'Our capex, margins are on track'

As the domestic IT services firms contend with global uncertainty, TCS remains focused on realigning costs and embracing AI-led transformations. Samir Seksaria, CFO at TCS, in an interview with Urvi Malvania & Padmini Dhruvaraj, discusses margin strategies, investment outlook and how GenAI is reshaping business models. Excerpts:

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As the domestic IT services firms contend with global uncertainty, TCS remains focused on realigning costs and embracing AI-led transformations. Samir Seksaria, CFO at TCS, in an interview with Urvi Malvania & Padmini Dhruvaraj, discusses margin strategies, investment outlook and how GenAI is reshaping business models. Excerpts:

Do you continue to hold on to your long-term margin aspirations of 26-28%, especially in this macroeconomic climate?

Yes, we continue to hold that as a long-term aspiration. The 26-28% range is a goal that takes into account a high single-digit revenue trajectory and the various cost levers we have built over time. That said, we do acknowledge that near-term disruptions can cause temporary dislocations. We are seeing some of that now, but our approach is to continuously realign our cost structure in response. For instance, over the last few years, we have significantly reduced our value-add (VA) costs, from over 9% of revenues to about 4.5%. That's a meaningful drop and it has helped us absorb some of the pressure. Similarly, we've been optimising our offshore leverage, utilisation and realisation over the past six quarters. These are still areas with room for further improvement. We are also looking at realisation through a combination of productivity gains, a better product mix, and pricing strategies. While pricing levers are somewhat constrained in the current environment, the other two continue to offer us opportunities.