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Last Updated : Jul 13, 2020 07:06 AM IST | Source: Moneycontrol.com

Worst of COVID-19 over for TCS, recovery in sight: CFO V Ramakrishnan

The confidence, Ramakrishnan says, comes from the strong order pipeline, heightened conversation with customers and also the kind of opportunities they are seeing.

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TCS will selectively open lateral hiring and will go ahead with fresher hiring in geographies such as the US though the numbers are small at the back of the pandemic.

This comes as a surprise as companies are freezing hiring to cut costs. This is a move TCS reversed in the first quarter. Announcing the results for the March quarter, the company said that, while the company would honour all the offers, there would be a freeze on lateral hiring at the back of COVID-19.

Has the situation changed for the better? V Ramakrishnan, Chief Financial Officer, seems to think so. The worst is over, at least for TCS, he said during a recent interaction with Moneycontrol.


As per CEO Rajesh Gopinathan, the company has better visibility now and expects recovery from the third quarter onwards.

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The confidence, Ramakrishnan says, comes from the strong order pipeline, heightened conversation with customers and also the kind of opportunities they are seeing.

What has changed in the last three months?

Ramakrishnan explained that even amid the pandemic, countries across the world have been opening up the economy in a calibrated manner. “As economies open up and different sectors start opening up, it (business) should slowly start coming back to normal,” he said.

When it comes to industries, sectors such as banking, financial services and insurance (BFSI), manufacturing and essential retail are adapting to the new normal and are embracing latest technologies to ensure business continuity.

It could be contactless banking, touchless delivery for essential retail or managing a robust supply chain for a manufacturing firm. Of the $6.9 billion order TCS signed for the quarter ending June 2020 even amid the pandemic, $2.3 billion was from BFSI and another large deal from manufacturing.

“So that is one indicator,” he added.

In terms of technology, there is a huge demand for migration to cloud, data analytics and TCS' own products and platforms such as Ignio, a cognitive automation product of TCS. Customers are spending significantly on cybersecurity with applications going online. In addition, some of the clients are also fast tracking their transformational agendas.

“So this is where opportunities are. Pipeline, if you look at it, it is healthy and it has a mix of large as well as small deal and that also gives us confidence,” he added.

This confidence and positivity has what led to opening up lateral hiring. “As far as laterals are concerned, they will be selective, depending on the requirement and markets where there is demand. Right now we don’t have a specific plan on a number,” Ramakrishnan said.

TCS is also going ahead with its fresher hiring in geographies such as the US though the numbers will be smaller.

Visa issues

H-1B visa ban till December and the US government's recent move not to issue student visa to students in the US whose classes have moved online could present challenges in the long-term.

According to Ramkrishnan, the US is the most innovative country in the world right now, and the largest innovation still comes out of the country.

“That is primarily because they have invested in meritocracy and also because of opportunities that have been made available for entrepreneurs and for the students for their higher education STEM education,” he added.
“If we have constraints on that, it is going to affect the technological leadership, our customers and it will also affect people like us,” Ramakrishnan added.

Will it change the current model? Ramakrishnan pointed out that the company has always found a way and its distributed agile model (remote working) would help.

“But is it the most optimum way to do it? Perhaps not,” he said


There are challenges of course. The company’s revenue declined 7.8 percent to $5059 million in constant currency for the quarter ending June 2020 on a year-on-year basis. While Europe registered 2.7 percent growth, its other geographies such as the US and UK reported decline in growth of 6 percent and 8.5 percent respectively.

With the exception of life sciences and healthcare, other major verticals’ growth declined in the range of 4-13 percent.

While the company expects the US market to see recovery in the coming quarters, there is not much certainty over the UK, which is struggling from COVID-19 and also Brexit.

Ramakrishnan pointed out that while the company is positive, the growth does depend on whether there are too many frequent lockdowns in different cities. There could also be a possibility of recurrence and there could be a fall back because of that.

“But hopefully, it will not be,” said Ramakrishnan.
First Published on Jul 13, 2020 07:06 am