Setting The Pace

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02 December, 2014

N Chandrasekaran, managing director and CEO of TCS, has a passion for running marathons. Like most senior industry executives, he is on the road most of the time. But he ensures that wherever he is, his daily run isn’t missed. In fact, Chandra, as he is called, encourages colleagues to run with him, which he says “has helped in bonding better as a team”.

The ability to run marathons even while taking the team along has ensured that TCS, the largest Indian IT services exporter, continues to set the pace for the sector.

Even as competitors like Infosys and Wipro have struggled to adapt to a changing market and grow, Chandra has ensured that TCS, the elephant of the Indian IT services industry, can dance.

When TCS listed on the bourses, its revenues were barely comparable to that of Infosys and margins were lower. Today, the company’s revenues are close to twice those of its nearest Indian peer. Its employees number 3 lakh-plus, again twice that of the 1.6 lakh that Infosys has on its rolls. More importantly, it has the broadest portfolio of offerings in the marketplace. Its revenue mix from different geographies is also one of the best.

How has Chandra been able to pull off this exponential growth for TCS? He lists three reasons for the success of the company. “Relentless focus on the customer, excellence in execution and making investments ahead of the curve.”

While companies like Cognizant and Infosys have stationed their CEOs in the crucial North American market — which brings in the bulk of revenue for Indian IT companies — Chandra says more than mere geographic presence, the team at TCS has anticipated rather than merely reacted to customer requirements.

While all businesses are people-centric, TCS with its large employee base is more so than most. This year alone, it will have a gross addition of 55,000 employees. Keeping them engaged and motivated is not an easy task. Again, compared to the spate of high-profile exits at competitors, Chandra has managed to keep the core team stable. TCS also has one of the lowest attrition rates in the IT industry. It is also good at utilising resources to the optimum. Its employee utilisation stands at 85 per cent.

It is in making investments that TCS has excelled. Today, it has the most diverse of revenue streams among tier-I industry players.

One instance of an investment made with a long-term perspective has been its joint venture with Mitsubshi. While the Japanese IT market is second only to the US in size, Indian IT players collectively don’t even have a 2 per cent market share. Domestic IT players have struggled to crack the market despite repeated attempts due to the language barrier, the close knit nature of business houses and regulatory reasons.

TCS made initial investments with Mitsubshi in February of 2012. The JV, in which Mitsubshi holds 49 per cent and TCS the rest, has only now started yielding substantial results. The JV is indicative of the win-win partnership that Chandra has been able to forge with a local partner to address a specific market.

Sudin Apte, research director at Offshore Insights, an outsourcing advisory firm, says: “What has set TCS apart is the consistency of its growth story. It has the broadest of offerings in the marketplace. The largest player in the industry either matches or, in most quarters, grows at above-industry rates. That says a lot about the company’s leadership.”
To ensure that there is no direct co-relation between people and revenue growth, TCS has been investing in intellectual property (IP). Till date, it has applied for 1,804 patents and been granted 129.

Given its net sales revenues of Rs 64,672 crore in 2013-14, can TCS continue to grow at break-neck speed? Even IBM, the big daddy of global IT services with revenues of $60 billion-plus, is struggling with growth issues. How long can TCS keep its current pace?

Chandra, for one, believes the opportunities to grow even faster are aplenty. The marathon man has clearly proved that he is in for the long haul. Given TCS’s record under his leadership, few would doubt that.

(This story was published in BW | Businessworld Issue Dated 11-08-2014) ]]>