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TCS: Making Sense Of It
He has taken TCS well ahead of local and global peers in growth and valuation and is now focusing on the digital space
Photo Credit : Ritesh Sharma
In 2009, when TCS announced its new chief executive officer, S. Ramadorai, the incumbent CEO and key architect of the software behemoth, had said: “Leadership decisions are not taken by flipping a coin.”
This remark reflected his certitude and the company’s consensus on “young, energetic and confident” Natarajan Chandrasekaran, who was chosen to take the TCS legacy forward.
True to his mentor’s intuition, the new CEO pushed boundaries and inspired his leadership team to take the $7 billion-Indian IT giant well ahead of local and global peers in growth and valuation.
Between 2010 and 2015, TCS’s revenue grew from $7.6 billion to $16.2 billion. Of the $8.6 billion incremental revenue, $4 billion came from new clients and $3 billion from selling new services to existing clients. The IT company’s stock appreciated three times during this period.
Chandra, as he is known, is one of the most experienced TCS-ers; he joined the company in 1987. He started as a trainee after completing his postgraduate degree in computer applications from Regional Engineering College, Tiruchirappalli, and never applied for another job.
Chandrasekaran, who hails from a small Tamil Nadu village called Mohanur, studied in a Tamil medium government school and tried to help his father in farming but soon realised it wasn’t his cup of tea. The frugal life of a villager and the aspirations of a professional helped him climb the corporate ladder.
His growth in the organisation was slow and steady. The 30 years of experience in the same organisation helped Chandrasekaran grow as a leader. Add to that the fact that he’s extremely people-oriented and knows at least five thousand of the 3.4 lakh odd TCS employees by their first name.
Chandrasekaran, who was instrumental in growing TCS’s high-profile clientele base across markets, was elevated to the post of executive assistant to Ramadorai and later rose to the position of chief operating officer before becoming CEO in 2009.
As a leader, he doesn’t believe in micromanagement, but keeps himself aware and alert of every happening in the business, be it a client presentation or something else. TCS staff often speak of an incident where a marketing manager in the United States received a text message from the CEO at Indian time 2 am, reminding him about a client presentation next morning.
Industry insiders and analysts say that Chandrasekaran is more aggressive compared to his mentor. An avid marathoner, he gets the best out of the teamwork.
His first strategic move was to create a strong second-layer leadership, empowering them to take their own decisions by creating different verticals with almost full autonomy on profit and loss. This way, he minimised the number of people directly reporting to him. This was an important shift in the management model that was traditionally followed in TCS.
Secondly, the IT company moved into the fast-emerging digital era by identifying this market transition for IT companies much before local peers such as Infosys and Wipro.
In a recent interview, Chandrasekaran said: “We began investing in digital technologies and their application in enterprises at an early stage, and today TCS is partnering with clients in their ‘digital’ transformation and re-imagination journey.”
Industry analysts are upbeat about TCS’s current strategy to focus on the digital space, which they feel will enable its transition to new market trends.
“TCS will successfully navigate the trends of digital and automation while continuing to gain global market share in a fragmented market,” says Sagar Rastogi, equity research analyst at Ambit Capital.
The company has already gained better market share in the digital space.
“Out of the $8 billion turnover that TCS gained during 2010 and 2015, at least $2 billion was contributed by digital services projects,” says Sanjeev Hota, vice-president, institutional research, at brokerage Sharekhan.
TCS lags in terms of strategies for acquiring digital capabilities by investing in startups, an area where its local rivals score. This could well be a test for Chandrasekaran’s leadership going forward.
But the marathoner is in it for the long run.
“The company is tracking over 1400 startups globally and is engaging with them,” he says.
[email protected]; @unni_ch