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TCS confident of achieving double-digit revenue growth in FY23

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TCS confident of achieving double-digit revenue growth in FY23

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TCS is confident of achieving a double-digit revenue growth in the current fiscal and will be targeting a similar performance in FY24 as well, a senior executive said on Tuesday.

TCS

Photograph: Courtesy, TCS

The largest IT services exporter’s ability to achieve the number in FY24 will hinge on how the macroeconomic situation, including geopolitical tensions, commodity price pressures, inflation and financial tightening worries, play out, chief operating officer N Ganapathy Subramaniam told PTI.

“(For) this year (FY23), probably we are there (double-digit growth).

 

“What we need to do is that in the remaining quarters, we just have to maintain the run rate and we will be able to achieve that, not a problem. In FY24, it is too early to call. The target is to stay on the double-digit growth,” Subramaniam said.

For the first half of the fiscal, the Tata Group company’s topline has jumped 17.1 per cent to Rs 1.08 lakh crore.

In its commentary after announcing the second quarter results on Monday, the company flagged concerns about the global economy, saying things are challenging and that it will stay vigilant to minimise the impact of the overall market on its business.

Subramaniam on Tuesday said demand for IT services continues to remain strong.

To a query about worries surrounding high inflation and rate tightening in its biggest market of US, he said consumer behaviour does not point to a recession.

The space to watch out for is Europe, which is bracing for a tough winter because of the energy supply challenges, Subramaniam said, adding that this can impact the manufacturing sector if factories stop working.

TCS does not have a high reliance on the sectors which potentially stand to get impacted, he added.

The company is well placed to keep achieving the Total Contract Value (TCV) of $7-9 billion per quarter for the next few quarters but the same will have to go up eventually in order to realise its longer term revenue growth aspirations.

The $7-9 billion TCV per quarter is good till it reaches $28 billion in annual revenues but the new deal wins will have to go up to $10 billion and beyond, Subramaniam said.

The company aims to double revenues to $50 billion by 2030.

TCS has not changed its strategy on acquisitions, and will continue to be selective on the inorganic growth opportunities, he said.

“We are not averse to acquisitions but it has to add value to us either from an IP (Intellectual Property) perspective or from a customer base perspective. We do not want to acquire just people but we need to have a corresponding asset,” he said.

On the profitability front, Subramaniam said the company has multiple levers which can be deployed to up the operating profit margin to the target of 25 per cent.

He said utilisation has come down recently from a high due to a very high hiring while there also exist other aspects like currency and pricing which will be looked at.

“Typically, we used to operate at 90 per cent (on utilisation), we are now at about 83 per cent.

“So, the 7 per cent cushion that we have can contribute to better utilisation and increasing revenue and bottomline,” he said.

When asked about competition from pure-play consultancy firms, he acknowledged that both TCS and such firms which have built digital practices are vying for the same business.

“They have a consultative background, so their ability to… articulate and package will be much better than what we are doing.

“They are groomed to sell… but on execution, we will be superior. Finally, customers pick one of these two,” he said.

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