There has been a significant slowdown in the Indian IT service industries and the same is reflected in the rather sluggish YoY growth of 1.7% in the quarter that ended in December.
The CEO of TCS, Krithivasan said that the clients are adopting a cautious approach and are re-evaluating the programs as well as projects due to the uncertainty.
Challenges Faced, Workforce Changes, Structural Shifts
There are no signs of rebound in the North American market and the banking as well as the financial services sector. Without any immediate replacements, large programs are being closed which is impacting the segments like insurance and in that too, auto insurance.
Making matters worse are the natural calamities. Though lending remains strong, the mortgages are facing challenges due to the high interest rates. Hence, there is a need for resilience to stay afloat on the changing dynamics scene.
TCS has slashed as many as 12000 jobs. This as per the CEO is stemming from the structural aspect wherein productivity gain as well as the internal redeployment are prioritized. Citing productivity benefits, CEO says that the reduced headcount shall be offset by the same.
Gen AI Transition, Impact of GCCs
As compared to Accenture’s Gen AI deals worth $500 million each quarter, TCS involves the proofs-of-concepts (PoCs) and highlights the transition of four programs from PoC to production.
Currently, market navigates through IP violations, security concerns, and employee access issues. Laying emphasis on a $1 billion revenue stream as the threshold for recognition, as per the CEO, Gen AI shall be mainstream in a period of 4 to 6 quarters.
Since India is a young country, it has talent and since there is talent, the Global capability centers (GCCs) in India are expanding. Speaking on the GCCs, Krithivasan said that the over the time period, their cost equations may become challenging, while the success depends on work that is not outsourced. With more people like CMOs, CFOs, and chief risk officers involving themselves more in the technology spending, the buyer profile in the companies is evolving.
