My son only reads on Kindle,it amazes me
Amidst all the gloom of the global financial crisis and the slowdown back home,Natarajan Chandrasekaran believes there is enough of an opportunity for the Indian software services sector.
Amidst all the gloom of the global financial crisis and the slowdown back home,Natarajan Chandrasekaran believes there is enough of an opportunity for the Indian software services sector. While Nasscom is looking to temper its growth estimates for the IT sector to around 14,the MD and CEO of Tata Consultancy Services feels his company could do better. Indeed,TCS has reported a strong set of numbers for the December quarter,endorsing Chandrasekarans confidence. The TCS chief,however,cautions that India shouldnt be complacent,else it will lose out to countries such as the Philippines in the BPO space. He tells Shruti Ambavat and Shobhana Subramanian that India should see innovation in technology soon.
Corporates in the US are flush with cash,so how are you seeing the growth in IT budgets?
The outlook is quite good because there is definitely a propensity to outspend and outsource. The outcome for the corporates may be different; it could be from a cost point of view or from a growth point of view,but there is a spend. Even in Europe,about which there is so much concern,we have managed to sign on quite a few deals in the last six months; for us,it has been very very good. So much so that we expect our growth in Europe this year to be better than that in 2011-12. Business is good across Europe and not just in Germany or France.
How is the Japanese market shaping up?
For us,Japan has been somewhat slow as a country,although theres no shortage of opportunities. But,were hoping to deliver growth this year. In fact,were consciously attempting to focus on business in the countries where we are making investments; we first need to make sure they grow at the company average so that they dont pull down the mean,and then we will take it from there.
Have there been any changes in the way clients are viewing vendors in the last six months or do they look for the same set of competencies?
Yes,clients are clearly looking for a lot more flexibility and a lot more partnering; its increasingly moving to a partnership approach. Nowadays,they are willing to share with us many more details about what their challenges are. It is not like: I want this done,just go and do it. Its more like: these are the problems we are facing as a business and this is what we are trying to do. We are trying to get our cost structure to a certain level or we are trying to get our operating expenses from here to here. Or we are trying to launch these kinds of new products,and what can you do? This doesnt really translate into better profitability for us; its simply that the dialogue has changed,and if you have the right capabilities,probably you can do more.
Are clients looking to have more vendors per project?
Those patterns have not changed. Some prefer single sources,some like multi-sourcing. If it is a large contract,then obviously they prefer multiple people. And if they are already using multiple people,they want to consolidate so that they can get economies of scale.
TCSs US revenues have grown 30 year on year. What has led to this growth?
We see across the board growth in verticals,including BFSI,although that may have been slightly lower than the company average. We have done very well in retail,manufacturing and hi-tech industries. Also,we have taken on digital initiatives like multi-channel,infrastructure optimisation and also some companies have gone for synergies between IT and operations. Last year,there was all-round growth. But while those like retail,manufacturing,hi-tech,energy,utilities and travel have grown above the company average,telecom was much below average. This year is going to be different because we have had good deals in telecom.
Is there any specific space within IT where you see immense potential,and how is TCS positioned to capture this?
That area I would say is always that of new technologiessmart phones,mobility,cloud and big data. We already have a presence here and made significant investments here. In fact,some of the currency benefits we got were invested in all this.
Instagram was recently acquired by Facebook. What are your thoughts on these new products?
They are more consumer-oriented products and demonstrate the power of technology. The way technology is evolving today,new things are coming up but not exactly on their own; there is lot of interplay between technologies,one is derived from the other. This interplay in technology has become very powerful. The opportunity for us is,how do we take that to enterprise? How do we leverage these technologies for ourselves and apply them? For us,its more a matter of applying those technologies rather than creating them.
So,the advances in technology in the consumer space are much faster than the changes in the enterprise space…
Absolutely. And thats because the consumer market is much bigger. Corporates may have cash,but the due diligence process is longer. Tomorrow if I want to buy an iPad for myself,its a quicker decision; for a company,it is a big decision in terms of investments because it would have already made investments,which it would need to review and perhaps write off. There are security considerations. But all these consumer products are game-changers. My son,for instance,only reads on Kindle; it amazes me. Even I have shifted to my iPad for newspapers and magazines but I still like to buy books. There are some innovations that will happen directly in corporates,but production of technology in the consumer space is faster. Take the iPad for example. It is an entertainment device,a media device. Its not for productivity. If innovation is for productivity,then it has an impact on enterprise immediately.
How much innovation is happening in India? Are we as a nation spending enough on Ramp;D?
If you go to these start-up shows,and take a look at these companies,there are lot of small companies doing a lot of cool stuff. But the question is whether these are being done on an industrial scale and whether they are making a big impact. We probably need a push and the technology needs to be adopted in a big way; only then will others be encouraged. In short,you need some big successes. Everything cannot be a success,but you need a poster child. As for funding,while companies like Intel and Cisco may have allocations for Ramp;D,innovation in technology needs to be viewed from a much broader perspective. And we cant just have one Instagram; we need innovation in every area because we have problems across sectors,whether its energy or water.
And do you see it happening in India?
On the technology front,there are several start-ups; people are trying but it has to pick up momentum. I think it will happen. Some big products will come out of India,I hope in the next five years. You will get a big product idea from India. One reason why this has not happened so far is because there isnt much of an entrepreneurship culture here; typically,when we graduate,we pick a up a job,so the drive to do something on ones own is missing. That culture has to evolve and we need to have the kind of ecosystem that there is in the Silicon Valley; in fact,apart from the Valley,there is little innovation elsewhere. Also,it is a question of economic maturity. Take education,for example; people want to study computer science because of the job opportunities. Kids opt for areas that promise them jobs; they rarely study what they like. When the economy reaches a certain level of maturity,there will be more people doing what they like. And thats when it will happen.
Countries like the Philippines are progressing very fast in spaces like BPO…
It goes back to the same point. We need stability in the way we look at tax regimes or SEZs.
You cant have surprises. There are some issues that we have expressed to the government and exactly the same point is being made by others,too. It is very important for India to stay competitive and for that we need to have a stable tax regimes.
Are we losing out to countries like Philippines?
Yes and no. The straight answer is that if we are not competitive and if we keep creating more uncertainty we will lose out. In the BPO industry,especially in the voice segment,Philippines has taken the lead. The scale in India is pretty high but we need to stay competitive.
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