Tata Consultancy Services Limited (TCS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the TCS Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Kedar Shirali, Global Head of Investor Relations at TCS. Thank you, and over to you, sir.

Thank you, operator. Good evening, and welcome, everyone. Thank you for joining us today to discuss TCS's financial results for the first quarter of fiscal year 2024 that ended June 30, 2023. This call is being webcast through our website, and an archive, including the transcript, will be available on the site for the duration of this quarter. The financial statements, quarterly fact sheets, and press releases are also available on our website. Our leadership team is present on this call to discuss our results. We have with us today Mr. K Krithivasan, Chief Executive Officer and Managing Director.

Good evening, good morning to everyone.

Mr. N G Subramaniam, Chief Operating Officer and Executive Director.

Hello, everyone.

Mr. Samir Seksaria, Chief Financial Officer.

Hello, everyone.

Mr. Milind Lakkad, Chief HR Officer.

Hi, everyone.

Our management team will give a brief overview of the company's performance, followed by a Q&A session. As you are aware, we don't provide specific revenue or earnings guidance, and anything said on this call, which reflects our outlook for the future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces. We have outlined these risks in the second slide of the quarterly fact sheet available on our website and e-mailed out to those who have subscribed to our mailing list. With that, I would like to turn the call over to Krithi.

Thank you, Kedar. Once again, good morning, good afternoon, and good evening to all of you. I would just want to start by saying how happy I am to be interacting with all of you in my new role. And I would like to -- hoping to meet you all in person sometime in future. From our quarterly perspective, it is very satisfying to start the new year, the string of marquee deals and the good performance given the current circumstances. In Q1, our revenue grew 12.6% in rupee terms, 7% in constant currency terms and 6.6% in dollar terms. Our operating margin was at 23.2% and net margin was at 18.6%. I'll now in which Samir, Milind and NGS to go over different aspects of our performance during the quarter. I'll step in later to provide more color on the demand trends we are seeing. Over to you, Samir.

Thank you, Krithi. In the first quarter of FY '24, our revenue was INR 59,381 crores, a which is a Y-o-Y growth of 12.6%. In dollar terms, revenue was $7.226 billion Y-o-Y growth of 6.6%. And consequent currency, our revenue grew in Q1 at 7%. Let me now go over the financial performance. As in prior years, we rolled out a salary increase across the entire workforce with effect from April 1, resulting in a margin impact of 2 percentage points. By reducing our use of subcontractors and through other efficiencies, we were able to mitigate some of the -- that impact and report an operating margin of 23.2%, a contraction of 1.3% sequentially and an expansion of 10 basis points year-on-year. Net income margin in Q1 was 18.6%. Our EPS grew 16.8% year-on-year. Effective tax rate nudged upside slightly to 25.8%. Our accounts receivable was at 65 DSO in dollar terms, flat sequentially. Net cash from operations was INR 113 [Technical Difficulty] -- stood at -- [ INR 2 billion ]. The Board has recommended an interim dividend of INR 9 per share. Over to you, Milind.

Thank you, Samir. Our workforce at the end of the first quarter was 615,318, a net addition of 523. While we are committed to honoring all the job offers we have made, our focus currently is on leveraging the capacity we had built earlier. Our workforce continues to be very diverse with 154 nationalities represented and with women making 35.8% of the base. We remain focused on developing, retaining and rewarding the best talents in the industry and enhancing their effectiveness by bringing them back to office to pursue our culture. Our return to office initiative is picking pace and 55% of our workforce are attending office thrice a week. Towards driving a more performance focus work culture we rolled out salary increases of 8% to 10% for high performance and 12% to 15% to -- for exceptional performance following our annual competition review. Our investments in organic talent development continues to deliver exceptional outcomes. Year-to-date, TCS has locked 12.7 million hours and acquiring 1.3 million competencies, including 180,000 high demand competencies. The LTM attrition in IT Services was at 17.8%, down 2.3% sequentially. Based on the current trend, we expect that in the second half of the year, our LTM attrition grew back in our normal longer-term range, which has historically been an industry benchmark for talent retention. Over to. NGS, you, for some color on our segments and products.

