Wage hikes a priority for TCS; focus on growth with profitability: CFO

Delivering wage hikes for its over 6 lakh employees is a "priority" for TCS, the country's largest IT services company's Chief Financial Officer (CFO) Samir Seksaria has said.

Speaking to PTI, after the release of the June quarter results, where the business witnessed headwinds on growth and margins, Seksaria made it clear that TCS would focus on growth with profitability.

The company showed a 6% increase in net on non-core income as demand got impacted due to macroeconomic and geopolitical troubles, and deferred its annual wage hikes that typically set in from April.

Stating that TCS has rarely resorted to deferring wage hikes unlike peers, Seksaria said, "My priority is getting back to the wage hike." He, however, did not specify when the hikes will be delivered.

Typically, the annual wage hikes crimp the operating profit margin by over 1.50%, Seksaria said.

TCS reported a 0.20% narrowing in the number at 24.5% for the June quarter, but Seksaria stressed that the intent is to push the margins up into the 26-28% aspirational range.

Seksaria explained that investments in upfront hiring to capture demand as it comes in hurt the margins, as lack of demand pulled down utilisation levels.

As the company looks to widen the margins, it is grappling with a set of controllable and uncontrollable factors, Seksaria said, pointing out that upping the utilisation and other organisational tweaks are the controllables, while demand is the uncontrollable.

The company has to focus on both demand recovery and optimisation, he said. "If demand recovery is prolonged, we will double down on optimisation."

"Our focus will be growth with profitability. Only profitability without growth doesn't help," he said, adding that this should not be taken as the company giving up on demand.

Also Read

Electronics, pharma sectors corner 70% of PLI disbursements in FY25

With attrition reaching some bit of concerning levels at 13.8%, Seksaria said the focus will be to retain top talent as it is difficult to build by fresh hiring, and added that some bit of attrition is healthy and it may not take so many measures to retain some part of the talent.

Given the fact that the company has capacity now, it may go slow on lateral hiring and restart once demand spurs up.

The company does not plan to cut investments but there could be some realignment like building only a part of a structure on a plot, Seksaria said.

TCS will not do acquisitions just for expanding the topline, but it will be capabilities that will drive such inorganic moves, Seksaria said, adding that it keeps looking at opportunities in the market.