To keep pace with the rising demand for IT and back-office services, Tata Consultancy Services (TCS) has earmarked a capital expenditure of ₹4,000 crore for 2014-15, its highest till date.
About 80 per cent of the proposed investment is geared towards erecting new delivery campuses and upgrading existing ones, said Rajesh Gopinathan, Chief Financial Officer. The rest will be spent on upgrading technology assets.
TCS, which is Asia’s largest IT exporter, plans to add 40,000 new seats to its global delivery infrastructure. It has ongoing projects in Nagpur, Hyderabad, Thiruvananthapuram and other cities. The company, which has several Fortune 500 companies on its client roster, had a capex of ₹3,000 crore in 2013-14. “We are on a fairly long capex cycle…we like to operate at capacity utilisation of 85-95 per cent and are close to 90 per cent at present. Our projections for the next year require us to further increase capacity,” Gopinathan told
Gopinathan says that several of its ongoing capacity augmentation projects are running behind schedule. Analysts say cities are facing a shortage of labourers as construction workers are being lured by jobs offered under the National Rural Employment Guarantee Act (NREGA). The NREGA, which guarantees a minimum of 100 days of employment in a financial year to rural households, is deterring labourers from parts of Bihar, Uttar Pradesh and West Bengal to migrate to cities in search of work.
However, Gopinathan has a different take. “If you benchmark with foreign countries, things definitely take longer to build here (in India). The construction companies tell us that once the workers go back to their villages for farming and other reasons, they tend to stay back for long periods, thereby delaying projects.”
In the fourth quarter ended March 31, 2014, the Tata group firm became the first Indian software vendor to employ more than 300,000 people.