Travel clients continue spending amid Omicron: TCS

The client spending in the travel segment has not halted because of the Omicron threat in the last few weeks, a senior executive at said on Thursday. The largest software exporter, which bagged a multi-year deal from airport hospitality services provider Plaza Premium Group (PPG) recently, will endeavour to keep profit margins in the travel segment at par with the company’s average, its president for Asia Pacific Girish Ramachandran told PTI.

It can be noted that many countries have had to impose restrictions on travel because of the Omicron threat, which is spreading faster than the earlier variants of the COVID virus, leading to concerns over its impact on business and also corrections in indices.

“Because of Omicron, I have not seen any of the travel customers stop any projects. Whatever they have invested in the last few months, they are continuing with that,” Ramchandran said, adding that clients feel this is a temporary blip and things will return to normalcy.

He added that except for China and Hong Kong, which are keen to control the virus fully, all the other countries have shown a willingness to open up borders and start to live with the virus rather than impacting businesses.

In the initial days of the pandemic, most of the airlines had held back spending but, as the pandemic continued, they decided to use the crisis as an opportunity and spent on technology in the last one and half years, he said.

“Most airlines are spending on moving assets to the cloud, customer experience, how do we bring new tech like artificial intelligence or Internet of Things to help passengers and improve operational efficiencies,” Ramchandran said, drawing from his experience of clients in the APAC region.

On the new deal with the Hong Kong-based PPG, he said it will see TCS help provide 32 new services for things as diverse as pets and parking for cars at over 70 airports that the client operates at.

PPG has already introduced a pilot of four new services at the Bengaluru airport, and the plan is to increase the number of services and also take them to other airports across the world, he said, adding that the work involves using digital interventions for enhancing the experience for an airport’s customers and employees, and also operational excellence.

When asked about margins from deals like this, given the fact that TCS has to work with multiple vendors and integrate them, Ramchandran seemed to suggest that there is no impact.

“…we have tried keeping the margins (in the travel segment) as close to TCS margins, we do not see a significant difference,” he said, adding that the profit margins are dependent on other things as well like the offshore/onshore mix.

The company sees many opportunities to grow the business, and will be cautious in partnering with strong clients who have the ability to pay over the long term as part of its risk calibration efforts.

In the Asia Pacific region, there are opportunities from Thailand to New Zealand, which the company will be bidding for, the Singapore-based executive said.

The pandemic’s travel restrictions resulted in a difficulty to fly talent into markets from countries like India for work, he noted.

It had to up the local hiring and will continue to do so in the future as well, Ramachandran said, specifying that a delivery centre in the Philippines alone houses 5,000 employees.

To a question on where he sees the revenue contribution from the APAC market – which stood at 9.3 per cent as of September – in the future, Ramachandran avoided a direct answer saying he is very optimistic regarding the significant opportunities in the market and its ability to win more clients like PPG. PTI AA BAL BAL