Thank you, Milind. Let me go through some of the segmental performance details of this quarter. I would like to also note that all growth numbers are on a year-on-year constant currency basis. Last quarter, we had called out the growing caution among the clients, resulting in deferments and process and discretionary projects particularly in North America and Europe. And that has continued in this quarter. Growth among industry verticals was led by Life Sciences & Healthcare, which grew 10.1% Manufacturing grew by 9.4%. Other verticals showed some softness. BFSI grew 3%. Retail & CPG grew 5.3%. Tech and Services grew 4.4% and Communications & Media grew by 50 basis points. In terms of geographies, we see maximum caution in North America and Continental Europe, which grew 4.6% and 3.4%, respectively. We continue to have good momentum in the United Kingdom, where we grew by 16.1%. Among emerging market, India grew by 14% and Asia Pacific grew by 4.7%. Latin America grew by 13.5% and Middle East Africa by 15.2%. Our industry-leading portfolio of products and platforms had a very strong quarter. ignio, our cognitive automation software suite saw 37 new deal wins. There are about 26 go-lives in [indiscernible]. We continue to strengthen our cloud offering by expanding coverage across all 3 major hyperscalers, launched the FinOps module to help customers analyze and optimize their cloud spending. Digital scientists are collaborating TCS research and innovation to leverage large language models to further enhance ignio's predictive automation capabilities. TCS BaNCS, our flagship product suite for the financial services had 7 new wins and 8 go-lives during the quarter. The deal wins were well distributed across developed and emerging markets and in banking, capital markets and insurance. Among the go-lives, a high-profile one was the trading platform that went live successfully for trading, clearing and settlement at NSE International Financial Services Center, the SGX Connect at the International Financial Services Center in the Gift City, went live during this quarter, by which the Singaporean and Indian capital markets can work seamlessly on dollar-denominated nifty derivative contracts. TCS BaNCS insurance platform also saw excellent traction in Q1, with 3 new wins and 4 go-lives during the quarter. We already published the details of the deals with the NEFT, Teachers' Pension Fund and Standard Life International, so I won't repeat them here. However, it is worth highlighting that the Standard Life International deal marks our entry into Continental Europe, extending our platform and services footprint to meet the needs of the German and Austrian markets to begin with, and thereafter to other markets in Europe. Quartz's blockchain platform had one go live this quarter. In Life Sciences, TCS had our Advanced Drug Development platform, had 2 go-lives this quarter. TCS ADD Safety went live at top 10 U.K. based pharmaceutical company to read and process adverse event cases. With this, TCS ADD has successfully automated over 70,000 adverse event cases, including clinical trials as well as post-marketing cases. TCS OmniStore, our AI-powered universal commerce suite had one new win and one go live during the quarter. TCS HOBS, our suite of products for communication service providers, had 1 new win and 1 go live during the quarter. TCS TwinX, our digital twin solution, had 4 wins and 1 go-live. TCS iON had 25 new wins and 23 go-lives. In Q1, our platform administered assessments for 18.2 million candidates, 72% higher year-on-year. Over 2,400 corporates now leverage TCS National Qualifier Test for their entry-level recruitment. MasterCraft and Jile won 30 new clients in Q1. Let me now go over client metrics. The steady increase in the number of clients in every revenue bucket is the ultimate validation of our customer-centric strategy. Superior outcomes that we deliver results in a steady stream of repeat business and invitations from clients to transform newer parts of their business. This is the secret of the long and enduring customer relationships that we have been able to build. In Q1, we added 1 more client year-on-year in the $100 million band, bringing the total to 60, 13 more clients in the $50 million band, bringing the total to 137. 24 more clients in the $20 million-plus band, bringing the total to 296, 22 more clients in the $10 million band, bringing the total to 468. 27 million -- 27 more clients in the $5 million-plus band, bringing the total to 667 and 72 more clients in the $1 million-plus band, bringing the total to 1,268. I will now request Krithi to speak on the demand drivers during the quarter.

