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Indian IT firms have reported mixed results in the March quarter. TCS, India’s number one software services exporter, does not give growth projection, but the company said it was confident of beating industry body Nasscom’s guidance of 11-14 per cent growth. Infosys, which has for long been the IT industry’s bellwether, forecast a muted 8-10 per cent growth for the current fiscal.

Industry watchers, who for long have got used to high growth, have begun asking if the best is behind India’s IT industry. In an exclusive interview with NDTV’s Vikram Chandra, TCS chief N Chandrasekaran says the IT industry is facing short term hiccups but long term growth prospects remain intact.

Here is an edited transcript.

Challenging times ahead: The IT industry has done extremely well over the years. This year we have done $100 billion in sales. There are some short term pressures but I believe technology is going to play a critical role in revival of economies and companies, whether in terms of driving efficiencies or driving growth. The IT industry in India has a lot more to do and there is a lot of growth left over the years.

The best not over for Indian IT yet: The problem is sentiments affect everything and people immediately swing between one end to the other end of the spectrum very quickly. If you consider 2005-06 as the golden era, there are many more golden eras to come. The technology disruption that’s going to take place in the next 2-4 years - with technology like cloud, big data, mobility - there are tremendous opportunities. If the IT industry was making an impact from a technology point of view, in the years to come it’s going to make a big impact from a business point of view. We have many more golden eras in the next 20 years. The Nasscom projection for this year is 11-14 per cent. We will review it in October. If you take a 3-5 year perspective, the industry will do very well.

Pressure on margins: This is an industry which requires constant investment in technology and if we don’t operate at the right margin, the ability to be ahead of technology and make investments is hampered. The margin at which you operate is your strategic position and if you think you have to build your business model around those margins you can. Ten years ago we were not even a billion dollar company and our margins - people said as we scale it will go down - but on the contrary it has stayed the same or slightly improved. So, it is possible to build a business model with the right level of margins.

Pricing is no longer the only differentiator: Today, Indian companies don’t always compete on price. Many times it depends on capability, the ability to execute on large scale, the ability to take on complex programme management. Going forward, there will be changes in the business models, such as outcome based pricing, transaction based pricing, more domain intensive process, and leveraging technology in the cloud. So many other innovations will happen and new product companies will come. There is a huge opportunity.

Capital, mentorship required for an Indian product company: Most of the industry today is focussed on b2b (business to business)..In the b2b space, in the financial services domain, there are a couple of products from India, which rank as number one and number two products. If you take the domain intensive products for large enterprises, various industry products are coming out of India. In terms of b2c (business to customers), it takes time. More venture capital, more mentorship is required and more needs to happen.

Out strength is in b2b, not to say that we should never do b2c, but we have to see whether we play only on b2b or b2b2c and then participate in the revenue stream of the second b2c while we are standing behind the b (business). So, those are possibilities that we need to think but there are a lot of things we can still do in b2b.

Telecom industry will turn around: I don’t want to get bogged down by what happens in the next two quarters. First, there were few telcos, then it expanded into large number of telcos and then it will shrink. Finally, there will be few players who will stand and continue to grow.

Size is an advantage for TCS: I have always felt that size is an advantage. We need to learn how to run the company as small units but at the same time leveraging the power of a large company. That’s what we have done in the last couple of years. Keep the innovation, agility and entrepreneurship going while use the advantage of scale. $10 billion in terms of global markets sales is just 1 per cent. I don’t know where we will go in the next 10 years but the opportunities are there. Size is an advantage but if you are not careful it can create a lot of bureaucracy.

Managing scale and growth is a challenge: We always have to worry about our future. I always have to think about what next? On our table… there a good number of initiatives. We know what areas to focus on. We have made a good number of bets and we have got our credit and made sure those things deliver but there are plenty of opportunities.

Challenges for TCS: We need to continue to manage scale. HR will be one area. Empowerment, agility and innovation - that’s a whole set of things. How do we continue to keep that going while we are scaling? The second thing is the alternate business model. The non-linear revenue model, which we have said is a stated goal. Currently, it is 4-4.5 per cent (of revenues) at this point of time.

Opportunities for TCS: Products, platforms, new business models in terms of transaction based pricing. We made a bet in the insurance space and that business is going to be more than $250 million currently and could go to $1 billion. Similarly, we have made bets on a number of platforms and each one of those platform will come at significant higher revenue per person thereby reducing the number of people required to make the revenue and at the same time producing the right margins. How do we scale this? That’s a challenge and priority.