After delivering a better-than-expected set of earnings in the second quarter of the current fiscal, Tata Consultancy Services maintains that the demand environment remains positive for the IT sector with growth being seen across key areas. In a conversation with Shruti Ambavat and Ira Dugal, TCS chief executive and MD N Chandrasekaran says that all verticals and geographies are growing well and adds that the company will continue to look at acquisition opportunities. Edited excerpts:
Give us a flavor of the demand environment? Is the environment more positive than what you had expected at the start of the year?
I see the environment to be positive. A few factors — simplification as a theme is being driven across the board. That’s an opportunity. At the same time, adoption of digital is slowing getting into main gear because people are seeing lots of possibilities. Europe is picking up as well. European companies are comfortable adopting new models. Frankly, we are also at a stage that we have built scale in different markets. It’s not just the US. Other markets, too, we have reached a certain scale. All our businesses have also scaled up and deeper relationships have been established. So I think there is a lot of opportunity.
So you don’t think that part of the upside is due to the pent up demand specially in markets like the US?
I don’t see this as a one off. I did talk about the third quarter at the time of earnings because seasonally it is a weak quarter and there will be furloughs. I have not factored in any global macro issues. Global macro issues are continuing in one form or the other and that will be the case. Those impacts will have to be gauged as and when they come. But to me, the role of technology in businesses is increasing and I am not seeing it as a one off or as pent up demand.
Business from Europe has shown strong growth this quarter. Do you expect that to continue and will the geographical business mix change?
Yes, Europe will grow. Europe will grow faster because we have attained a critical mass in all the sub-segments in Europe where we are present. And wherever needed, we will do an acquisition to gain momentum. We have done it in France. If there is an opportunity elsewhere, we will do it. Japan is also important. Latin America