India’s largest IT services company will also be an underdog bidding for a part of the $ 50 billion federal IT project in the US,
chief operating officer N Ganapathy Subramaniam told ET.
On a potential Air India project, he said, “We have to win it on merit. We have to be proactive about it in terms of going and saying what we could do… The onus is on us to pitch for it and then see whether we can win some of those.”
The government had declared Tata Group the winning bidder for the national carrier.
Subramaniam said nothing would be given to TCS on a platter just because it is a Tata Group jewel and expected other companies to bid for the project as well.
“We work with Singapore Airlines, Malaysian Airlines, Qantas, British Airways…so we have a fairly good experience and expertise in making this work,” he said.
ALSO READ TECH NEWSLETTER OF THE DAY
As ET reported last week, TCS is bidding for part of a $50-billion US federal government contract. “When we bid for some of these things (large federal projects in the US), we are the underdog, so it is actually a nice position to be in,” Subramaniam said.
He said the $50 billion amount is divided into hardware, software and Cloud components over a number of years, and so the actual project is not unmanageable.
“I think we have to break it, and craft a value proposition which is attractive… We have to see how we can structure this and how we can work within the government procurement processes like anywhere else,” he said. “The government procurement processes are very different. So we are also learning about it. So it’s a good deal to participate in it. Whether we win or not, we will learn a lot from it, that’s the way I see it.”
TCS had on Friday announced revenues of Rs 46,867 crore for the second quarter ended September, up 16.8% year on year. In dollar terms, revenue was up 2.9% sequentially at $6.33 billion, lower than internal and street expectations. However, the management said this was the best quarter the company had had in several years.
“The footprint is really excellent. Almost all the verticals and geographies grew very well,” Subramaniam said. All industry verticals and geographies posted strong double digit growth during the quarter. While the key banking and financial services business crossed $2 billion in absolute revenues during the quarter, growing at 17%, manufacturing was up 21.7% and life sciences and retail by 19% each.
North America, which contributes about half the revenues grew by over 17%. “When 50% of our revenues grow by 17-18%, it puts us under tremendous pressure to be agile,” he said. “If the US grows then everything will also grow, in that sense it has been one of the best quarters.”
The company added customers across all the client bands and he said the business would only accelerate from here.
Subramaniam said the 2.9% sequential growth was lower than what the company had initially anticipated, expecting the business to grow by about 4.5% during the quarter. The slowdown, he said, was not on account of project cancellations, but a few projects in Europe ended in the previous quarter.
“Almost all of our customers in Europe wanted us to move things offshore, and while that is good for us in terms of margins and the ability to manage our resources better, revenues will drop because we are charging them at a lower price,” he said.
While a large part of the work is moving to India, some work has been shifted to near-shore locations like Poland, Hungary, Romania and Bulgaria.