Cyber security, building resilient and adaptable supply chains, various forms of data protection and sovereignty-related issues will emerge as “big drivers for technology spend globally”, the 51-year-old chief executive officer said in an interaction with ET.
India’s largest software services company is aiming for “profit-driven growth,” as it looks to double its revenue to $50 billion by the end of the decade. “We are closer to a cycle than a sports car. It’s not about the speed rush, it’s organic growth and we know that balance is more important than the sport,” Gopinathan said.
The $25.7 billion software giant expects to match double-digit growth with margins of 26-28%.
In the financial year 2022, TCS grew 15.9% on the back of record deal wins amounting to $34.6 billion for the full year with nearly a third coming in during the final quarter. In comparison, rival Infosys grew 19.7% but clocked lower operating margin at 23% compared with 25.3% reported by TCS.
“The theme that technology will be an increasing percentage of (business) spends is unlikely to get challenged for the next many years,” the TCS chief executive officer and managing director said.
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Given that the Tata Group company is “quite narrowly focused” on the western hemisphere and the opportunities there are “100-fold compared to anywhere else”, it has little to fear from the ongoing geopolitical strife, according to Gopinathan.
“The US is our primary market. The US, UK and Western Europe together account for 80-85% of our business,” he said. TCS has no presence in Russia, Ukraine and Belarus and has minimal operations in parts of Asia. “Japan, Australia and India, US, UK, Europe that’s pretty much 90-95% of our business,” he added.
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However, the ongoing Russia-Ukraine conflict has accelerated the need for dual trading systems and dual (business) ecosystems which will need to be kept mutually independent and technology will increasingly play a bigger role to enable such a world order, Gopinathan pointed out.
From fiscal 2018 to 2022, the Mumbai-headquartered company has seen revenue expand by 30% and last September, it crossed the $200 billion mark in market capitalization, making it second only to Accenture by this metric among global IT services companies.
Further, as global business moves towards a “post-pandemic world”, companies are now discussing transformation agendas instead of coping mechanisms.
“This year the dialogue is a lot more about where the growth opportunities are, where the transformations are, that is the big shift that has happened,” according to Gopinathan.
India, which he described as “very much a local tech story (and) not an imported technology story”, has “allowed free capital flows” unlike China which “forced localization of ownership” he said while pointing to companies like Flipkart — acquired by Walmart — or Zomato or Swiggy, which are all locally built.
“The digital transformation of India — both public and corporate — has been entirely executed locally and that is why we are so uniquely placed among all emerging markets,” Gopinathan said as he called out the country’s digital payment infrastructure for special mention.
“Today people are putting wrappers on that payment infrastructure and putting a brand around it. Many of the global brands are doing a much better job advertising it on TV, but the underlying rail which makes it possible is locally (built),” he said .
While it has taken the Tata Group company – established in 1968 – over 50-odd years to reach the $25-billion mark, Gopinathan’s ambitious target to double revenue this decade is built around a company-wide organization rejig that was kicked off earlier this month . The strategy includes betting big on partnering customers on their transformation journeys as they navigate a more uncertain world and fast changing technology landscape.
“Today we have about 1,200-odd customers. When we double, we want to (have) let’s say, 2,000 or 2,500-odd customers. But we want to make sure that the level of service that we are able to provide to all of them is equal or better than where we are today,” he said.
This includes TCS’s ambitions to snag more business from its parent group such as from iconic Air India. While TCS may have a natural advantage, “as with all our group companies, we have fought hard and won, so we can’t presume that we’ll have it automatically”, Gopinathan said.
“We have a trusted relationship that we can leverage but beyond that we need to earn our right. So, Air India is still at early stages of that dialogue,” he said.