Confident of getting back into 25% margin band: TCS COO
Getting back into a quarterly margin growth of 25% is the first priority for Tata Consultancy Services (TCS), India’s largest software services exporter, with a key executive saying the company is very confident of business and ending the year with double-digit growth.
- Jul 11, 2022,
- Updated Jul 11, 2022 8:15 PM IST
Getting back into a quarterly margin growth of 25 per cent is the first priority for Tata Consultancy Services (TCS), India’s largest software services exporter, with a key executive saying the company is very confident of business and ending the year with double-digit growth.
Speaking with Business Today TV, N. Ganapathy Subramaniam, Chief Operating Officer and Executive Director, TCS said, “We paid the salary hike for all the employees in the first quarter and it had an impact of 150 basis points on margins. And our subcontractor cost for the quarter went up, and even lateral hires were more than what we normally do. Because of all of this, our margins got slightly impacted," he said.
"We feel confident and focused toward getting back to the 25 per cent margin as fast as possible and then be in the preferred range that we normally operate in," he added.
TCS shares tumbled 4.7 per cent on Monday, with the decline being attributed to the dip in margins.
Meanwhile, new business growth continues to be strong, with the company posted an order book of $8.2 billion which includes two mega deals worth over $400 million.
Subramaniam discounted fears of a recession in the advanced economies, pointing out that there had been no client pullbacks. “We see a continued demand for our products and services - clients are not thinking of shrinking their technology projects," he said.
The company has announced a hiring target of 40,000 for FY23 and says it is on track to hire the same numbers. Its workforce has crossed over 600,000 and has given a 5-8 per cent salary increase to its employees.
"We have the ability to hire and we don't see a problem in hiring and attracting talent at the right cost structures that we want," Subramaniam said.
Commenting on the rupee depreciation, Subramaniam said the rupee reaching 79-80 against the US dollar was a bit unexpected. “That's actually good for us, but then the rupee has also appreciated against other currencies like the GBP and Euro - so it is a cross currency headwind which we are seeing."
Getting back into a quarterly margin growth of 25 per cent is the first priority for Tata Consultancy Services (TCS), India’s largest software services exporter, with a key executive saying the company is very confident of business and ending the year with double-digit growth.
Speaking with Business Today TV, N. Ganapathy Subramaniam, Chief Operating Officer and Executive Director, TCS said, “We paid the salary hike for all the employees in the first quarter and it had an impact of 150 basis points on margins. And our subcontractor cost for the quarter went up, and even lateral hires were more than what we normally do. Because of all of this, our margins got slightly impacted," he said.
"We feel confident and focused toward getting back to the 25 per cent margin as fast as possible and then be in the preferred range that we normally operate in," he added.
TCS shares tumbled 4.7 per cent on Monday, with the decline being attributed to the dip in margins.
Meanwhile, new business growth continues to be strong, with the company posted an order book of $8.2 billion which includes two mega deals worth over $400 million.
Subramaniam discounted fears of a recession in the advanced economies, pointing out that there had been no client pullbacks. “We see a continued demand for our products and services - clients are not thinking of shrinking their technology projects," he said.
The company has announced a hiring target of 40,000 for FY23 and says it is on track to hire the same numbers. Its workforce has crossed over 600,000 and has given a 5-8 per cent salary increase to its employees.
"We have the ability to hire and we don't see a problem in hiring and attracting talent at the right cost structures that we want," Subramaniam said.
Commenting on the rupee depreciation, Subramaniam said the rupee reaching 79-80 against the US dollar was a bit unexpected. “That's actually good for us, but then the rupee has also appreciated against other currencies like the GBP and Euro - so it is a cross currency headwind which we are seeing."