Edited excerpts:
Ramky, Q1 was a tough quarter with wage hikes and yet margins were good. The ambition remains 26-28%. Is it achievable?
V Ramakrishnan: As you rightly said in this quarter we had the 180 bps impact due to the normal increases which happens in Q1 but we were also able to recover about 70 bps from the operational efficiencies. We do the increases in the first quarter and then through the year we are able to use our levers. This time we have got this and of course exchanges also helped.
Over the years, we have been accustomed to talk about the margin band but what has changed in last 12 months is the buyback. Because of buyback, if you are a minority shareholder, an institutional investor, return ratios would change. What is the long-term plan for your return ratios?
V Ramakrishnan: We take a a more holistic look at shareholder returns. Today of course the return on equity etc. is around 34% or so but looking at it from the buyback point is also related to what we can do with the cash. If there is no immediate requirement for the cash and if there are enough opportunities to deploy it in business we will continue to do so. Investment programmes are put on the backbench.
V Ramakrishnan: We will take it as it comes. We are generating close to around Rs 26,000-27,000 crore of free cash flow and we will also see if there are inorganic opportunities. We are focussed on most of the free cash flow returning to shareholders either in the form of dividends or buybacks. We will take it as it comes.
Your vertical has been an outperformer for the quarter gone by. What has changed in last two quarters, why suddenly BFSI is making such a big comeback?
K Krithivasan: It is a transformation and happening slowly. We called out a couple of quarters ago also. Some of the banks in US have been more focussed on the workforce and workplace transformation, more internally focussed in revamping their strategy. We believe that they have completed their internal studies and there is a lot of focus on transformation agenda. There is a lot of transformation agenda back on the table. We have our business 4.0 framework which helps them in leveraging the technologies much better. There is a resonance of our offerings to those banks.
Is this the beginning of a new cycle?
K Krithivasan: I want to be a little cautious. I do not want to say that it is a new growth cycle. Europe has always been on growth path for us. The softness was primarily in North America. We believe that it is coming back to normal. I do not want to call drumbeats saying that we are on a new growth cycle. I would say it is coming back to normalcy.
But would you say that America is back?
K Krithivasan: America is showing signs.
Is it another milestone nobody is talking about?
Ajoyendra Mukherjee: Yesterday we said that okay we have talked about multiple milestones. As far as this particular quarter was concerned, $5 billion was the total revenue.
Should I stop asking question on attrition?
Ajoyendra Mukherjee: We are the industry leaders and from a headcount point of view, our employee strength is 4 lakh plus.
Of course, I have seen attrition going up to as high as 14-15% and then it has come down.
Ajoyendra Mukherjee: We have touched 15-16% also. But over the last two years, we have been attrition has been low and it is not only in the IT side, it is across the board and also across the globe. Our total attrition is at 11.7% and we have been maintaining that very well. People are pretty happy. They are getting the kind of opportunities that people want from the point of view of their own career growth and learning curve. Our focus has been in developing the talent base internally so that we are able to meet customer requirements.
We are creating opportunities for our employees by giving them the facilities that they need to build and develop their competencies and that is what is helping.
Exactly 18 months ago, a lot of IT companies decided to reduce the workforce. TCS said they won’t reduce, we will train our employees. Are you getting a sense that the challenge for the IT sector in terms of rekindling, reskilling, reorganisation talent is now behind everyone?
Ajoyendra Mukherjee: The industry is such that technology will change every three to four years. The kind of change that we are going through, the digital wave, is a major disruptor but change is part of life.
Download The Economic Times News App to get Daily Market Updates & Live Business News.
Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
Read More News on
Download The Economic Times News App to get Daily Market Updates & Live Business News.
Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price