Tata Consultancy Services (TCS) said that while spending by clients on information technology (IT) next year was likely to remain static at current year’s levels, the situation “would not be very gloomy,” S. Mahalingam, Executive Director and Chief Financial Officer, said here on Thursday.
“There are various surveys available that indicate that the IT budgets of customers will remain at the same level as this year…But there are reasons to believe that outsourcing spends will increase,” Mr. Mahalingam told journalists. He said that IT budgets included various components — hardware, enterprise solutions, network systems and services. While the budgets remained the same, spending under various heads might change. A client might cut back on hardware spending and spend more on services, he said.
“Customers essentially have to spend a fair amount on technology upgradation. We have talked about various technologies whether it is mobility, big data or analytics. There are companies which are worrying about changes from a sustainability point of view and there are regulatory aspects which are coming up in certain industries,” Mr. Mahalingam said.
On being asked to comment on the forex losses suffered by TCS as reported in quarterly results, Mr. Mahalingam said that the company had hedged at Rs.50 to a dollar, but the value of the rupee fell.
“This year, we had decided to protect the rate at Rs.50, because it was around 49 when we took the decision. And, therefore, we took a lot of action to ensure that we do not lose on account of rupee depreciation…Therefore whatever losses we are showing in our accounts on a quarterly basis reflects the amount of premium we are paying,” he said.
He said that the company was expecting forex losses of about Rs.30-35 crore in the third quarter. However, he hoped that the value of the rupee would appreciate with inflows through FII (foreign institutional investment) and FDI (foreign direct investment). “We believe that the actual difference will be made by the inflow of money. We have already seen FII money flowing into the country and FDI will hopefully also be flowing into the country,” he said.
Keywords: Tata Consultancy Services