.

Q: Your peers are also suggesting that fourth quarter will be quite. That’s something that you said as well post your results. Why are you saying that one should be cautious about the fourth quarter?

Chandrasekaran: First of all Q4 will be a growth quarter. It is not a flat quarter or a degrowth quarter. All I have said is, some of the discretionary projects which we expected to get closed in Q3 did not close. None of them are cancelled and they may not kick in from January 1. If we want to capture the full volume, we have to start ramping up from first week of January at least. It is getting delayed, so to that extent there will be a mooted growth in volume. That was the only message I gave. There was no negativism in terms of outlook for 2012.

Q: But temporary and limited cautious period just for the fourth quarter? Not spilling beyond that?

Chandrasekaran: Yes, not spilling beyond that and also because of the fact that the ramp ups will not happen for the full quarter.

Q: So are you saying Q4 almost be like Q3 in that sense?

Chandrasekaran: We don’t give guidance.

Q: You just said not flat, not de-growth, right?

Chandrasekaran: You can draw conclusions.

Q: What exactly are you talking about, this kind of not closing some of the discretionary deals? Can you just give us a little bit more on that?

Chandrasekaran: These are development projects and they need to be signed up because we are not talking about annuity contracts or additional changes you are doing to the same projects. So, we have new projects. Every time you sign these new projects you have got to form the team ramp up.

These projects could be development of any kind. It could be in a new technology, it could be in analytics, it could be in any one of these areas. But, these are new developments towards growth typically and there have been delays in these projects.