Focusing On Core Strengths Will Be Fundamental

Updated: Feb 27 2003, 05:30am hrs
A career spanning 30 years which saw the metamorphosis of Asias largest software company Tata Consultancy Services (TCS) into a global giant, TCS chief executive officer and Asias Business Leader Award winner S Ramadorai has been at the helm of the Rs 40,000 crore Tata groups flagship company spearheading it into new vistas of growth. Here, he takes a break from his hectic schedule to share his insights in an exclusive interview with Maithreyi Seetharaman, Kavita Nair and Namrata Singh of The Financial Express. Excerpts:

Since its inception in 1967, TCS has come a long way. How has the road been thus far
The road has been good it has had its challenges. The road has built a lot of professionals, set the direction for the information technology (IT) industry and created an identity for this country in the IT arena. We can proudly take credit for all these things of shaping this industry and taking it forward to its full potential the IT services or enabled services. We will accelerate this in the future as competition will be intense.

What are the challenges you are now facing
How do we compete in a global market How do we identify the good prospects How to identify ourselves with the customer Why do they see you as the right partner Why do they see you as the right organisation to be aligned with Are their business priorities understood by you They will do their homework. They will see the value creation price is not going to be the only factor. It (projects) will not come to you because you are the cheapest, it will come to you because it addresses numerous points. We have the capability to relate to business, we have the capability to address all the issues that are business related, that are risk related.

What strategies have you adopted in the face of rising competition
Competition is intense. Today, your worst fear is competition. But you cannot be worried about competition because, what you need to be focussed on is what you are good at. If you spend your time worrying about what your competition is doing, without doing something, it will get worse. Focussing on our core strengths and keeping leadership position in force will be fundamental. Which means, recruit the best, train for excellence as a professional the investment must be there in training people, new technology with investing in technology on a continuous basis. Do software R&D which is very fundamental. If we have to keep the leadership position at what we are good at, we will continue to do that. To me if my core is this, and within that core I am making those investments and making them fearlessly, I know with the right people, the right technology, the right training, the right approach, I will maintain my lead.

What impact can the concerns on laws against outsourcing in the US have on TCS
These cycles will be there always where companies are shifting work or companies are doing work wherever they find the talent. There will be noise! There will be more noise when market conditions are different. But then, one has to live with these problems. If you just drop productivity or quality, show a cause which is not better than what it is or you lose a job and that goes to China...make a noise that someone has taken our jobs...then go out of circulation. In manufacturing, the same thing happened. Everything shifted to Asia Pacific, East Asia, Singapore, Malaysia, Japan.

Jobs shifts will not happen where talent is available, job shifts will happen to where productivity is highest at the right price, job shifts will happen where you are creating a market. In a global scenario these are the fundamentals. Over the next 2.5 years our focus is India.

How are the US or other countries foreign policies going to impact TCS and the Indian IT industry
How can anyone make a policy saying that I cannot go and set up a development centre away from my office No country can. Believe me, with global competition no country can have a norm saying that I cannot set up a development centre in India. Only state governments like New Jersey and Virginia are saying that because politically they have to make some noise. I am going to take care of my constituency, if I am to get elected and in that respect they are right to say that a private sector in my state cannot go ahead and set up operations somewhere else, cannot relocate from location A to location B.

But do they have the influence to make it a federal policy
No, the companies of the world also have a way to address this by saying that this is a question of survival.

But if the talks reach the Senate level, what action could possibly be taken
We have to compete. To me, we have to compete with the right product at the right price. Like I said, artificial barriers have to be fought with the government, with the WTO as a forum. With the help of Confederation of Indian Industry and Nasscom, we will explain our point of view.

