With continued uncertainty due to fears of a recession and uncertainty in Europe, Tata Consultancy Services CEO Rajesh Gopinathan said while pipeline velocity and deal closures continue to be strong, the company is vigilant due to macro-level uncertainties.
TCS kicked off the IT results for the quarter on July 8, with profit increasing by 5% year-on-year. In terms of deal wins, the IT services major saw a decline from last quarter -- from $11.3 billion to $8.2 billion. It added nine new clients to the $100 mn-plus band YoY and 19 clients to the $50 mn-plus band.
TCS had a total contract value (TCV) of $8.2 billion in Q1FY22. Gopinathan added that the company is seeing steady demand based on client discussions, and the same is reflected in their deal pipeline and closures.
In terms of customer addition, TCS said it added customers across all revenue bands. Its $100-mn-plus customer base grew by nine on a year-on-year basis going to 59 clients for the quarter. Growth, he said, has been broad-based across geographies and sectors.
The CEO added that demand for technology continues to be robust, and is similar to the themes that have driven them in the recent past — cloud transition, as well as investments in customer experience and other operating model transformation initiatives. These initiatives, he added, are both on the growth side as well as on the transformation side.
“Projects that are currently going on, the pipeline conversions, all of that indicates a very steady demand environment. We are also constantly polling to see whether there are any early indications of softening and as of now there is nothing into the middle of the year,” he said.
Customers are focussed, he said, adding they don’t see a footprint of the recession on the demand.
“The pipeline build is quite strong and the nature of deals are also remaining fairly strong. We are now running at about 1.2 times book-to-bill which is above our long-term average. On an immediate basis, the demand continues to be pretty strong,” he said.
TCS overhauled its organisation structure, and as a result of it, the CEO said they don’t just expect an impact on revenue but also expect to see greater vibrancy on the bottom end of the client pyramid as we see the progression from lower to upper revenue backgrounds. He added that the new structure needs time to start delivering.From an Indian business perspective, Gopinathan said it is volatile, but the corporate sector is doing relatively well.