Not giving up on double-digit growth, but will be a tough ask in FY26: TCS CEO K Krithivasan

What is your playbook to achieve growth in a tough environment?

 First, we are looking for quick wins. Many clients do not know where to invest, and they do not know whether they will get ROI.  We have to go after opportunities where clients can be more certain about the return on investment and where the investment required is not very high. So, go for smaller projects and where the ROI could be quicker, within 2-3 quarters. Second, if we are winning 70 per cent of the time, we should now work on winning 80 per cent.

What if stress persists for longer than a year?

We will work on expanding the scope of services offered, verticals and geographies. You need to find the white spaces to sustain overall growth.  For example, in India, we are looking at consulting as the area to focus on. In BPS, the idea is to expand where we do not operate currently.

From a geography perspective, Southern Europe could be an opportunity for us, but it requires its own delivery model. We need to have a more localised delivery there. Then there are geographies like Korea, where we are not present, but demand is good. We need to expand, including in Asia-Pacific. In terms of verticals, there are certain verticals like sports where we are not present at the moment.

Last year you had said 2025 would be better than 2024. During results, you voiced hope again that demand will return. What gives you that optimism considering the macro headwinds? 

 I qualified the 2025 comment in terms of international revenue. I still hope it will be better. We exited FY25 with a positive exit rate in the international business. Q1 for this year has not been good. Still, even if we get 1-2 per cent in coming quarters, FY26 will be better off than FY25.

Are you still going after the double-digit growth?

 I will try to, I will never give up, but is a tough ask for this year. We will focus on what we can do and not so much on things we do not control. The most important thing that we can do is stay close to our customers, understand what they want. The second thing is providing more capability and tools to our associates to address the immediate needs of the customers and be proactive in telling them what we can do. .  

In the telecom equipment business, you have not had any new contracts from BSNL or private telcos. Is this an indication that there is not much demand for the open source RAN hardware?

  We still believe the world is looking for open-source RAN. Other than O-RAN, we have also come up with newer components on network management. It is a solution for the future. We have to give some time for the technology to mature. The engineering capability in this country is very strong.

Mid-tier IT companies seem to be going at a faster rate than the top 4. Are big firms like TCS protecting margins and so losing out on market share? 

 For a company like ours, it is important that we have sustaining profit. We cannot drop the margin only for the sake of it. We do compete heavily and intensively, but at the same time, it has to be profitable. If we do unprofitable business, we will not be able to benefit the customers.  

Semiconductor is a hot topic in India right now. Do you see opportunities in this segment in India?

 Tata Group has their own investment. For instance, we work with Tata Electronics in helping them bring in AI-infused manufacturing or automation in those technologies. We work with different Tata Group companies in adopting and leveraging latest technologies. We will be interested in design, but we may not be interested in manufacturing. We will not do a fab [fabrication facility] here, but otherwise it is an area of interest to us.

How is AI impacting hiring and talent acquisition?

 The number of programmers I hire in the future will be different from the numbers today because programmers will become more productive. You will need people of different skills who can train these models like prompt engineers, those who can test the output. So, there will be more jobs but different jobs than what we have today. We have to train people in all those different things.

On the wage hike front, TCS has still not said anything. Are you concerned it might possibly demotivate employees?

 This was the first year in the recent past where we have deferred wage hike. Most companies have done that multiple times. We need to have a better clarity on the overall situation. For some of the job grades, we did not announce a salary increase, but we will increase the quarterly variable allowance (QVA) that we gave compared to the previous quarter.

At least, to some extent, we will compensate. For the lower grades, we have always been giving 100 per cent QVA. For the next level grades, we will increase the QVA component to compensate for the wage hike that has not been rolled out. We would like to ensure that we are able to roll the wage hike out quickly. 

Last year, you said call centers as a concept may not exist due to AI. Is the Capgemini-WNS deal an indication of the changing BPM model? 

 The model has to change. A significant part of call centre transformation has not happened because the interface technology is fragmented. You always need a human being to look at multiple applications. AI technology has the ability to integrate or look into multiple systems in an autonomous way and help the customer.

I am also seeing a day where more straight-through processing will be enabled. Fragmentation could be fixed. So, you may not need a contact centre, even if you do, it could be highly automated. So, except in those cases where a human judgment has to be made, jobs where a judgment need not be made could be eliminated.