Have governmental policies changed over the years, or do they still need to be changed towards the IT industry
Its not lack of policy or that we are waiting for something from the government. To us, any policy should be very clear, and should be implemented. Any policy should bring the same thing to all of us. It has to be that simple. Everyone has different interpretations and all of us think differently that is the problem. When we talk of communications and I take a link when I pick up the phone I should get a dial-tone. If I connect my PC on a telecommunication line, I should be able to send my mail right away. For example, a line from here to VSNL or tomorrow from here to any service provider and I cant guarantee 100 per cent reliability, whether it is the government or the private sector, I will have to make a noise. This is where governments are in a position to give those solutions. Governments, policy makers all have to work together. We made a lot of changes, yes. We had a lot of problems, yes. More business will come if ease of doing business in this country is there...yes! India is very clearly in the radar map of the global market. But is China getting more attention Yes! Is China getting more FDI Yes! Can we get more Yes! That is what all of us have to work together for!

Have any suggestions been made to the government in this regard
We dont make suggestions. We tell them what concerns us, what worries us, what does it mean for the industry, concessions, tax. What should we do in the WTO forums Ease of access. One, we may be complaining here, but to me if movement of professionals is restricted by artificial barriers like visas, delays in visa thats where we have to seek the help of the government. If another countrys products and services can come here then, I should have the same level of access. This is where the government can play a very critical role. The government with industry can participate very effectively.

With the China factor, how do we get India on the same level in the consultancy services business
We have a presence in China, that is the first step. I may do some work out of there using the Chinese nationals, then I may do things here that is not possible with the technical capabilities of the Chinese. We will do combinations of both. It is very necessary to do this, because its not just China, there is Latin America, Europe, Asia Pacific, the US.

Is the lack of brand awareness a definitive problem for the company Is anything being done to address the issue
Our delivery excellence continues to be very critical. Otherwise, if the brand does not deliver value then there is no product. We have to supplement it. If people look at TCS and look at a branded product like manufacturing applications what does it stand for They will have the brand recall. It is not like a retail or consumer product. Software services by definition are a promise which you have to deliver. You are making a promise that you will build a system that will fulfil certain criteria. If this promise cannot be delivered and it cannot be verified, then the brand that you claimed is gone. TCS as a name and as a mind recall is very important. Strengthening is required. We will have to do a couple of more things than we are doing today. We will do that in alignment with the business.

What is the TCS view on mergers and acquisitions
We acquired CMC. The integration is on. We are building the scale right now. We will not dilute the impact by buying another right now. You must deliver what you promise. Just because a Mr ABC is acquiring something, we wont get scared. We know that by acquiring we will acquire problems also. Does that mean we will not acquire No! Does that mean we will look at acquisitions Yes! Acquisitions come by us mapping as a chain and saying that we have to look at these areas. Acquisitions will come by suddenly finding a deal, the acquisition will come by investment bankers saying that the greatest deal in town will happen. You cannot map your future for the next 5 years. You can just about map for the next 2.5 years. Beyond that if anybody claims that I can see the writing on the wall, it is just not right.

What is the status of your impending IPO
We have not yet decided on the bankers. With regard to the journey we are seeing the court process, we are seeing everything happen.

Is it going to happen by September
No, no decision has yet been taken.

What will be the status of CMC, post TCS IPO
CMC will continue to stand as an independent entity. CMC is a listed company in its own right. CMC will leverage the strengths of TCS and TCS will leverage the strengths of CMC. We have a joint marketing strategy. Just like I can go with an IBM or an HP I will go with CMC. We will grow together. We will let them grow in the areas that they are good.

And if they are that good we will help them to grow in the international field, where CMC has definite strengths in certain areas like ports and railways.

Post listing, will TCS merge CMC with itself
We will see.

What is the status of the talks to merge all of Tata groups IT companies under the TCS umbrella Is it possible
Yes, it is possible. Are we collaborating Absolutely yes! Are we taking the strengths of each of these and utilising in certain solutions or going to the market Yes.

Is it good
Absolutely yes! If I take a primary bid as TCS, I will face that particular area as a TCS face just like I said..in the railways or in transport or in ports the face will be of CMC and if TCS has to support it, so be it.

This is the level. Infotech is a listed company, so is Elxi*, TCS is not a listed company, CMC is a listed company. Each has its own product profile and we collaborate a lot. We cannot talk about it today, because it is a theoretical exercise. Is that the direction we will ultimately take Makes sense! Have we taken a decision No.