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Last Updated : Jan 24, 2018 05:24 PM IST | Source: CNBC-TV18

Davos 2018: TCS says customers seeking more transformative deals

In an interview to CNBC-TV18, Rajesh Gopinathan, CEO & MD of TCS shared his views on the business outlook from the sidelines of World Economic Forum (WEF) at Davos 2018.

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In an interview to CNBC-TV18, Rajesh Gopinathan, CEO & MD of  TCS shared his views on the business outlook from the sidelines of World Economic Forum (WEF) at Davos 2018.

Below is the verbatim transcript of the interview:

Q: The Prime Minister in his speech talked about the threat of protectionism and that impacts for instance the IT sector. While the US doesn’t see the visa issue as a trade issue and more as an immigration issue, India sees it as a trade issue. In the world that we live in today, has the threat now receded, diminished even a bit. Have you adjusted to this new normal so to speak?

A: My big takeaway from the PM’s speech was what he said at the beginning about how the whole World Economic Forum (WEF) has been built by keeping in mind both the forces of Rajneeti and Aarthik progress; the economy and politics. So we got to be cognizant of these realities and find solutions in between.

As companies we are all operating across multiple boundaries and our customers are also in a similar kind of a situation. We are overall quite positive. There are specifics to be dealt with but overall environment is still quite positive and that is the spirit that the PM spoke about.

Q: Since we are talking about the environment, let me ask you about the IT environment and the market certainly seems to be betting on the fact that the environment is changing for the better. What is your sense and I remember your commentary on the day that you put out your numbers, you seem to suggest that we need to start looking at spending from a different lens and not from the traditional lens that we got used to looking at these things from. What do you mean and give me a sense of what you are seeing change in the environment?

A: The world is going from a more, if I would say, a batch processing kind of an environment where there is an annual cycle and there is budgetary cycles which are tightly linked to that. We are going into a much more Agile world and with projects which are much shorter duration but on a constant basis with ebbs and flows of funding based on where the business priorities go and IT is becoming more and more linked to business. So the kind of spending that you see is a lot more dynamic compared to more static kind of annual budgeting fund. So that is what I was alluding to and this whole to shift to Agile is something that we very significantly embracing and we think that we are leading the way in terms of going to what we call a 100 percent Agile world and that is the new frontier for technology and in that scenario many things will change; budgeting will change, performance management will change, contracting will change and that is what I was talking about when we said that this concept of November-December you will get visibility on budgets and by January-February we will start spending. I think that world is behind us and we will have to wait and see how it exactly comes together but it is going to be lot more dynamic, lot more real time and lot more Agile.

Q: A lot more challenging as well?

A: Different kinds of ways. Agile programmes, once you are deeply embedded – think about it this way that your best bet is to be very close to business and Agile is a methodology that allows you to get very close to business and to know what is going on in business. I would anyway trade that off against stability in budgets because if you are close to business you are constantly realigning yourself and your resilience is a lot longer. So I would bet on it any day compared to being a bit distant but getting an artificial sense of security by saying this is the budget.

Q: Speaking of security, let me ask you about the deal pipeline. You have just done four big USD 500 million plus deals. Is that an indicator that large deals are back on the table?

A: What is important about these deals is they are quite unique, so they are not like old; maintenance deals being clubbed together into large ones. There are still some of that going along but this is a totally different kind of a construct. It is a combination of frontend digital and backend technology transformation and operations to build together. So it takes unique blend to be able to stich this together and we are seeing increasing traction in our customer base where there is a lot of interest in looking at these truly transformative deals but I wouldn’t know whether to characterise that as an industry wide phenomena but we definitely are seeing correction in our pipeline.

Q: Is this pipeline looking strong. Do you believe that you will be able to continue to, at least in the foreseeable future clock up some of these kinds of deals?

A: We have set ourselves a very high threshold so I do not want to comment against that but the interest levels are quite high. These are pipelines which are difficult to predict, so there is traction, there is interest but how the closure rate comes through – that only time will tell.

Q: There has been a lot of talk and I asked N Chandrasekaran, Chairman of Tata Sons this and he said there is something that Tata Consultancy Services (TCS) is going to have to look at and this is the possible consolidation within the group of the IT companies. What is your take on that?

A: It is not a segment per se that we look at. We are always constantly on the lookout for the appropriate opportunities but per se we are not looking at group as a segment and therefore I do not have a particular point of view on any of that. We do not look for acquisition as a means of growth. We look for acquisition as a means of market entry into new service line or into new geography. We have done a lot on the geography side.

Q: Is 2018 going to be an acquisitive year?

A: I do not know. If there is right opportunity at the right price point comes around, we are always geared.

Q: Is it going to be a better year in comparison to the previous one?

A: I do not want to comment upon but we are positive and especially right now we are riding high, it’s looking good. So as I said the pipeline is strong, there is a traction, and closure will depend unfortunately in the new scheme of things long-term visibility is limited. So we will roll with it as it comes.
First Published on Jan 23, 2018 07:53 pm
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