With us are TCS CFO Samir Seksaria and TCS CARO Milan Lakkad. A very warm welcome to both of you.
For joining us on CNBC Awaaz. Samir, let's start with you. It's a tough environment. We all knew Q3 is seasonally weak, but the market was expecting 0.6% degrowth in dollar revenue. Quarter on quarter, your degrowth was 1.7%. What's the reason for that?
So if we look at this quarter, one special thing was the cross-currency impact, and I think because of that, when you talk about sequential, our constant currency growth was flat without taking in exchange. But if you look, dollar revenue degrowth was 1.7% negative. That happened because the dollar globally appreciated against all currencies this quarter, and it did so against the rupee as well. But the rupee defended well, and it was not as much as the other basket of currencies. So due to the rupee's depreciation against other currencies and the cross-currency base effect, that's how the 1.7% happened. If we look at overall performance year on year, BFSI and retail verticals, which are our biggest verticals, have returned to growth. And three verticals where some weakness is visible are life sciences, manufacturing, and telco, where initial signs of revival are visible. And overall, the expectation is positive.
Absolutely. You've also said in your press release that there are some signs of demand revival in verticals. Earlier this was limited to BFSI, now you've added three more sectors. How much time will it take to come across the board, that all sectors have growth?
I think if you look at how the US has been cautious on discretionary spending for almost six quarters, if customers are cautious because of that, when we see revival in our two biggest verticals, hopefully that should pass on across. More importantly, the first to get conservative was BFSI, and when revival is showing there, it should pass on. As consumer sentiments improve, I think other verticals should also see positive momentum.
Okay, let me go back to the first question. Because in your answer, what you said, I completely agree. But in January, we've seen that the rupee, which was holding out until now — perhaps the RBI or whatever decision was taken — because the rupee was quite overvalued and we've seen a big move. To some extent it was perhaps controlled depreciation, but perhaps in January, market forces were allowed to take over. The move from 84 to 86 was quite fast. So two things: first, will these cross-currency hedges reverse? And second, how will it impact your hedging strategy?
Cross-currency will depend on how other global currencies perform against the dollar. So if you look, the rupee is still appreciated against GBP and euro, while we usually only look at the dollar. But GBP, which used to be around 110-112, has now come to around 105-106. Euro against the rupee used to be 92, now it's almost 88. So as long as that differential remains, there will be a cross-currency impact. What we have done is, we have a well-defined hedging program, and in that hedging, we target that overall cross-currency variation remains limited and profitability doesn't get too much impact in the next two quarters.
Milan, after adding employees for two quarters, 5,370 employees went net out of the company. Why did this happen? If you're India's largest IT company and growth is decent, then why did this happen?
No, I've said before also that you shouldn't look quarter by quarter at how much growth happened. There's no direct linear correlation. We added 11,000 net in the last two quarters. Like you said, because of various reasons, you know, including productivity and utilization and pyramid and everything else, the headcount outcome is minus right now. But it doesn't mean we're not hiring. We are on target to hire 40,000 from campus, and the target is on. We're trying to do the same or better next year for campus hiring. So looking at just one quarter, it's not the right way to look at it.
No, I'm asking because your comfort zone is 11 to 13 percent. Last quarter it was 12.3. Now we're at the border of 13 percent. And I was talking to two analysts, and they were saying if it reaches 15 to 16 percent, it will start impacting margins, and then you'll have to take steps accordingly.
No, if you look at it now, yes, it's at 13 percent right now. But as I see going forward, in the coming quarters, the quarterly utilization is likely to decrease. LTA addition, the way we calculate it, we don't know where we'll end up, but operationally it makes a difference. Quarterly, how much has happened — I think we will be in the range.
Will your net hiring this quarter be like that, or is it tough to say right now?
We don't give out the numbers, but you know, we're always looking to basically balance all the aspects and continue to hire. Hiring from the market is also happening, campus hiring is also coming. Everything is happening. After that, depending on the situation, the numbers will...
Okay Samir, because our interview is for a Hindi channel, so my questions will be related to that. Many people have this question — after Donald Trump becomes president on January 20th and assumes office, for the IT sector, will things get better, worse, or will it make no difference, whoever the president is?
I think our target is always that we stay close to customers and deal with their expectations and requirements. On macro, on global politics, whatever happens, we'll handle it as it happens. One thing I'd like to say is that what's considered the biggest concern for TCS is on visas. I don't think visas should be a problem. We're a global company. We have local employees in the US who are proportional to what we deliver locally. Our dependence on visas has reduced significantly over the period. Other than that, whatever happens, we should be able to tackle it as it comes.
Not from your company's perspective, but from the industry's perspective, the view Donald Trump took recently — was it a bit positive and refreshing to hear? Because the MAGA campaign had created a lot of concern, and after that, what he said about H1B visas, he even said those who study at Harvard etc. should immediately get visas so they can find jobs here.
No, no. I think the best talent should get opportunity globally, and if they get it, that's very good. It's good for the company, good for the country, good globally.
Do you have any view on the statement Donald Trump gave?
