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‘Will focus on cost management, efficiency’
Rajesh Gopinathan, CEO, TCS
Jul 12, 2019 | Source: Businessline
On growth in BFSI and North America: TCS had called it out last quarter about softness increasing during the quarter. A lot of impact in North America is coming from BFSI and retail. Manufacturing is doing very well for them in North America. Overall, Mr Gopinathan feels there is weakness volatility in the environment. Retail is expected to bounce back next quarter. BFSI is in wait and watch mode.
On focus on stability instead of growth: In the last couple of years, TCS completely focussed on getting to double-digit growth to capture the opportunity as well as to address credibility issues. It made big strategic calls that were counter-intuitive to the industry. That credibility has been established. Now, it needs to step back and look at the efficiency paradigm. Its customers are faced to work on demand, efficiency and growth altogether. TCS will also focus on cost management part. Earlier, it was leveraging investments for growth, now it will see whether the productivity benefits are coming through from its investments. For Mr Gopinathan double-digit growth last year was a milestone and he does not intend on pushing it further as their strategic agenda is now broader.
On Digitate: The first product Digitate launched — Ignio has already crossed $60 million in revenue. It is the fastest growing software product in that category. It will be a meaningful part of TCS portfolio but it will take time.Digitate has been set up as a separate entity. They act independently, but are strongly linked to TCS. It has worked for a Canadian retailer who was not a customer of TCS. Ignio worked with them independently as product vendor. TCS has hardly any services business with them but Digitate is at the front lines without the dependency on TCS. Two of TCS’s competitors are service providers, hence TCS is training their people to use the product. TCS has also set up intelligent enterprise automation group, which works with Digitate and other vendors across a spectrum of automation tools.
On bifurcation of digital revenues into specific technologies such as cloud, cyber security etc: TCS is not ready for it yet. Coming out with numbers every 13 weeks itself is a difficult task. Mr Gopinathan wants to keep on doing it to a level where it is value adding for TCS also.
On Margins: By TCS’s historical trends, margins are slightly lower, impacted by external events such as currency and political events. He further adds that lack of innovation, leads to price resiliency. Constant innovation and investment gets reflected in the ability to hold prices and your competitive position. That’s reflected in TCS’s best-in-class industry margins in an industry that has been struggling to maintain growth and margins.
On investing internally vs acquiring companies: Mr Gopinathan always prefers to fund from P&L than from the balance sheet. TCS is much disciplined not to use its balance sheet and have been systematic about it. Digitate and Ignio are works in progress. The fact that it is homegrown, has given TCS the confidence to constantly change.
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