Nearshore Americas

Tata CEO ‘Optimistic’ on 2012 Outsourcing Demand; ‘We Are Hiring in Latin America’

Source: Press Trust of India

BANGALORE — The country’s leading software exporter Tata Consultancy Services (TCS) on Monday said it has an “optimistic” outlook on demand for outsourcing in the next fiscal year as the “demand pipeline is looking good.”

“What I see on the ground is the spend is increasing and 2011-12 will be a better year for the industry… better for growth,” TCS Chief Executive Officer N Chandrasekaran said in Bangalore.

“Demand is quite robust” and the company is seeing opportunities in banking, financial services, retail, manufacturing, high tech, overall across the board. The type of deals are either related to driving efficiency or driving growth or compliance, he said.

“From the industry point of view the situation we have today compared to the situation we had last year is much much better. Last year, people were not expecting significant growth, people were not really expecting for demand to pick up, but there is lot more clarity this time,” he said.

“The demand pipeline is looking good, so I think overall it will be a better year,’ he said, referring to next fiscal.

He said “in the fourth quarter of next fiscal year, March 2012, we will have 10 per cent of our incremental growth from non-linear and from there we will continue to increase, the share of non-linear revenues in the overall growth,” he said.

This would be driven by products, BPO platforms, and ION. He said the company was making significant investment in mobility, social media, cloud, and supply chain projects.

On whether TCS was seeing clients committing large long-term or short-term projects, he said, “We are seeing both kinds.”

In terms of markets, he said, “The US was doing much better. We are seeing growth in Europe but it is behind the curve.”

On hiring, the TCS executive said the company planned to hire 50,000, including 37,000 freshers, next fiscal (2011-12).

However, it has not firmed up plans as of now on wage increases, he said, and refused to comment on whether it would be in the single high digit or low digit range. “We are working on the numbers, the CEO said.

Speaking on the issue of consolidation, he said, “Currently, we are not looking at any consolidation.”

Talking about pricing, Chandrasekaran said with the demand environment continuing to be better, he expected a pick in pricing. “We saw a moderate increase in pricing last quarter.”

To a question on visas, he said: “In general, the regulatory environment in terms of visas is a challenge, not only from the US but a few other countries as well. It is something we are working with.”

On geographical expansion, he said, “We have a very good footprint at this point of time. Our footprint is pretty neat.”

“We are trying to scale the figures in all locations we created centres. We need to scale in terms of number of people. So we are not looking at setting up centres, but if there is a market opportunity, if there is a specific demand, we will. Our focus this year will be to scale in all centres we have opened.”

“We are hiring in Latin America, we are hiring in China, we are hiring in the US, we are hiring in Europe. I think we are hiring in all markets. Definitely we want to increase the local presence in every market,” he said.

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On industry’s reluctance to invest in infrastructure and willingness to specialise in services, he said he differs on the issue. “Our focus is on application of solutions. Our view is infrastructure is a commodity and you cannot differentiate. There are significant investments happening in infrastructure with very credible companies and we can partner with them.”

“We are not really into creating huge infrastructure investment, which is not our model. Our model is to partner with players who create that infrastructure, which we will do. In India we have data centres which we are partnering with and as we go into other markets we will partner with others,” he said.

On TCS’s aspirations of being a $10bn company going forward, he said this mark should be seen more as a journey rather than a destination.

Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

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