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Delay hasn’t impacted deal winning yet, but sees softness in long-term deals: TCS

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  • For the current financial year, TCS said it will likely maintain its $7-9 billion quarterly run rate of winning deals.
  • TCS’ COO Subramaniam added that it is normal to expect some softness in long-term deals and decisions given the macro environment.
  • There is an increasing sense of caution among customers, but it hasn’t found its way to winning deals yet, TCS says.

IT Major TCS said Monday it has yet to see any caution being exercised by clients making its way to its deal profits. It said it is likely to maintain its quarterly run rate of $7-9 billion worth of winning deals.

“There’s no need to change that kind of focus. In fact, we would like to win more.” N Ganapathy SubramaniamTCS’s chief operating officer said in a news conference after it reported 10% growth in July-September net profit to 10,431 crore and revenue growth of 4.8% to ₹55,309 crore, beating street expectations. .

The company’s order book stood at $8.1 billion at the end of the September quarter.

Talks of a possible recession in its main market – North America – have made stock markets concerned about the IT sector. “We will know in three to six months what the budget decisions are for next year,” said Rajesh Gopinathan, CEO and MD of TCS, referring to the US.

Subramaniam also added that it is normal to expect some softness in long-term deals and decisions given the macro environment. “As for Europe, we will see what the winter will be like and expect some softness,” he added.

Gopinathan said Covid has proven that technology is at the heart of transformation, growth and resilience and that TCS has a relevant portfolio for that.

“We are seeing increasing caution in conversations with customers. We cannot say that we are completely isolated from it, but as we said last quarter, we are vigilant for the environment and targeting a number of customers,” said Gopinathan.

Last month, Accenture issued a weak forecast of about 8-11% for the fiscal year, which has made markets and analysts cautious about the IT sector and demand prospects.

So much so that Jefferies also said it will closely monitor a revision in FY23 guidance from Infosys, HCL Tech and Coforge. “However, we don’t expect this to happen as part of the second quarter results announcements,” said Jefferies’ IT sector preview.

Deal sizes have declined since the last quarter and have continued to do so this quarter. Most deal profits are in the $200-400 million range.

“There are none above $500 million and nothing to mention,” said Samir Seksaria, the company’s chief financial officer. He also said that the headwinds from supply-side challenges are easing, preparing them well for the seasonally weak second half of the year.

Gopinathan said they stay close to the customers. “We’re trying to create a niche and minimize the impact of volatility,” he said.

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