Thank you, NGS. As NGS called out in his commentary, macroeconomic uncertainties have resulted in greater caution among clients. Clients are taking a month-on-month approach, resulting in very limited visibility on their future spending even within their own organizations. On the discretionary side, while larger transformation programs like cloud migration are continuing at pace, some of the solid -- smaller programs or sub programs are coming under scrutiny. We continue to see reprioritization of projects in favor of those which are considered business critical and where ROI realization is likely faster. This is disrupting the normal flow of work in the form of an uninterrupted series of related projects executed one after the other. Long-running discretionary projects, typically CTB in nature, planned and scheduled some quarters ago under different circumstances, are now coming in with reduced scope or reduced base. This is what is resulting in some revenue softness across most of our industry verticals, we on order book has been very strong in the last couple of quarters and there has been no problem in their conversion to revenue. At an overall level, given the uncertain macroeconomic outlook, we see strong client interest and cost optimization, vendor consolidation and integrated operations. That said, the [ flair ] of the quarter was generative AI. In every conversation I've had with the clients over the last 3 months, this has unfailingly come up. gen AI promises to transform most knowledge by assisting and augmenting people and improving their productivity. Over the last 2 quarters, we have engaged with multiple customers using our co-innovation framework in exploring use cases for generative AI across productivity improvement, content creation and enhancing customer interactions. We are currently working on over 50 proof of concepts and pilots and have more than 100 opportunities in the pipeline. Let me give you 3 examples. We are working with a leading European shipping and logistics company to automate their contract administration using generative AI, significantly improving productivity and enhancing business outcomes. Following energy utility on the West Coast, TCS is engaged in transforming their service desk operations using generative AI to enhance self-service, improve the quality of service and drive customer satisfaction. This is being enabled via conversational services desk chatbots, augmented with generative AI capabilities to provide precise contextual and personalized responses to user queries and issues based on knowledge articles. Generative AI is also being used to automate the call quality, audit functions that are assessing and evaluating against interactions with the customers and providing recommendations for improvement. For a global provider of travel insurance and assistance, TCs is engaged in a pilot project to transform customer service leveraging generative AI. This will enable the customers to get highly contextualized and precise responses to the any queries that they may have on travel insurance policies, especially about the terms and conditions. The solution would manifest as a self-service multilingual chatbot, to which users can pose questions about the travel policy in a natural conversational style. Unlike traditional chatbots, the gen AI bot can understand nuances to the question and respond with specificity and personalized to user context. Generative AI will be used to also respond to queries [ with your ] e-mail. This is expected to result in reduced agent handling time, substantial productivity gains and improve quality and consistency of responses. The excitement around the new technology apart, our point of view is that the full potential of generative AI is best realized through a holistic enterprise-wide initiative encompassing business, legal, risk and compliance, research and innovation rather than through multiple point solutions. We have launched an advisory offering to help customers in creating a holistic vision, strategy and plan for the enterprise as adoption of generative AI. Additionally, we have started talent development at scale across multiple gen AI solution suites in partnership with the hyperscalers. We plan to create a talent pool of over 100,000 gen AI trained associates. On AI/ML, this will build on the tremendous depth we have predictive -- we have in the predictive AI machine learning and advanced analytics, which we have been using in the last few years to build transformational solutions that can recognize patterns across large data assets, make recommendations and personalized customer experience. Today, we have over 50,000 TCSers trained in AI/ML solution building skills, with over 9,000 with top external certifications. We have market-leading products like ignio, Optumera, [ ADD ] and TwinX, which use AI and ML to transform their respective domains. We have filed over 710 patents for AI invention in the past 5 -- just past 5 years, 282 of them have already been granted. Two examples of recent engagements will give you a flavor of the business impact that AI-powered solutions can have. Our Belgian provider of connectivity and digital services leverage TCS consulting and adversity capability to shift from cost-plus pricing to intelligent pricing within its ICT business. TCS delivered a differentiated