India’s largest software exporter, which reported better than expected revenue growth in the first quarter of this fiscal, is expecting greater clarity on technology spends once the US completes its presidential elections in November and the much-anticipated interest rate cuts by its Federal Reserve kicks in by year end. In an interview with Sameer Ranjan Bakshi and Surabhi Agarwal, the 59-year-old CEO pointed to his company’s deepening engagement with other Tata Group firms. The company recently inked a $ 1 billion partnership with Tata subsidiary – JLR (Jaguar Land Rover). Edited excerpts

There has been criticism over the BSNL deal having contributed much of the incremental growth for TCS in the just concluded quarter?

I don’t know what is wrong in doing priced programs in India ( where) we are also delivering margins. India is a good market, and we must be present here as it is one of the few emerging markets that is growing. Future growth will come from emerging markets and if companies like ours don’t invest ( here) it will be a huge, missed opportunity.

How do you see the macro environment and what does FY 25 look like?

Things have not changed much but we believe this year is better than last year. But if you look (specifically) at the US, people are expecting (change) after the Federal Reserve announcement in terms of jobs and some cuts in interest rates. Similarly, once the Presidential elections are complete in November it will give them a direction on which way the overall economy will go. I feel that the amount of certainty once the elections are over is the most important thing. Once we know what they’re likely to get into, then the whole thing gets recalibrated, and the investments start (unlike the current situation which is that they don’t know what would happen). In the UK, we’ve been doing well. And now the elections are (over) I expect, there is a certain direction available to them.

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But elections are due in November. That is a long wait, should we brace for more uncertainty over the next two quarters?

I see maybe the next two quarters we need to wait is my guess. Unless the interest rate gets reduced before that (some clarity will emerge in next two quarters).

The contribution from North America to TCS’s overall revenue has dropped below 50% for the first time in three years. Even India revenue contribution is at a multi-year high. Will this continue to be the trend?

We would like that. Broadly, we’ve been using North America as one layer of growth. And secondly, there has always been Western Europe and the UK. We want to have a credible third pillar of growth coming from emerging markets. So, we are very focused on these emerging markets and investing a lot (there).

Are Generative AI projects more on site or are they being offshored, because of the data intensity involved?

It’s a mix. Our R&I (research and innovation) teams are primarily based out of India. But we do have a significant portion of our team onsite also. Generative AI is more of a summarizing technology as it stands today while traditional AI is predictive.

Your peers are on an acquisition spree, there is a rush for ER&D semiconductor companies and what are your plans?

My guess is that there is an overall rush towards semiconductor companies because everyone wants to ride on Gen AI and interest in India. Our approach has been to create synergy, if I can top off what we can acquire and provide a growth multiplier, we will do it. If not, we will not do it. It’s easy to acquire but if you’re not able to execute on synergy benefits, you will be staring at more inefficiencies. So, we don’t want (that), our benchmark on acquisitions is quite high.

How significant are Tata Group companies for the growth of TCS?

Tata group is very critical for us. We have to fight to win programmes with group companies because each one of them is a listed company, they deal with us at arm’s length. But we know what the group is planning to invest so we prepare ourselves, but we fight with everybody to win those deals. But it’s very important. The group is also investing globally as well. So, we want to increase and enhance our presence through collaboration.

You still have 30% of TCS employees who are yet to work from the office. So are you being liberal in your mandate of work from office?

There are people with genuine reasons to work from home, people holding out or not coming at all is a smaller percentage. We are rolling out the consequence process. It will be an incentive plus a disincentive mechanism. We are close to 80% of the people coming into the office. Before the pandemic also, about 80-85% people came to office. If you go into any of our Centres, the activity is like pre covid level.

India’s largest software exporter, which reported better than expected revenue growth in the first quarter of this fiscal, is expecting greater clarity on technology spends once the US completes its presidential elections in November and the much-anticipated interest rate cuts by its Federal Reserve kicks in by year end. In an interview with Sameer Ranjan Bakshi and Surabhi Agarwal, the 59-year-old CEO pointed to his company’s deepening engagement with other Tata Group firms. The company recently inked a $ 1 billion partnership with Tata subsidiary – JLR (Jaguar Land Rover). Edited excerpts

There has been criticism over the BSNL deal having contributed much of the incremental growth for TCS in the just concluded quarter?

I don’t know what is wrong in doing priced programs in India ( where) we are also delivering margins. India is a good market, and we must be present here as it is one of the few emerging markets that is growing. Future growth will come from emerging markets and if companies like ours don’t invest ( here) it will be a huge, missed opportunity.

How do you see the macro environment and what does FY 25 look like?

Things have not changed much but we believe this year is better than last year. But if you look (specifically) at the US, people are expecting (change) after the Federal Reserve announcement in terms of jobs and some cuts in interest rates. Similarly, once the Presidential elections are complete in November it will give them a direction on which way the overall economy will go. I feel that the amount of certainty once the elections are over is the most important thing. Once we know what they’re likely to get into, then the whole thing gets recalibrated, and the investments start (unlike the current situation which is that they don’t know what would happen). In the UK, we’ve been doing well. And now the elections are (over) I expect, there is a certain direction available to them.

Discover the stories of your interest

But elections are due in November. That is a long wait, should we brace for more uncertainty over the next two quarters?

I see maybe the next two quarters we need to wait is my guess. Unless the interest rate gets reduced before that (some clarity will emerge in next two quarters).

The contribution from North America to TCS’s overall revenue has dropped below 50% for the first time in three years. Even India revenue contribution is at a multi-year high. Will this continue to be the trend?

We would like that. Broadly, we’ve been using North America as one layer of growth. And secondly, there has always been Western Europe and the UK. We want to have a credible third pillar of growth coming from emerging markets. So, we are very focused on these emerging markets and investing a lot (there).

Are Generative AI projects more on site or are they being offshored, because of the data intensity involved?

It’s a mix. Our R&I (research and innovation) teams are primarily based out of India. But we do have a significant portion of our team onsite also. Generative AI is more of a summarizing technology as it stands today while traditional AI is predictive.

Your peers are on an acquisition spree, there is a rush for ER&D semiconductor companies and what are your plans?

My guess is that there is an overall rush towards semiconductor companies because everyone wants to ride on Gen AI and interest in India. Our approach has been to create synergy, if I can top off what we can acquire and provide a growth multiplier, we will do it. If not, we will not do it. It’s easy to acquire but if you’re not able to execute on synergy benefits, you will be staring at more inefficiencies. So, we don’t want (that), our benchmark on acquisitions is quite high.

How significant are Tata Group companies for the growth of TCS?

Tata group is very critical for us. We have to fight to win programmes with group companies because each one of them is a listed company, they deal with us at arm’s length. But we know what the group is planning to invest so we prepare ourselves, but we fight with everybody to win those deals. But it’s very important. The group is also investing globally as well. So, we want to increase and enhance our presence through collaboration.

You still have 30% of TCS employees who are yet to work from the office. So are you being liberal in your mandate of work from office?

There are people with genuine reasons to work from home, people holding out or not coming at all is a smaller percentage. We are rolling out the consequence process. It will be an incentive plus a disincentive mechanism. We are close to 80% of the people coming into the office. Before the pandemic also, about 80-85% people came to office. If you go into any of our Centres, the activity is like pre covid level.