Tata Consultancy Services’ recent strong earnings announcement surprised industry-watchers bracing for bad news due to global economic uncertainty. While revenue and earnings were each up by 13-14% for TCS worldwide, business in the eight Latin American countries in which TCS operates grew even faster, by 18 percent.
We asked Ankur Prakash, Vice President and COO of TCS Latin America, to describe the broad-based growth he hopes will lead the region to $1 billion in annual sales for TCS by 2015, and trends such as an increased move to outcome-based pricing.
Q: What geographies, services or vertical markets drove this strong Latin American growth this quarter?
A: Every single country grew, and every single industry we have a presence in. You can’t attribute it to one particular services line (such as business process vs. IT outsourcing.) This is the most important thing to me…everybody has to contribute to the growth. That’s the only way you have a sustainable model.
Q: What is your current mix of local versus global customers?
A: It is 65 percent local, 35 percent global, with steady growth in the local market. A lot of global customers are also seeing more value in (sourcing work from) Latin America. They appreciate what we have learned over a period of time…and are very, very keen to utilize it whenever there is a chance. We are seeing more and more traction (in our Latin American delivery centers) with our global customers.
Q: Can you identify any major customer wins for TCS’s Latin American operations?
A: No, but we have added new customers and (converted) potential customers…in the areas of financial services, in retail, in manufacturing, in government.
Outcome-Based Engagements
Q: Are you seeing a move towards more “outcome-based” engagements?
A: We have multiple (such) engagements…and we are seeing more and more interest from our customers as we shown what we are capable of delivering for them. We have a wide (variety) of parameters. For invoicing processing, it might be the number of transactions performed, or the number of transactions in a (given) period of time. Then you also have how much I can save for the customer, and I will charge a part of that cost. Then we also have how can I (TCS) work with you in a consulting kind of an engagement…for example, to increase customer satisfaction in a particular area, or to reduce the number of complaints you receive.
Q: Many global services companies are looking for “non-linear growth” – the sale of software or other products that increase revenues without a corresponding increase in head count. Has TCS rolled out any such offerings in the LatAm market?
A: One example is BaNCS, our banking suite of products (we have deployed) to customers across Latin America. We have at least five implementations, and at least seven in the pipeline. Along with the product comes a lot of services, in term of customization.
Business Outlook
Q: As global uncertainty continues, how is TCS Latin America positioned versus other geographies in the country to weather any uncertainty?
A: (Some things) are within your circle of influence, and some things are outside. The global economy is completely outside your circle of influence. You can take some measures, like ensuring you are close to the customer, and ensure you are as agile as ever and ensure you…make the right investments to ensure you are not only continually investing (in) the right infrastructure and offerings, but you also continue to invest in your people.
Q: And how is the business climate looking?
A: We are better off than we were a year ago in terms of sentiment. We meet with customers every day, and I don’t hear anyone saying they don’t have …projects. People are taking it slow…(they are) cautious but I think there’s growth.
Q: Is there more price pressure than a year ago?
A: I don’t think so. Even in good times, we have seen projects which we have won or lost on pricing. Everyone always wants to do more with less.
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