approach integrating data from multiple sources to extract meaningful insights from historical data and an AI-driven dynamic pricing mechanism on an opportunity-by-opportunity basis that also incorporated anomaly detection. The solution has already uncovered significant money left on the table that turns into multimillion dollars, enabling revenue growth and profitability. For Cummins Incorporated in North America, TCS successfully delivered a strategic engagement to identify and reduce global warranty noncompliance, leveraging contextual knowledge, in-depth understanding of the warranty function and working closely with the business teams, TCS has built a solution that uses partner detection and automation through advanced analytics and AI/ML to shift the detection mechanism [ early ] in the process. This initiative will potentially save millions of dollars per year for Cummins. A well-governed and robust data foundation is a prerequisite for enterprise adoption of AI. Consequently, as part of the Horizon 1 cloud transformation, many clients are also modernizing their data estate. We have extensive experience in this area and a strong portfolio of intellectual properties that has helped us to gain share in this opportunity. TCS Data is an advisory framework to help clients assess the data maturity and define a holistic data analytics and AI strategy aligning to their business goals. We also have TCS Daezmo that helps clients speed up data modernization initiatives with a host of accelerators and methodologies to improve project outcomes. And then we have DeXAM, our data exchange and marketplace solution platform, to help clients democratize, monetize and commercialize cross-functional enterprise data through private or internal data marketplace. Let me share a few examples of recent data modernization engagements. A global leader in water, hygiene, energy technologies and services partnered with TCS to modernize and migrate its master data landscape to the cloud. TCS uses domain and technical expertise to deliver a modern SaaS AI/ML and cloud-native solution that enables near real-time integration with its core ERP systems to improve performance, usability and scalability while reducing cost of ownership and technical debt. The solution enables seamless integration, interoperability across various business systems, the empowering teams to make data-driven decisions. and provide a strong foundation for future AI-based solution. So our U.S.-based provider of connected vehicle services show TCS as its strategic partner to enable its data monetization strategy to drive growth. TCS leverage its proprietary data on framework to build a data platform on a public cloud, which serve as a single source of [ truth ] for data on subscribers, vehicles and other vehicle telematics. With real-time data ingestion and advanced analytical capabilities, the client now has a centralized repository, our very large data set that can be monetized through AI/ML. The UAE-based market infrastructure institution engaged TCS to build a centralized data warehouse to host all the data generated with cybersecurity software and appliances in the enterprise. Thus, they can be effectively monitored, assess, reported and acted upon to reduce security threads and vulnerabilities. The TCS solution stitch us together in technologies of multiple providers, to provide on-demand scalability and traceability to a centralized framework. This has resulted in reduction of security vulnerabilities by 5% to 10% and enable 2x faster onboarding of [ newer sources ]. Most importantly, with all the cybersecurity data hosted centrally, it is now possible for the client to use AI/ML to sift through those vast amounts of data to help analysts prioritize [ the threads ]. Speak on -- moving on to cybersecurity. As we have pointed out in prior year earnings calls, this has been an area of fast growth for us. Let me share a few success stories in this area. Bane NOR, a Norwegian state-owned company responsible for warning, maintaining, operating and developing the nation's railway network, selected TCS to help move to a newer and more advanced identity and access management solution. TCS facilitated an organization-wide assessment of the IAM estate and leveraged its domain and technology expertise to craft a unique solution that will help then secure its complex and critical IAM and reduce it. A leading supplier of rail-based transportation services engaged TCS to improve the security posture and reduce cyber risk. The TCS solutions stitch together firewalls, proxy services, endpoint protection, [ SOC ] and vulnerability management to help the client achieve high cybersecurity standards. In addition, TCS is running the cybersecurity operation for the client in a managed services model. The European technology leader in electrification and automation engaged TCS for transforming their privileged access management to protect their large server estate across hybrid cloud as part of the stringent [ SOX ] compliance mandate. TCS managed and successfully delivered the plant transformation, helping the client clear rigorous post-audit control checks from third-party auditors is no significant efficiency for the first time in 3 years. This if established a robust foundation of [ PAM ] and give the clients sufficient confidence to expand it to other critical infrastructure and applications. Moving on to growth and transformation. We continue to see clients invest in business-critical transformational programs that will drive growth. The leading U.K.