Although the global economy is still rocky, with few bright spots, you would never know it based on the earnings results of service providers like Tata Consultancy Services (TCS), which beat analysts’ expectations in its latest quarter with revenue growth of 13 percent and net income growth of 44 percent.
TCS Chief Executive Officer N Chandrasekaran cited “well-rounded growth across industries and geographies” and said, “Our execution excellence is winning recognition and our service offerings remain relevant for customers.” In addition, he said, “Our investments and capabilities make TCS extremely relevant to participate in imagining and co-creating this future with our customers.”
Latin America was a strong performer for TCS, with 8.3 percent quarter-over-quarter growth. Like Chandrasekaran, Ankur Prakash, COO and vice president for TCS Latin America, stressed the company’s devotion to both business fundamentals and innovation.
Global Delivery Report asked Prakash about the Latin America region’s performance. Here are some excerpts of our conversation:
GDR: Is the strong performance in Q3 a surprise, given that the global economy is recovering so slowly?
Prakash: Growth, no growth. Crisis, no crisis. Whatever you want to call it, you cannot leave the fundamentals to runing a company behind. I think that has let us show that if you run a company right, you can have the right results. The strategy we developed and put in place for being closer to our customers is yielding results. There is no rocket science in this. It’s doing the right things and doing them repetitively.
GDR: Is TCS planning any new investments for Latin America in the coming months?
Prakash: We have a presence in eight countries and are close to 10,000 people across the region. We are not a manufacturing company, so we will not do a huge amount of CapEx. That said, we are always investing in human resources, always investing in training, always investing in expanding our global delivery centers. We make sure we are up to the mark in terms of our technology and infrastructure, which supports us to executive mission-critical projects for our customers.
GDR: I know TCS stresses its human capital, and I believe this is especially true in Latin America. Why is this so important?
Prakash: It is one of the reasons we are where we are. In addition to doing recruitment from universities and catching them young, we ensure our employees are completely up to date on the technologies and projects they are working on. They also are up to speed on the businesses of our customers, so they can speak the same language as the customer. We want them to speak the same language in terms of business, not just in terms of technology.
On Domain-specific Offerings
GDR: Development of domain-specific offerings seems to be a big trend. How does TCS develop those kinds of solutions and present them to clients?
Prakash: Development of domain-specific offerings happens primarily in India, with a lot of input from all of our markets and regions and employees. We invest a lot of effort in ensuring that people get together during our innovation competitions that we have across the world. That way we get lots of ideas that are substantial and usable and add value to the customer. All of this happens as a process.
On a day-to-day basis, we encourage our employees to put in their ideas and to talk to each other and not to be confined by the boundaries of a country or a market or a region.
We want to be seen as a flexible company in front of the customer, who will come up with innovative ideas that will take the customer where they want to go. That is very important to us, and we don’t want to give up that particular spot to anybody.
GDR: It’s interesting you mention the processes TCS has to encourage and capture innovative ideas. One of the nagging complaints about some service companies is that they aren’t doing enough to help their customers with innovation. What’s your take on that?
Prakash: What is innovation? According to me, it is something that is feasible to be implemented within a customer, or within a business or an industry. And it must yield results. You may be able to innovate something that is absolutely out of this world — nobody has thought about it — but if it is not commercially viable, what good is the innovation? It’s no good at all.
Always we have to keep in mind that innovation has to come with the feasibility of getting it constructed, getting it made and getting it implemented in a way that adds value to the customer and to the end customer. It can be a process, a product, a platform, a technology – it can be anything. We put a lot of emphasis and focus on this. Things like the competitions, they are just one step in getting ideas good enough to be invested in and implemented.
On Latin America’s Love for Tech
GDR: Are there any notable regional differences in Latin America that affect how TCS conducts its business there? I believe many of your customers there are local or regional vs. global companies?
Prakash: In Latin America, approximately 70 percent of our business comes from local and regional customers. But global and regional is a misnomer. I can show you companies based in Latin America that are bigger than some of the global companies. People want to classify them, because traditionally that is how it has been done, but for me a customer is a customer. If I talk to a customer and understand their requirements and know what I need to work on, nothing is different – except of course, the language.
What we’ve seen over the last decade in Latin America is that Latin America customers have a high affinity for adopting new technologies and platforms. That is good for us. We offer a good implementation so the customer can take advantage of that.
But of course, technology is just an enabler of business. Whether you are looking to increase your market share, or to decrease your time to go to market, or to improve your customer satisfaction, technology will just be an enabler. We’ve seen that, many times, going in front of the customer with a simple approach has worked best for us.
On the Cloud
GDR: I’m hearing a lot about the rapid uptake of cloud computing. Are TCS customers in Latin America asking for solutions that incorporate the cloud?
Prakash: When we go to the customer to determine the business solution, the way you present it is very important. You must understand what they want and then you can come up with your different ideas, whether it’s cloud or mobility or Big Data. The customer will appreciate it more because they know their business very well. You are the one who is the catalyst, to provide a technology or a platform that will be of use to the customer.
GDR: Some analysts say that cloud companies like Rackspace may be new competitors for companies like TCS. What do you think?
Prakash: I respect the competition. Competition is good for the system. There are companies that are better than us in some things. We are better than many of them in a lot of other things. We want to continue to be agile and close to the customer. That has taken us to where we are, and I would like to grow on that.
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