The technology win from TCS

Tata Consultancy Services is widely known for its technical excellence and for its early start in India. The company has, however, remained in the sidelines of the great tech type that swept the country until a year ago. One reason, of course, is that it is still unlisted. Now is the time to project TCS's formidable strengths as the conversation C. R. L. Narasimhan and Ramnath Subbu had with Mr. S. Ramadorai, CEO, and Dr. Ravi Gopinath, head (manufacturing practice), TCS, shows.

Tata Consultancy Services (TCS), among the largest companies in India today, is the sixth fastest growing consulting company globally and the fourth fastest in the U.S. The company, which grossed revenues of $689 million in 2000-01($ 489 million in 1999-2000), boasts of 16,000 software professionals. The company provides high-end consulting, product development and domain expertise support on Information Technology services.

In a much-hyped area like IT where visibility is an important factor, TCS has been guilty of not being visible enough and has only now started talking about its activities. But, TCS believes that technology and how it is positioned in the marketplace is very important. ``Technology by itself is good but unless there is an application that uses the technology, whether from outside or developed within the organisation, we need to look at the application very clearly and carefully,'' according to Mr. S. Ramadorai, CEO, Tata Consultancy Services (TCS) who believes that if you have to propagate or broadcast what you have done with the technology, a successful implementation of the technology is very critical before saying what impact it has.

``The culture of the organisation or the group in the past has been to talk of the things you have done rather than what you can do. That is the fundamental way we have grown. But we are also aware of the market changes that are taking place. The hype factor has become a lot more important than in the past.'' said Mr. Ramadorai adding, ``We need to quantify what we are doing, as well as what we have applied, what we are capable of doing and how we are visioning ourselves in the future. That is the transformation we are going through.''

There has been a lot of talk in the media regarding TCS' plans for an initial public offering (IPO). However, TCS has said that there are no immediate plans on the anvil. Instead the company is focusing on getting its house in order. ``It is essential to have corporate governance. There was no need for disclosures earlier - in a scenario when you are owned by somebody else namely Tata Sons - so all our disclosures were to them rather than to the outside,'' said Mr. Ramadorai.

Corporate governance

TCS has initiated steps towards corporate governance not only with an eye on competition but also to inform and educate its own employees.

The TCS head said that the company was beginning to disclose a lot more not only for the outside world, but within the organisation. ``That cannot be achieved by sending a house journal, it is a phenomenal challenge. We are creating focused positions in the organisation with external help to communicate a lot more quicker and effectively. We are very conscious of a transformation from an inward to an outward looking organisation and that the dissemination needs to be a lot more quicker and a lot more proactively but without compromising any of the fundamentals.''

The much talked about Indian software sector has seen so many players coming from behind and create a niche for themselves in both the domestic and international markets. But TCS has been among the pioneers in the field of IT in India and has ensured growth in both its domestic and international presence.

The company has consciously chosen to grow the domestic market simultaneously with its own overseas operations. ``If we had decided 5-10 years ago that we are going to do 100 per cent business outside India, our turnover would probably have been double of what we are doing today and by that time we could also have blocked every other software company from getting into the export scene. But a conscious decision was taken to look at your own market. To bring technology is a 30 year phenomena and not an overnight phenomena,'' according to Mr. Ramadorai.

TCS is focusing on the creation of value through its consulting practice. With the increasing commoditisation of skills (companies being charged man-hours on-site and off-site), the danger is of participating only in skills availability or distribution and that is only a question of price which then becomes the only differentiator.

``When you look at a value creation - you provide solutions that address business requirements. Here are the assets I will bring and we will quantify a return on investment for the service. Also, if we do not show you expected return on the investment, we are willing to take a reduction on fee or a penalty. That kind of confidence building is necessary. Then how you leverage the cost parameter into the whole process is essential. The solutions which you create must be replicatable across similar industries.'' said Mr. Ramadorai.

In this direction, TCS is, through its manufacturing practice, providing high-end consulting and IT-based solutions to a wide range of continuous process and manufacturing industries. Dr. Ravi Gopinath, head, manufacturing practice, TCS said, ``if you are moving up the value chain, there are several key practices and we have spent last 3-4 years, in analysing what are the key drivers for the industry. A lot of research went in not only in terms of technology, but in terms of understanding the impact of technology on the business. This has enabled us to have a sound understanding and we have been focusing on `demystification' of technology to the customers.''

The essence of the practice is to extract the knowledge capital from every project executed and capture it in a set of software components and tools so that those become the building blocks for the next project or next solutions that can be built for similar applications.

The company has already successfully done that for ACC's cement business and has branded the package CemPac. Other players like Grasim, Gujarat Ambuja and Lafarge have also used it. `` We are looking at expanding from one of Lafarge's plants to all three. The next step is to approach Lafarge on a global basis because today they are the largest cement manufacturers in the world. If we can get identified by Lafarge as their solution provider of choice in this space for energy optimisation function, that would be a tremendous validation of what we have created through a mix of industrial relations, R&D, componentisation and asset creation and finally creating a product that has very clear bottomline implications for the user industry.'' said Dr. Gopinath.

R & D focus

Dr. Gopinath stressed on the need for encouraging process industries about the benefits of technology. ``If process industries continue to operate with archaic technology - their operations suffer and people working there do not have a chance to see how technology is a key enabler. Companies which have made an investment in right technology have no problem in retaining or attracting talent. This is what we are trying to do through our focus in India. Our R&D centre applies R&D to the benefit of Indian industry and how areas like core engineering can become a vibrant input in the creation of relevant technology. Software is about 25 per cent of creating a solution. A good chunk of it is fundamental engineering and another part of it has to be sound economics and business sense. These have to come together and there are enough examples and more of our doing these things.'' said Dr. Gopinath.

In the last few years, there has been a virtual flood of companies offering computer-related courses for students. Mr. Ramadorai expressed his reservations about the merits of such courses. ``Unless there is a conscious effort to relook at the curriculum for these education, and simply turning out students like a factory talking about different expertise - I do not think that model will succeed. Purely training in C and C++ is of little use. That model has to change. Organisations have to look at their missions and find out if they are building relevant skills and creating relevant application domains with the curriculum that they have.''

There is also a need to use technology as a teaching tool -

``Diploma and degree courses have to change. In schools you can give computers, but unless the teachers teach subjects using technology as an enabler there is no point. The whole national literacy mission and the curriculum and schools missions have to be addressed together. You have to upgrade the capability of the teacher. Companies unfortunately sometimes get carried away by the short term benefits.''

Excellent infrastructure in China

China has been emerging as a global player in the IT and related fields and has been successfully attracting several IT big-wigs to set up shop there. ``Whenever we visited China, what has been an eye-opener is the infrastructure they have created. Physical infrastructure whether roads, buildings, access to places, telecommunication infrastructure, ease with which you can set up an organisation there some things which are unbelievable and how could they do it in such a short time, said Mr. Ramadorai.

How does India look at that? Can they be ignored and then keep doing what you are doing. The attendant risks are anyway going to be there. Do you collaborate with them and how - for the domestic market or outside? Inherent strengths could be their ability to relate to Korea and the Asia Pacific market. I think one has to deliberate. The essence of the message that is coming out is that some form of presence or collaboration is a must.

But a lot of patience and understanding of their laws, rules, regulations, IPRs have to be understood. You cannot go to China with the past in mind because they are looking at the future and are aligning a lot faster than anybody else. Some protection is necessary. Five or ten years down the line, they may say no foreigners are allowed and then what happens?''

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