-based global beverage company partnered with TCS to accelerate growth with a B2B digital commerce platform. TCS helped design and deploy a bespoke solution that strengthens customer relationship across every touch point and cover world-class digital experiences for customer engagement. The new system also improves commercial execution with 360-degree views of customers and insights on customer behavior, enabling tailored content and communication for targeted customers. Its 24 by 7 self-service has reduced dependency on the sales rep, increased net sales value and significantly reduced the cost to sold. A U.S.-based industrial equipment rental company, engaged TCS as its strategic partner to enable new services and revenue streams through equipment privatization. TCS leverage is bringing life with things IoT transformation framework to build a hybrid cloud-based IoT platform as a digital spine of the company's remote operations center. The platform collects team usage data, coordinates maintenance and tracks availability of the assets that are rented out. This data is used to provide real-time asset performance insights that can help the end customers avoid work stoppage, reduce maintenance costs and improve asset utilization. Our client not only gains incremental revenue for these value-added services, but also a comparative edge in the market. Lastly, we continue to see strong traction in operating model transformation. We have described in prior calls how this transformation entails, redesign of all the processes, embedding next-generation technologies like machine vision, AI, and machine learning to boost velocity, improve operational resilience and drive efficiency. Another aspect of these transformations that business leaders like very much is a TCS integrated operations model with AI-powered business command center, which provides them with end-to-end visibility and holistic control across backend middle layer and front-end operations, along with the underlying applications and data estate and the IT infrastructure layers. This enables better alignment with business [ KPIs ] to enables faster resolution of issues and greater resilience in operations. Faced with multiple challenges in the supply chain and IT landscape, a U.S.-based health care distributor engaged TCS as a strategic partner to transform their operating model. Their IT tool systems and processes were fragmented and they had multiple services provided supporting their IT infrastructure and business applications. This fragmentation resulted in lack of capability whenever there was any system failure. Any issue potentially meant some facts somewhere in the supply chain got delayed by 4 to 5 hours, impacting the delivery of drugs. A significant portion of the ticket resolution time was spent in just identifying the stakeholder responsible for the issue. We integrated their different IT service management tool into one modern platform, consolidated the services desk into one integrated team, supporting all the business applications and the supporting infrastructure and implemented personnel-based solutions for better user experience. We deployed our machine-first delivery model. leveraging multiple AI/ML based value builders from the TCS Cognix suite of solutions to transform the processes. All these are self-reduced supply chain disruptions, we improve the drug delivery fulfillment and enhance their supply chain effectively. A large U.S.-based information management company partnered with TCS to digitally transform their CFO operation. Here too, we deployed a new operating model that integrated the business processes and IT support operations using TCS Cognix and process mining to redesign the processes. By integrating the support teams and monitoring performance holistically, spanning businesses -- running business operations, IT applications and infrastructure support, we have helped the client enhance operational resilience and velocity, helping improve free cash flow and working capital. Moving on to order book. We had a strong order book in Q1 with a TCV of $10.2 billion, a book-to-bill ratio of 1.4. In rapid succession, we won 2 deals in the U.K. public sector from Teachers' Pension Fund and Nest and one from Standard Life DAC, reinforcing our leadership in the U.K. life and pensions market. While the details of the next win are already in the public domain, including in our press release, I thought it is worth sharing an interesting detail mentioned in the tender document available in public domain. It comes -- commissioned a broad market assessment from PricewaterhouseCoopers to understand, whether there is competition in the market capable of meeting this requirement for technical experience. PwC's expert conclusion was that apart from TCS, there was no single supplier or consortium in the market now or the short term assess during the next 12 months, who could meet these requirements. Coming back to our Q1 order book, BFSI TCV was at $3 billion, while the retail order book was at $1.2 billion. The TCV of deals signed in North America stood at $5.2 billion. With that, we can open the lines for questions.

