Davos 2023 | Meeting customers, mood is one of optimism, says TCS COO NG Subramaniam

At a time when IT Services companies report mixed numbers and signal caution from clients, Tata Consultancy Services Chief Operating Officer N Ganapathy Subramaniam said that he has been meeting customers at the World Economic Forum in Davos, and the mood is one of optimism.

In an interview with Moneycontrol’s Chandra R Srikanth on the sidelines of the WEF, NGS said that customers believe that aside from the war, things are falling into place and that they see the light at the end of the tunnel.

“Most of them tell me that technology is something that is important—whether it is growth, efficiency, innovation, anything that they want to do—technology is important. So in that context, the last 48 hours, I'm feeling good,” he said. However, one has to wait to see how this will translate into IT budgets for the year, which the company’s clients are expected to firm up soon.

“We have done well in North America, in the UK. Europe is the only one where we had some amount of tentativeness. But whosoever I see, they all feel that winter has been generally warm. Germany is actually quite warmer than expected. So they all believe that the energy crisis, which they were anticipating may not be that much of a problem. That itself is a big boost for them. They're optimistic, then it gives us more room for optimism,” he said.

Commenting on the net headcount reduction in the December quarter across the industry including TCS, NGS attributed it to a couple of factors. The first was that companies went to hire a lot of people due to the increased demand, that demand now slowing down, particularly in Europe and a seasonally weak quarter for IT companies led to companies having excess capacity.

“The focus has shifted to better utilisation, improving that realization. I think our attrition rates coming down, and hiring is getting moderated or going back to the levels at which we are used to hiring in pre-pandemic times, which means that the rhythm that we used to have before the pandemic is something that we will get there in 2023,” he said.

TCS has seen its attrition starting to moderate on a trailing twelve-month basis sequentially, but also ended the December quarter with 1,627 fewer employees than in September 2022.

Return to work

In September 2022, TCS informed employees that they were mandated to return to work for three days a week based on a roster. As things currently stand, the COO said that 2.1 lakh of the company’s 6.13 lakh employees — or about a third of their workforce — now works from office for at least three days a week, a figure he said they were happy with.

“Most employees when they come and see the office environment, how they get benefited by this, they tend to come more often. I think this flexibility to the workforce, the hybrid model, the collaborative way of working is important,” he said.

He added that they have got the model right when it comes to working collaboratively, but that it was sad to see TCS employees who have never been to the office exit the company.

“Our emphasis is to see that they come to work, come to the office, and build a career for the long term. Once you get to the rhythm of working in TCS, then you know, it doesn't matter where you work. But initial integration needs to happen by coming to the office,” he said.