August 2012 | Raghunath Kale
Reinventing the IT business model
Surya Kant, president of TCS North America, UK and Europe, talks to Raghunath Kale, about the company's rapid growth in the last five years and its future plans. He also discusses the impact of new technologies on IT solutions and the need to maintain focus on social and community engagement.
How has Tata Consultancy Services (TCS) strengthened its presence in North America in the past decade?
TCS is a key partner for and integral to the profitability of many major North American companies through its Global Network Delivery Model. TCS began work in North America more than three decades ago in 1971 and was the first Indian technology firm to set up operations in New York City in 1979.
Today, we have more than 20,000 consultants working out of 25 offices on the continent. North America accounts for more than half of the company’s total global revenues – in fact, TCS NA crossed the $5 billion revenue milestone in FY2012.
What has been the thrust of TCS, particularly since the economic downturn in 2008?
During the economic downturn, there were three measures companies tried. They offered new products and services, they tried to bring the costs down and they looked at other markets to do business in. Despite the challenges of the economy, we have sustained our strong momentum and have kept our focus on profitability and consolidated our market leadership.
We are currently focusing on non-linear growth and are looking at growth from software products, process platforms and industry-specific solutions. With our customer-centric approach, strong solution sets and investment in game-changing technologies like mobility, big data and cloud, we remain well positioned to help our customers transform and drive growth in their businesses.
Today we see growth across all sectors, including banking and financial sector, telecom, retail, manufacturing, life sciences, media and information services, ERU (energy, resources and utilities) and travel, transportation and hospitality.
How is TCS creating value for North America in terms of customer satisfaction and employment creation?
TCS is a big contributor and employer in the North American market. Today, TCS employs close to 3,000 locally hired associates across North America. Last year, the company hired 1,600 local associates in North America through a combination of lateral hiring and college recruitment.
The company has established several development centers and centers of excellence that create innovative solutions for North American customers. As much as 97 percent of TCS's business comes from existing customers, which is evidence that they appreciate our commitment to their success and believe that we deliver real value.
TCS also invests in innovation in the US through partnerships and financial support of US academic institutions, including Stanford University, University of California at Berkeley and Massachusetts Institute of Technology.
What are the major milestones that TCS has achieved in the past five years?
Globally, TCS became the first Indian IT company to cross the ten billion dollar milestone, posting annual revenues of $10.17 billion for the quarter ending March 31, 2012. In North America, despite challenging market conditions, the revenue from North America has almost quadrupled from $1.28 billion per year to more than $5 billion per year in the past five years.
In addition, the North American TCS employee base has more than doubled from 8,900 to 20,000 and the client base has grown to more than 500.
TCS was also recently recognized as the fourth most valuable brand in global IT services worldwide by Brand Finance, the world's leading brand valuation firm. TCS is the first firm headquartered in emerging markets to enter the top of the league. This achievement on the brand front is a watershed moment in our company’s evolution toward gaining a formidable position in the global market.
In 2011, TCS launched iON, the first-of-its-kind, cloud-based, fully integrated information technology solution for small and medium businesses. Though premiered in India, iON’s cloud-based services and pay-as-you-use business model is also uniquely suited to SMBs in other developed and emerging markets.
TCS’s acquisition of Citigroup Inc’s interest in Citigroup Global Services, the India-based captive BPO, marked another major milestone. The acquisition broadened TCS’s portfolio of IT and BPO services in the global banking and financial services sector and enabled TCS to offer end-to-end, domain-led, third-party solutions in the field of business operations to our large financial services clients.
What are the key initiatives undertaken by TCS that you believe will be significant in creating value for the next five years?
Going forward, IT services will be delivered via different business models. While the core standard model will remain, cloud technologies will become common as a delivery mode.
Technology is becoming all-pervasive and, in particular, the consumerization of IT is forcing companies to rewire their operations to be more customer-centric, more relationship oriented and more transparent. Customers are increasing their spend in new areas such as mobility and big data.
TCS recently established the TCS Silicon Valley Customer Collaboration Center in Santa Clara, California. The center will serve as the worldwide headquarters for both the TCS Mobility Solutions Unit, which aims to bring the benefits of mobility to the enterprise-side and consumer-facing side of TCS customers across all industry verticals and the TCS Next Gen Solutions Unit, which will apply the latest advances in technology to real-world business problems that customers may face.
What are the TCS traits most admired by your customers?
Our biggest differentiator is our customer-centricity. For TCS, that means caring for the customer's growth and success. So when we do business with you, we remember that we exist because of your presence. We don't nickel and dime you. We have been told many times that this approach gives us freshness in the market.
At TCS, we believe that the best solutions come from collaborative relationships with our clients. We view our customers as partners, so we are committed to understanding their unique business objectives and helping them achieve success.
What are the other areas, besides technology, in which TCS has made an impact?
TCS was founded and still thrives on the principle of social capital – the value created from investing in good community and human relationships. Tata group Founder Jamsetji Tata had famously said that an enterprise gets its business from the community where it operates, so it is the responsibility of the enterprise to return the favor many times over.
Beyond our commitment to reducing our own environmental footprint, TCS works for sustainability in three broad areas, namely education, wellness and environment:
- Computer based functional literacy: TCS worked on a paradigm-shift program that would impact the 260 million illiterate in India – this IT based application uses animated graphics patterns for visualization and audio appreciation. Completely free of cost for the beneficiaries, this method ensures reading can be taught within 40 to 45 hours of learning.
- Commitment to green: TCS has reduced its carbon footprint by more than one third in the last four years. All of TCS’s new buildings are LEED certified. In addition, 16 of TCS’s facilities are now composting and many now use biodigesters, which turn waste into methane fuel. TCS is also the first company to implement 100 percent environmentally friendly waste management technologies.
- Working as a go-green collaborator: As part of its continuing effort, TCS gathers organizations together to have a greater impact. TCS is an active member of the Global Technology Leadership Exchange, which brings together businesses who want to take a lead in moving to a low-carbon economy.
- Deliver sustainability to our partners: TCS has set up the Eco-Sustainability Unit with the primary objective of identifying solutions to help customers drive their sustainability agenda more effectively and enhance their environmental performance.
- Making a difference from the ground up: TCSers across the globe have enthusiastically taken up a variety of causes within their local areas and, in recent years, have collectively volunteered over 40,000 person hours in making a difference to their respective communities. Every year, I personally lead a group of around 250 TCSers on a "Walk for Hope for Breast Cancer" in New Jersey.