Not going away, will still be involved with TCS strategy: N Chandrasekaran

Chandrasekaran, TCS' designate chairman, told a financial daily that H1-B visas pose a challenge

There would be challenges ahead for the information technology (IT) sector and Tata Consultancy Services (TCS) and the various players would have to adapt, said Tata Sons designate Chairman N Chandrasekaran in a joint interview with TCS designate CEO Rajesh Gopinathan to The Economic Times. 

Upon being asked how prepared TCS was to face the current churn in the industry, a situation which was similar to 2009 when Chandrasekaran had taken over the reigns at TCS, the Tata Sons designate chairman employed a cricket analogy and said that one would "never play on a dead wicket". There would be the occasional ball which would pose a challenge, but overall, the industry and TCS were yet to see their best, Chandrasekaran added.  

Gopinathan answered by saying that TCS would invest more in technology, not less. "We are in that sweet spot," Gopinathan told ET, adding, "This is the only industry that can claim that." 

Here are the key highlights of the interview:

1) Status of transition: Chandrasekaran called the transition a "formality' from TCS' point of view and said that the leadership of the firm, including its new CEO Gopinathan, had worked with him closely for a long time. He asserted that he was "not going away" and would be "involved with strategy". However, he also said that the past month had involved him stepping back from his former position as TCS CEO and letting Gopinathan take all the decisions, albeit with some advice. 

2) Trump, protectionism and H1-B visa woes: Chandrasekaran said that for the past 12 months, TCS had all its teams working with the assumption that there would be no H1-B visas coming their way in the future. He told the financial daily that he had informed the TCS team in October of 2015 itself that the company had to operate with "a lot of constraints on visas" for the coming financial year. This echoes what he has had to say on the topic in the past. As reported earlier, Chandrasekaran said at the Nasscom India Leadership Forum, "Every time there is a regulation change or a perceived challenge, whether H1-B (visas) or increase in visa fee, people talk about the IT industry being in trouble. It is the most exciting industry to be in." Responding on the same topic, Gopinathan said that people should not characterise the industry as a labour-arbitrage industry, which is another sentiment that Chandrasekaran had expressed at the Nasscom forum. Stressing that the IT sector had not been built on visas, or regulation there off, Gopinathan told the financial daily that  TCS was "deeply embedded into the global supply chain" as far as technology was concerned. 

3) Future constraints: Chandrasekaran also told the financial daily that they had projected that in the current financial year, they would get a sixth of the visas they had received in the previous year. Finally, the team we had set up to look into the issue came back and said that we would get 15 per cent of the visas we applied for. We were able to achieve that number. However, whether this constraint would also apply for the financial year 2017-18 was something that Gopinathan did not make clear in the interview, instead, he said that he would field such questions only after April. However, while Chandrasekaran admitted that visa regulations would have an impact on TCS, he explained that the extent of the impact would depend upon the solution TCS would adopt and that the company was ready to change its business model if necessary. 

4) Future opportunities: Gopinathan said that TCS' challenge involved finding out where to position itself. While he said that the sector was at an inflection point, TCS fundamentally believed that demand would only increase. "There is no vertical industry or geography where we can’t play," he said.