India's largest IT services company, Tata Consultancy Services (TCS), does not expect the US government to target technology companies based on their domicile, with its leadership attributing recent immigration-related actions to domestic employment concerns. The company also plans to focus its future recruitment on digital and artificial intelligence (AI) skills, with 80 per cent of new hires expected to have new-age capabilities.
TCS chief executive and managing director K Krithivasan said technology companies are deeply integrated into the US ecosystem and provide important services, while emphasising that the company’s long-term strategy in its largest market by revenue remains unchanged.
At the same time, TCS expects the growing contribution of AI-led work to support profitability, with such work accounting for 10 per cent of its revenue in the September quarter.
TCS sees US immigration curbs driven by employment concerns
"I do not think the governments will really look at it from a domicile perspective. I think what the governments have been looking at is from an employment perspective," Krithivasan told PTI in an interview at the company's corporate headquarters in Mumbai.
He said sensitivities around local job creation could be driving government actions such as last week's decision to suspend eight technology companies, including TCS, from a key green card application programme. However, he stressed that the move had no material impact on the company.
TCS applied for only around 10 green cards last year, while its overall H-1B visa applications numbered fewer than 300, Krithivasan said. Many of those applications involved employees already in the US, with no fresh employees being sent from India.
The development comes amid tighter scrutiny of work visas and higher costs for H-1B applicants, adding to uncertainty for Indian IT companies operating in the US, the biggest market for the USD 300-billion Indian IT industry.
Industry body Nasscom has said immigration and skilled talent mobility are "two distinct issues" that should not be viewed through the same lens.
TCS retains long-term US strategy, focuses on local hiring
Krithivasan said the outcome of the US mid-term elections in November would not alter TCS' strategy in the country, where it continues to focus on building a local workforce.
More than half of the over 30,000 people employed by TCS in the US are local hires, he said.
Asked whether the company's earlier commitment to add another 15,000 employees in the US over the next five years involved hiring only US citizens, chief operating officer Arathi Subramanian said the company recruits diverse talent based on skill requirements rather than nationality.
"We have this deep experience of integrating into the geography and benefit from the diversity," she said, acknowledging that the workforce could include people of Indian origin who were born in the US or migrated there earlier.
TCS to hire 80% new-age talent with digital, AI skills
TCS plans to make digital and AI capabilities a major focus of its recruitment, with 80 per cent of new hires expected to have new-age skills.
Of the 4,500 employees added in the September quarter, 25-30 per cent had specialised AI skills, while around 80 per cent had new-age capabilities, Subramanian told PTI.
She said the company expected this proportion to continue and added that the required talent was available in the market.
On whether freshers would have an advantage over mid-career professionals in an AI-driven environment, Subramanian said the advantage would lie with people willing to "unlearn and learn".
"If a mid-level engineer is willing to learn, it gives a huge advantage because he or she understands what is the technology landscape, what is the domain," Krithivasan added, noting that a junior engineer might not have the same understanding.
TCS will continue investing in "niche talent", while mergers and acquisitions and partnerships will remain other areas of investment, Krithivasan said.
AI-led work to support TCS profit margins
AI-led work accounted for 10 per cent of TCS' revenue in the September quarter, and the company expects an increase in its share to support profit margins, which remain below its aspirational levels.
"As these (AI) deals increase in volume, you would see that there will be margin (benefit)," Krithivasan said.
Subramanian said customers were initially signing AI deals for smaller business verticals and subsequently expanding the work into other areas after establishing the effectiveness of their spending.
Asked about the AI component of the USD 9.6 billion in total contract value recorded in the September quarter, Krithivasan said TCS was conservative in classifying deals as AI-led, although some aspect of AI was present in virtually all the work the company was undertaking.
TCS says Porsche, Best Buy deals reflect transformation opportunities
Asked whether recent deals involving Porsche and Best Buy, under which TCS would absorb employees of the clients, indicated challenges in the market, Krithivasan rejected the suggestion.
"These two are opportunities where our customers come to us and we have discussions on how we help them transform themselves and make them AI first," he said.