As demand picks up, pricing power will return. TCS has been winning deals.
— Mr N. Chandrasekaran, CEO of TCS
Adith Charlie
Mumbai, Dec. 30
In what could be a firm indicator of turnaround times for the IT industry, the CEO of India's largest IT services company said fiscal 2010-11 is likely to see his company step up the pace of hiring, give wage hikes, as well as increase capital expenditure.
“We are likely to hire more people next year ( vis-à-vis the current fiscal) and we have also increased the quantum of work done offshore. This means we have to create more facilities going forward,” Mr N Chandrasekaran, Chief Executive Officer and Managing Director of Tata Consultancy Services, said in an interview to Business Line.
Next year's capex for the $6-billion company is likely to be higher than the Rs 1,300 crore earmarked for the current year, a figure disclosed by the group chairman, Mr Ratan Tata, at the company's annual general meeting last year.
However, Mr Chandrasekaran would not provide concrete numbers as the company is still in the process of firming up its plans for the next fiscal, ahead of its third quarterly results that are to be announced on January 15.
This revival in IT spend is propelling TCS to firm up hiring plans for next year and it is being led by companies in the banking, financial services space across geographies.
Positive indicators
Though companies in sectors such as manufacturing, hi-tech, telecom and manufacturing are still ‘not out of the woods', there are enough indications of things revving up next year, said Mr. Chandrasekaran. “I believe that during the course of the year these sectors will turn positive and deliver growth. The good news is the decline (in these sectors) has stopped,” he said.
TCS expects 2010 to be a better year for the company and the IT industry as a whole. And the growth is largely going to be volume-driven.
“Short term, there may not be a pricing uptake; but I do not expect a (pricing) decline either. As demand picks up, pricing power will return,” said Mr Chandrasekaran.
The good news is that discretionary or optional technology spending among corporations also seems to be making a comeback, especially in the BFSI (banking, financial services and insurance) space. TCS Bancs (its financial products suite), which is “positioned against discretionary budgets”, has been winning deals across geographies, securing engagements even in geographies such as continental Europe that are yet to see an uptake, he said.
Better clarity
“Fundamentally, there is lot more clarity and there is a systematic way of approaching business from the customers' end vis-à-vis last year. We just hope that Europe as a geography also starts showing signs of recovery,” he said.
Starting January, TCS will approach campuses for recruitment for 2010-11. It may be noted that for the current fiscal the company has already given 24,888 offer letters for campus recruits, a good percentage of whom are expected to join, in a staggered manner through the fiscal.
Earlier, TCS had indicated that it had nearly frozen lateral hiring for the current fiscal. That too seems to be changing and the company has increased the pace of hiring laterals or experienced professionals.
TCS, which had clamped down on salary hikes this year, is likely to be more lenient next year. The company is internally huddled in discussions to see how much wage hikes can be implemented next year, said Mr Chandrasekaran.
For the quarter ended September 2009, TCS had reported a 29 per cent rise in net profit at Rs 1,642 crore against Rs 1,271 crore in the corresponding year ago period
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