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TCS to Continue its Pace in R&D, Office Space and Technology Infrastructure

CIO Insider Team | Monday, 17 April, 2023

Even as it navigates near-term volatility, IT services provider, TCS, will keep up its pace of investment in R&D, office space, and technology infrastructure.

According to the company's chief financial officer Samir Seksaria, the operating profit margins will be reduced by another 1.70 to 1.75 percent in the June quarter as a result of the company's commitment to continuing with the usual wage increases. However, the important figure will stabilize as we move into the new fiscal year, he added.

According to him, the company currently invests 1,200–1,500 crores in research and development and 3,500–4,000 crores in the capital expenditures for the back-end technology required to supply work and office spaces. He predicted that this trend should continue in the future.

The company experienced losses in its main market, North America, and its major sector vertical, banking, financial services, and insurance (BFSI), as a result of deteriorating sentiment brought on by layoffs in the technology industry and the collapse of Silicon Valley Bank.

According to Seksaria, the company intends to pursue its goal of increasing utilization while reducing its reliance on outsourced workers.

As a result, it reported sequential constant currency growth of 0.6 percent, which Seksaria deemed uncommon for the fourth quarter.

Seksaria described the overall 13.7 percent increase in revenues in FY23 on top of the over 15% increase in FY22 as a respectable growth and stated that the company is hopeful that things will improve with the start of the new year and did not anticipate significant layoffs following vacations, adding that the SVB collapse only made matters worse.

Yet in the wake of the volatility it is experiencing, the company intends to continue with its customary wage modifications, according to Seksaria, who also mentioned that the top performers can anticipate an increase of up to 15 percent this year.

He stated that the pricing environment is stable, implying that the ongoing problems in the IT sector have not had an impact. He cited new orders of $ 10 billion filed in the March quarter, of which half were from North America, to illustrate how customers continue to turn to IT companies for smaller organizations and easier processes that help them save money.

According to Seksaria, the company intends to pursue its goal of increasing utilization while reducing its reliance on outsourced workers. He also noted that the costs associated with business associates have already decreased to over eight percent of revenues in the March quarter and will return to the historical average of 7–7.5 percent.

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