Sitting on a cash pile of Rs 18,850 crore, the country’s largest software exporter, Tata Consultancy Services, has significant capex plans for India over the next financial year. A day after the company announced its October-December earnings, chief financial officer Rajesh Gopinathan spoke to Shruti Ambavat on what it takes to be a market leader. Excerpts:
TCS is sitting on a huge cash pile of R18,850 crore. From an acquisition point of view, which geographies and segments would you look at?
We have always been active on the acquisition front but are very selective on what we choose. We would look at acquisitions in France, Germany and Japan. We either acquire for purchasing capabilities or to gain access to a particular market like the French company Alti SA’s acquisition. We continue to remain active evaluators of deals and like others, we are also evaluating in spaces like healthcare.
You mentioned a capital expenditure of R750 crore for this quarter. What is your target for the financial year 2015?
We are looking at a capex of R3,000-3,500 crore for the next financial year and have multiple ongoing plans at various campuses. We have plans for Hyderabad, Nagpur, Kolkata, Kochi.
The company’s competitors are also improving their business performance and what will TCS do to retain its market share or client pie?
Primarily, market presence is what drives growth. We continue to invest in gaining market access and that will continue to help us in our relative performance.
Could you elaborate on how you continue to gain market access?
As far back as 2005-2008 period, when business process service was not considered to be a strategic lever, TCS went about restructuring its entire activity. We sold off our voice BPO operations and went into transaction processing in a very significant way. We invested in acquiring back office operations of Citibank, which we called e-Serve, and built a joint technology company-cum-operations kind of capability that focused on transactions and high-end business process side of it. That service line grew 30% for us last year. Similarly, we invested in platform-based transaction processing systems in the UK, which is Diligenta. This was five years back when people had not spoken about platform-based business processing. So, when you see growth, it is happening because of market development that we did.
India has seen a de-growth of 9% for TCS this quarter and the company has already mentioned that it expected to remain weak till elections. Is there any plan to de-focus on India at present?
We?ve been in the Indian market long before it was the flavour of the season. All large projects here are pretty much done by TCS. Focus on India is not going to go away. In India, the government and PSU sector contribute a significant share of the business and that segment is impacted by dynamics such as elections. Hence, we see a weak pipeline and that is why we say that the situation may continue till the next quarter or couple of quarters…Stability will come only after elections are over.