[Operator Instructions] We have a first question from the line of Sudheer Guntupalli from Kotak Mahindra.

Yes. Krithi, congrats and all the best once again, sir, on your new innings. Just a couple of questions. Last time when we announced our results, the banking crisis in America and Europe was just cooking. Now is this issue still being referenced to by clients as a concern? Or is this subject largely behind based on your client conversations?

So we don't hear about this topic much. I would say that that's largely behind us, in fact, the large banks who are our primary customers, who are net beneficiaries. We don't hear this as a concern anymore, Sudheer.

And we understand that predicting macro 6, 9 months down the line, may be tricky at this point. But given that this was a major panic or stress factor in the last quarter, is it fair to assume that September quarter we'll see a decent growth unlike June, which remained flattish despite the seasonal strength? I know you don't give quarterly guidance, but directionally, is that a fair assumption?

You said we don't give quarterly guidance. I don't want to say anything on Q2, Sudheer.

Sure, sir. Just one last question. Two consecutive quarters of strong deal booking in despite the weak market. Not even including the BSNL deal. And this quarter execution also largely played out in line with your expectations. And we are seeing market situation improved a bit, especially regarding this one panic factor. I'm just saying pipeline is strong. So how do we reconcile it with your tone in general on the demand situation. I hear a bit of conservatism you're baking in, in your tone to provide the buffer for any unexpected shock, especially since you have just taken charge?

No, no. Like we are not being conservative or optimistic here. We are telling what we are seeing in the market. And as we explained the earlier also, in the call itself. While the demand is still good, we are winning new deals. But clients are reviewing the projects underway. And wherever there is an ROI is not very strong. The next phase of the project is getting paused. So that -- that's the reason that where we find that revenue is -- droppage happens for revenues. Otherwise we don't see a long-term perspective, we don't see any issue with the demand for tech or investment on technology.

We have our next question from the line of Apurva Prasad from HDFC Securities.

So after 2 quarters of $10 billion-plus TCV, I just wanted some more understanding on your media comment earlier, when you said long term is good, short term, cannot call. So is that based on more client-specific factors or deals deferred earlier have seen more cancellations in the near term? So essentially, what I'm asking is the softness of the project prioritization that you referred to, has that become more broad-based across clients? Or that has become more concentrated within the profit?

See except in one or 2 specific things, I won't say this is concentrated. It is probably we see this trend, like it could be varying from one account either in terms of how much of the impact is. But the fact that there is a review and reassessment of the project. I would say that trend itself is broad-based, but it could be like how much on given client passes the project or delay it compare versus others could be different, could depend on the individual situation also like I was telling in the media interaction. For instance, if you look at U.S. banking, like large U.S. banks are still doing good. We don't see a major problem there. So to some extent, it depends on the industry also, Apurva.

Okay. And my other question for Samir. On the operational front, what are some of the near-term levers that you have, especially when operating leverage impact is lower due to software growth?

Sure. Actually, we'll continue to use levers like utilization, I have called out that utilization still has scope for improvement, and it continues to have productivity and realization becomes other levers. And some of our discretionary spend is now at a critical mass where we can start looking at optimizing them as well. So these would be the primary levers.

We have a next question from the line of Mukul Garg from Motilal Oswal Financial Services.

Couple of questions from my side. Krithi, first on the nature of pauses, which we have started seeing. What are you hearing from your clients in terms of -- what are the signs they are kind of looking for, which can make them change their view on these pauses or kind of push outs. Is this something which people will still have patients for some time before they start kind of pulling back up in terms of their tech spending? Or do you think the uncertainty being where there it is, if things to worsen materially the demand can come back on a shorter notice?

So Mukul, like as you also mentioned, it is an uncertainty, near-term uncertainty, which is causing the them to relook at the programs and pause them wherever they think. The ROI is not strong or it's going to take longer time. And once the uncertainty is lifted, like they have clarity on more long-term outlook in terms of where there will be growth or what they should be doing. We would see a certain class of projects, either it going to cost on optimization or transformation projects speaking of the momentum. But obviously, we cannot say when the uncertainty will be cleared. So I would believe that until the uncertainty exists, there would be a cautionary approach towards the investment.

