As US retail buzzes, TCS sees huge opportunity
The business “opportunity was huge” across sectors and the only limitation was the company’s ability to execute deals, he told ET.
The robust US economy has resulted in that country’s retail industry showing record sales due to increased consumer demand in the last few months. Traditional big box retailers such as Target, Walmart, Best Buy and Home Depot have seen sales jump to decade-long high in July, with higher growth from online sales to compete with ecommerce behemoth Amazon. “Retailers are in a good position,” Gopinathan said. “This shopping season is critical one. Let us wait and see how it turns out.”
Retail and CPG (consumer packaged goods) is the second largest vertical for TCS, contributing 16% of its revenues for the quarter to June. The division reported 12.7% growth in the first quarter on the back of large deals from customers such as Marks & Spencer (M&S).
TCS has helped firms such as Best Buy and Home Depot in expanding their online presence and show significant business growth. The Tata Group company has been a standout performer among Indian IT services companies, winning a number of large deals. In fiscal 2018, it closed deals worth more than $6 billion from customers such as M&G Prudential, Transamerica and Lloyds’. The company expects more such deals as traditional companies look at technology investments to compete with startups that look to upend their business with technology as a key differentiator.
“We are just at the right place. Now it is about our imagination, our conviction, commitment, our ability to utilise the opportunity. The opportunity is huge,” Gopinathan said.
TCS, which expects double digit growth this fiscal, said it has reached acritical mass in digital revenue and people working on such projects. “The whole training initiative has been a success, there has been so much of negativity, and everybody sees the transformation we are participating in,” Gopinathan said. “Today, it is 25% digital — the fact is one out of four people in TCS is working on a digital project. Once it goes beyond a certain critical mass, it gets a life of its own.”
TCS is also witnessing growth from existing customers who are looking at adopting digital technologies across their enterprises, which it calls transformation deals. “We are actually participating in a lot of transformation agendas,” Gopinathan said. “Many a times, we are not seeing in that lenses. Talking about it and articulating about this is very important. The great thing is that most of our best customers are more than glad to help us out.”
Indian IT firms have seen growth reviving on the back of increased technology investments from clients in the US and Europe. But these investments are in newer areas such as digital and cloud at the cost of traditional outsourcing, where budgets are shrinking.