Stagflation is the trend to watch, says Chandrasekaran, chairman of Tata Sons

Mumbai: Tata Sons Chairman N Chandrasekaran has warned of a “stagflationary impulse” in the context of the Russian-Ukrainian conflict.

He was addressing the 27th Annual General Meeting of

() virtually.

TCS is well positioned to capitalize on the demand for digital solutions in this environment and the IT services provider is engaging globally and in India to exploit the opportunities, he added.

“The Russian-Ukrainian crisis has given a stagflationary impulse. This has led to slower global growth, while further increasing inflation,” Chandrasekaran said. “We are also currently facing a supply shock due to rising oil prices, semiconductor shortages, to name a few. Due to many of these macro factors, we are likely to face an environment of low growth and high inflation.

Concerns about inflation and an impending recession have increased in recent months.

Global GDP is expected to grow at a slower pace of 3.4% in 2022, while inflation is expected to exceed 7%.

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“The Indian market is extremely well placed for growth and inflation in India will be lower than in Western countries and Indian regulators will continue to monitor this space,” he said.

On issues regarding the Digital India Act, Chandrasekaran said it was necessary “because so much has changed in the last two decades since the original IT Act was put in place. Glad that the government be committed to developing a participatory approach to the development of digital law, especially as privacy and other aspects will enter into this law.

TCS’ ability to stay relevant to customers helped the IT services provider improve revenue per customer from $19.6 million in FY17 to $21.7 million in FY17 22, said Rajesh Gopinathan, managing director and general manager of TCS.

“We believe this (growth) will continue into the near future to be a major driver of technology transformation globally. Our core technology and business operations and outsourcing offering remains relevant to our customer base as they seek both efficiency and freeing up resources to focus on their transformation programs and seek global scale and global talent to be able to deliver on their growth aspirations,” Gopinathan said.

Chandrasekaran said TCS has been working during the Covid-19 pandemic to find innovative ways to engage with the workforce, including mental health counseling.

IT budgets in key markets such as the US remain high, but India’s comparatively lower IT budgets mean that while India’s revenue share will gradually increase from the current 5%, “I don’t see that figure will jump into double digits for a long time to come,” he said.

Regarding public sector projects, he added that the TCS would continue to work with the government and seek opportunities to participate in and develop mission-critical projects of national significance.

Noting that

was a separate equipment company acquired by the parent group, Chandrasekaran said that “TCS will have a partnership in the implementation as a system integrator in some of these areas, and wherever there is a TCS IP that can be leveraged in joint marketing, we will explore that.

The AGM was also filled with lighter moments as shareholders congratulated Chandrasekaran on being awarded the Padma Bhushan as well as the group’s acquisition of Air India.

Many also commented on the missed opportunity to meet the board members in person, calling it a “Kolaveri Di” (disappointing moment) given that people (including Chandrasekaran) had attended IPL matches in stadiums.

Chandrasekaran also highlighted the trends in different areas such as digital transition, energy transition, supply chain and talent transition, which will be huge opportunities for TCS.

He said TCS had had “a satisfying year of strong and profitable growth” with a 16.8% increase in consolidated revenue to pass the $25 billion revenue milestone.

TCS’s goals are to hit $50 billion in revenue over the next decade, he added.

“Areas such as renewable energy, battery storage, carbon capture, decarbonization, e-waste management, etc. will generate many new opportunities. This will be an important area for the company (TCS) to s ‘associate with its customers in order to help them achieve their sustainability goals,’ said Chandrasekaran.

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