Tata Consultancy Services (TCS) Chairman N Chandrasekaran on May 31 said information technology (IT) spending is not coming down but is getting staggered due to uncertain times.
“As the world is going through uncertain times, remember the technology spends for all corporations globally will only increase,” Chandrasekaran, who is also the Chairperson of the Tata Group, said at the 29th annual general meeting (AGM) of TCS.
The comments come at a time when the IT industry, in general, and TCS, in particular, is struggling with tepid demand due to uncertain macroeconomic environment.
For the full year of FY24, the Mumbai-based firm’s revenue grew by a mere 6.8 percent YoY to Rs 2,40,893 crore. This growth rate more than halved from the financial year 2022-23, which stood at 17.6 percent.
Chandrasekaran attributed his theory for IT investments to two major factors: the transformative mega trends reshaping both daily life and business operations, and the inherent need for technological advancements across various industries.
“One is the mega trend of changing the way we live and the how businesses operate,” he added. And the second is investment in technology such as on artificial intelligence (AI), generative AI, energy transitions, modern supply chains, and secure networks, Chandrasekaran added.
He also highlighted that significant tech investments are needed for sectors such as financial services, drug discovery, healthcare, and advanced manufacturing.
Despite the long-term outlook, Chandrasekaran accepted that immediate challenges have affected budgets, such as geopolitical crises, supply chain disruptions, and commodity price volatility. “Many such things are happenings, which will either impact the economic growth of the country or inflation of a market and those things will have short term budgeting impacts for companies.”
Chandrasekaran further explained that in response to these uncertainties, businesses are adjusting their budgets on a quarterly and yearly basis to meet their targets and shareholder returns. However, he said the overall spending on technology remains robust, which is the foundation for every “business and society”.
The former Chief Executive Officer of TCS also said the service exporter’s investments in tech and the total available spend for itself will increase year after year. “But remember the overall spend on technology is very solid very strong, that is a foundation for every business and every society. So TCS is in a very good space,” he added.
Also read: Tata Group firms executing over 100 GenAI projects: N Chandrasekaran
In the company’s annual report, he highlighted that after two years of recessionary fears and high inflation, the global macro-outlook has started to look better in FY25.
“After two years of recessionary fears, persistently high inflation, and unprecedented monetary tightening, the global macro-outlook looks relatively better now with improving growth, disinflation, and monetary easing in sight,” he said.
He, however, continues to remain wary of the military conflicts that intensified this year and continue to impact the global supply chains, even as initial signs of stability began to emerge.
Also read: There is a greater opportunity to increase pricing: TCS CEO K Krithivasan
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