Sure. Krithi, one question on the gen AI. Obviously, you have spoken a lot about it. But how should we realistically expect to see the impact of all the work that you are doing from a 2- to 3-year window? Is this something which will help you accelerate your revenue growth? Or should we see this more as a defensive move, which will help us defend your revenues because there bit of a deflationary nature to the gen AI deployment? Or is this something which will play out more on the talent side and structure to moderate the pace of employee addition?

Mukul, this is NGS here. I think all of the things that you said will play out. You need to be looking at all these dimensions. But I think what is interesting for us is the fact that it can deliver things faster. And the whole time-to-market element would be completely redefined. Newer benchmarks could emerge, in terms of predictability of the overall software, quality processes, everything can improve. Will it mean that we will need less people. It's something that we'll have to evaluate. But in all the technology adoptions in the past that we have seen, it has only increased the volume of work and thereby actually we needed more expertise and more hands to do the heavy lifting that people really look for. So from that perspective, it's a very, very interesting technology. And a lot of evaluations are going on at enterprise level. And the other thing is that, look, the whole cost model of it. How much is going to cost me to embrace generative AI? How people are going to price it? It's a very interesting proposition that everybody is looking at. Now currently, every token is getting priced. So how much is going to cost me to embrace generative AI in my overarching things that I want to accomplish across technology and operations. It's also something that will be taken and played out. So I see a lot of opportunities for us in structuring our own way of delivering, our own improvement to the value propositions that we can offer embedding generative AI. But overall, it's going to be very interesting to see how industries is going to embrace it and given their own experience on cloud and the angst around how the cloud cost itself in terms of consumption cost is emerging.

We have our next question from the line of Kumar Rakesh from BNP Paribas.

Just an extension of the generate AI discussion you were having just now. So while you definitely talked a lot about the demand opportunity for the customers, I understand you are also running multiple projects internally as well to assess their augmented processes, how they are going to save cost or productivity or you -- can you share some of the details on that? And is there a possibility that our own productivity benefits within TCS would start growing much ahead of the revenue opportunity from general AI comes through eventually?

Rakesh, It's NGS again. And it's difficult to call out some of this, but sufficient to say that there are multiple teams almost every vertical that we have. Their pilots, their internal projects and how do we craft the methodologies and toolkits to be meaningful to our clients using this technology. All this is going on. And as we called out earlier, there are at least about 50 projects that we are executing. Some are small, some are large. And I think one of the nice things to say is that, look, if a particular organization has an ability to predict on our 2 parameters, which will create a maximum business impact for them. If that can be focused upon using this technology, I think that will create maximum impact. I mentioned about, for example, if someone can predict, if the technology can predict, let's say, the container price 3 quarters down the line, then it could be a boon for the shipping industry. So it's problems such as that. And how do you improve or increase the yield of agriculture commodities. Some of these things and specifically matching with the climate technologies or climate parameters that one has, which will have everyone predicting features. All will contribute to the impact disciplinary nature of the solutions that we need to deliver. So there's a lot of work going on in the industry and within the research and innovation team of TCS. I think we're couple of quarters down the line, maybe we'll be able to give you more...

Definitely quite exciting use cases there. Samir, during media interaction, you talked about clawing back some of the margin in the coming quarters. So how do you see the trajectory of the claw back? Will it be similar to what we saw last year? Or there are higher tailwinds or headwinds this year as we move in the coming quarters?

So that's typical of how it happens in the year -- in a typical year for us because we take the biggest headwind, which is the increment upfront. And what I called out is we typically claw back overall in -- through the period. As you see the macro environment and the uncertainties around it, that is where it would be difficult in terms of -- to put across how exactly it will play out, but our focus would be to incrementally get closer to the aspirational band which we have and improve through the quarters and to exit at a higher rate through the year.

We have a next question from the line of Gaurav Rateria from Morgan Stanley.