Cyber security, building resilient and adaptive supply chains, various forms of data protection and issues related to sovereignty will emerge as “big drivers of technology spending globally,” the 51-year-old chief executive said in an interaction with ET.
India’s largest software services company is targeting “profits-led growth” as it seeks to double its revenue to $50bn by the end of the decade. “We are closer to a bicycle than to a sports car. It’s not about sprinting, it’s about organic growth and we know balance is more important than sport,” Gopinathan said.
The $25.7 billion software giant expects to match double-digit growth with margins of 26-28%.
In fiscal 2022, TCS grew 15.9% on the back of record deal profits that totaled $34.6 billion for the full year, with nearly a third coming in the latest quarter. By comparison, rival Infosys grew 19.7% but posted a lower operating margin of 23% compared to the 25.3% reported by TCS.
“The theme that technology will be an increasing percentage of (business) spending is unlikely to be challenged for years to come,” said the TCS CEO and CEO.
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Since the Tata Group company is “very focused” on the Western Hemisphere and the opportunities there are “a hundred times greater than anywhere else”, it has little to fear from the ongoing geopolitical struggle, according to Gopinathan.
“The US is our main market. The US, UK and Western Europe together account for 80-85% of our business,” he said. TCS has no presence in Russia, Ukraine, and Belarus and has minimal operations in parts of Asia. “Japan, Australia and India, the US, the UK and Europe account for about 90-95% of our business,” she added.
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However, the ongoing conflict between Russia and Ukraine has accelerated the need for dual trading systems and dual (business) ecosystems that will need to remain mutually independent, and technology will play an increasingly important role in enabling such a world order, Gopinathan noted.
From fiscal 2018 to 2022, the Mumbai-based company has seen its revenues grow by 30% and, last September, crossed the $200 billion mark in market capitalization, placing it second place after Accenture in this metric among global IT services companies.
Furthermore, as global business moves into a “post-pandemic world”, companies are now discussing transformation agendas rather than coping mechanisms.
“This year, the dialogue is much more about where the growth opportunities are, where the transformations are, that’s the big change that has happened,” according to Gopinathan.
India, which he described as “very much a local technology story (and) not an imported technology story,” has “allowed free capital flows” unlike China, which “forced localization of ownership,” he said while he pointed to companies like Flipkart, acquired by Walmart, or Zomato or Swiggy, all built locally.
“India’s digital transformation, both public and corporate, has been completely executed at the local level and that is why we are in such a unique position among all emerging markets,” said Gopinathan while mentioning the country’s digital payment infrastructure to a special mention.
“Today, people are putting wrappers on that payment infrastructure and branding around it. A lot of the global brands are doing a much better job of advertising it on TV, but the underlying rail that makes it possible is (built ) locally,” he said. .
While it has taken the Tata Group company, established in 1968, more than 50 years to reach the $25 billion mark, Gopinathan’s ambitious goal of doubling revenue this decade is based on a whole organization revamp. the company started earlier this month. . The strategy includes a strong commitment to partnering clients on their transformation journeys as they navigate a more uncertain world and rapidly changing technology landscape.
“Today we have about 1,200 customers. When we double down, we want to (have) say, 2,000 or 2,500 customers. But we want to make sure that the level of service that we can provide to all of them is equal to or better than where we are today,” he said.
This includes TCS’s ambitions to capture more business from its parent group, such as the iconic Air India. While TCS may have a natural advantage, “as with all of our group companies, we have fought hard and won, so we cannot assume that we will automatically have it,” Gopinathan said.
“We have a relationship of trust that we can take advantage of, but beyond that, we must earn our right. So Air India is still in the early stages of that dialogue,” he said.
Reference-economictimes.indiatimes.com