Growth:
Why QoQ growth is subdued this quarter? - This quarter is weak primarily due to cautionary stance from clients in North America. Lingering concerns and financial volatility in the banking system but are well positioned to handle it well.. We have brought down the lateral hiring and are systematically using return to travel.
What happened on margin front as you guided on 25% earlier? - Beginning of the year we saw negative sentiments impacting the revenue and cost side. We could optimise the fee to external consultants and with help from currency and operating efficiency we have offset some increase in cost.
What is happening on BFSI segment? - For North America, sentiments are down and are in greater risk to preserve cost. More sentiments at play than any structural issue and we have strong order book.
FY 24 growth will be more back ended Vs front ended. And due to increasingly negative sentiments for NA, is it likely to get worse before it gets better for NA? - Volatility is fairly recent and sentiment is negative. It will take some time to play out. Medium term doesn’t see large scale project cancellations and are on track. More of the discretionary projects which are deferred or put on hold but this requires careful watching. Decision making for US is very fast and it is the most risk taking market so expecting faster recovery.
Any budget cuts on BFSI side? - Spending wisely is the mantra.
When you speak to clients, how is sentiment different now as compared to 2008?- No comparison with that situation and the overall impact right now is on the US banking sector. It's more of a sentiment related issue and it will get better with time.
BFSI pain still persists? And how fast it can recover? - It varies within geographies, and currently US is the only issue for us. There is no structural pain as far as inflation and interest rates are in control.
If it was not about global slowdown then we could have see higher budgets of clients projects? - Types of programs that customers are working on are kind of irreversible and there is no going back for them. So we are seeing some deferment and some pickup in the pace is expected going forward.
How do you see BFSI growth in the next two quarters and full year? - Demand is there so if something expected hasn’t happened in this quarter then they may happen in the coming quarter but they are not going anywhere.
36 bn TCV in Mar 22 and 11 bn deals win in Mar 23, client addition has also slowed, last year you added 10 and this year you added 2. Even 7 industry verticals are growing slower than industry average. These numbers appear to suggest a slowdown at TCS? - Numbers are what they are and you can make your own conclusions based on it.
How is FY24 looking like? - No guidance available.
Deal pipeline:
On deal wins, can you explain 10 bn and why it is not reflecting in the top-line and could you break it up in cost-optimisation and transformation related projects? - NA is contributing 5bn, BFSI 3bn, retain 1 bn and its all extremely broad based. Everyone is talking about Chat GPT. It’s clear that innovation is surpassing productivity. Huge focus on clouds, ML and integrating Chat GPT in the offerings.
Is it realistic to say 26% is not going to happen in FY 24? - Any deal cancellations or delay in ramp up on ground? Our guiding beacon is 26-28% and our long term cost structures can help in building this as long term average.
Deal win pipeline guidance for FY 24? - 7-9 bn going to stay and overall pipeline looks broad based and is on track.
More color on deals, in terms of short term? - More cost optimisation are expected right now rather than transformation projects
Is the mega deal win from India? - It's from UK.
How is TCS preparing to bag large deals? - We have see higher deal wins in Europe and the sentiment is converting into actual deal wins at a satisfactory pace. We don't think there is structural weakness in US.
Chat GPT:
Have you Integrated Chat GPT with your offerings? - We have started using generative AI, over last few decades we have collected enormous amount of data, so we are working on applying ML and AI to improve the overall quality of experience for our clients. As such a technology matures, we will be ready with our core competencies built around it and will use it the right way to derive growth.
About Chat GPT, will it impact jobs as well? - Jobs are not going to disappear, but new kind of jobs will be coming out with this.
Specific industrial use cases for Chat GPT? - TCS banks complete code is generative. Our competencies include developing programs that can help us build programs and the prime objective is to make it even better.
Do you think chat GPT or generative AI will increase outsourcing and what will be it's overall impact on IT? It is expected to make relevance of technology even higher and we are going to see increased use to technology everywhere.
Hiring/Attrition
FY24 hiring target? - Do you hold it at 40k? Yes 40k stands, so far we have already issued 46k offers.
Onboarding delays of freshers and is there a pay-cuts for freshers? And is 100% variable pay expected? - We always have honoured all our offers and will continue to do so. Not planning any reduction in the salary and we are providing 100% variable pay for this quarter. Top performers may see around 12-15% increment and it may go down to 2% as well based on performance.
How many freshers onboarded in Q4? - No figure available for that.
CEO Transition:
What are two focus areas as CEO? Will the corporate structure placed last year will continue? - No surprise, would like to meet our customers and understand the requirements and potential demand. Need to become confortable on non-BFSI side.
Rajesh’s advisory role might get extended? - No comments on personal career plans.
Planning any structural change in the organisation? - Not planning any for now.
How is the transition going so far? - Going smoothly and as planned.
Investor Resources: https://www.tcs.com/financial-statements#year=2022-23&quarter=quarter4