In an interview with ET Now, Ajoyendra Mukherjee, Executive VP & Global HR Head, TCS, shares his business outlook. Excerpts:
ET Now: You say that high utilization will be key to maintain margins. Can you please expound on that?
Ajoyendra Mukherjee: TCS has been very focused and has been looking at developing the capability that we need in order to succeed in this market. It is a difficult one from an IT services point of view, where technology becomes obsolete every three to four years. You have to continuously upgrade your skills.
If you see, today with $13.4 billion and 3,00,000 plus employees, it is a very diverse set. We are developing skilling, re-skilling, managing the scale and building those capabilities. From a strategy point of view, we have been totally customer centric. We have also reorganised ourselves such that we are focused on certain verticals and what our customers need, building our capabilities to meet those requirements.
We have also developed competency and we have created offerings - which we call pull services - which is starts from consulting IT services, doing the business processes, having engineering services capability for our manufacturing and utility customers, etc. Creating these kinds of offerings for our customer base has been a critical aspect of our success.
If you look at how we have expanded ourselves in various markets and new geographies, our next focus will be on non-linear growth. Hence, from a research point of view, we are probably the first organisation which created a large research base in Pune in 1982. That was the time we created that organisation which is driving innovative research within the organisation, creating capability and building products.
We have done multiple things from the point of view of investment. The latest one is being in the digital field. We then have the global network delivery model, which has the delivery and the execution capability within the organisation to give an experience of certainty. These are some of the things we have been doing.
ET Now: A lot of companies have reported numbers this quarter and the past few quarters, which have been giving mixed signals as far as the demand environment is concerned. From TCS' point of view, do you see on ground things changing for the better? Will clients still invest in smaller projects without really putting a lot of money in bigger projects?
Ajoyendra Mukherjee: If you look at that from an investment point of view, there are two things that have happened. One is running the business, which is in terms of providing the maintenance and enhancements and regular IT services for our customers. The second is discretionary spend, which is the new implementation that happens, which could be in terms of enterprise solutions, which is in terms of digital technology and the like.
What we have been seeing is that digital technology is gaining ground and so their discretionary spend is increasing at this point in time. But these engagements are still small ticket items. But if you add it up, then it is a larger pipe and that is what we have been focusing on as far as the future growth is concerned.
ET Now: You have given a target of 55,000 for this year, which you had hiked last year. Chandra had said that this year is going to be much better, but you seem to be focusing on non-linear revenue generation. Why is that?
Ajoyendra Mukherjee: We said that it will be better than last year. Our focus is on non-linear initiatives and we will be hiring at a gross level 55,000. From a training point of view, we had given offers of about 25,000 last year. They have started joining from Q1 itself. As far as the lateral hiring is concerned, we are confident of hitting 55,000 this year.
ET Now: This means we can expect a further hike in hiring, given that you are speaking of a better year ahead than the projection you have already given?
Ajoyendra Mukherjee: We do have a business plan and based on that, we can decide as to what is the kind of workforce we need. Based on that plan, we have put the number at 55,000. It includes non-linear growth as well, but like last year, as the year progressed, we saw a better demand and as a result we increased the hiring targets. If we see the same trend this year, we will definitely make an announcement, but at this point in time, I would maintain 55,000 as the number.
ET Now: Your utilisation is exceptionally high at 85 per cent. Do you think you can sustain that going forward, given that it is a very important factor in maintaining the company's guided margin of 26 to 28 per cent. What levers will you be using to sustain it there?
Ajoyendra Mukherjee: There are multiple levers from a margin perspective. Utilisation definitely is a primary lever. When size becomes large, then 55 per cent of 3,00,000 is a large number. By utilisation, what we mean is 85 per cent are on customer engagements and the rest is on various other initiatives that we are running within the organisation - innovation, product development, research etc that happens.
People like me who are in the management are also part of that 15 per cent. Thus, this 85 per cent does not include the trainees. If you include the trainees, that number drops to about 80 per cent. 79.8 is what we did last year and that will change as the trainee joining increases over different quarters.
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