TCS chieftain S. Ramadorai explains how the company nurtured the ecosystem that has enabled India to make hay in the IT sun, and what it will take to continue shining in the future

S. Ramadorai has become accustomed to winning awards, but that has not dimmed the significance and meaning of every new one he receives, especially if the honour is the Padma Bushan. The commendation, bestowed on him this year, is for Mr Ramadorai a recognition of Tata Consultancy Services, the organisation he heads, and it's many achievements.

Mr Ramadorai has been with TCS since 1971 and its chief executive officer since 1996. In a freewheeling interview with Christabelle Noronha and Sujata Agrawal, he revisits the milestones on his long journey with TCS and shares his vision for the company.

You have been with TCS for more than three decades, during which the company has taken immense strides. Did you think, when you joined TCS, that it would grow to the size it has?
When I joined TCS in 1971 there were less than 100 people in the company. It was like a start-up organisation and we were taking small steps to create the IT industry in India. No one expected us to grow so large. But we had a sense of commitment and the passion to work together to make a difference.

We believed in ourselves and in what we were doing and that is what drove us. The journey was unpredictable but the Tata name gave us confidence. The most important thing was we had opportunities and there were people [in the Group] who supported us.

How did TCS grow to create the industry and become the leader?
When I look back, I think the reason TCS grew is because we put certain milestones along the way. It was not just about numbers, where we said let's make it a 2,000- or 7,000-people organisation. It was also about setting up systems, processes, procedures, training and development. We worked on these to enable us to scale costs. And we understood that each of these areas was a challenge — a growth opportunity and the next stretch target to cross. We created a mindset to focus on creating an IT ecosystem.

The only way to realise the full potential of the organisation was through the application of IT within the company. So we put in the critical enablers in terms of empowering people, having a data-driven company and collaborating. The models changed as we scaled up each level.

We proactively went about recruiting people, setting up R&D facilities, building customer contacts and growing through geographical expansion.

TCS created the IT industry. Every initiative that is being scaled up today, whether it is an IT services organisation, a back office BPO type of organisation, a captive delivery centre for customers, joint ventures, distribution of products and hardware — it was TCS that put in the enablers.

TCS distributed Burroughs computers and Tata Burroughs was born. We distributed Oracle computers and software in India. Subsequently Oracle set up their base here. Later TCS brought in ERP software, data and database type of service, and made investments in technology. We did projects in the areas of systems integration, share registry, mutual fund processing, back office processing for the financial services industry. People look up to TCS because we created the industry and developed people in terms of competencies. Some of these people have set up their own organisations.

Coming to the present — you expect to achieve sales of $3 billion by March 2006. Which are the areas that have contributed to achieving this milestone?
The first is our IT services which is a critical component. Within IT services there are some clear areas such as banking, financial and insurance services, telecommunications, government, manufacturing, retail, transportation and utilities. Then there are new areas like life sciences and healthcare. And finally there are areas such as BPO and infrastructure services. We have started doing large outsourcing projects for ABN Amro, Tata Teleservices, National Stock Exchange, National Depository Fund, State Bank of India and Indian Bank. These projects in India and worldwide will help us reach the $3-billion figure.

BPO and infrastructure services have not been TCS's strengths in the past. Is there an aggressive strategy to scale up in these operations?
Earlier all our services were integrated under the overall umbrella of IT services. We are now trying to separate BPO from mainstream IT services and brand these services. We are focusing on platform-based BPO, providing operational support and services to process areas, whether it is credit card processing, drug discovery or data mining, claims management in insurance, or in the life and pensions areas (through our partner Pearl in the UK). We will push growth in these areas so as to be visible as a brand and as a strategic player in transaction-based BPO rather than voice.

In infrastructure we are seeing beyond what TCS can do in terms of collaboration with VSNL. With its steady growth and acquisitions, VSNL will enable us to get a global footprint in areas of disaster recovery, back-up data centres, network management capabilities and IT applications. We are looking at a spectrum of IT and infrastructure services either separately and / or jointly with entities like VSNL.

Will acquisitions continue to play a large role in TCS's growth?
Acquisitions will be a key component in TCS's growth for many reasons. The first is our focus on globalisation and having an international and multi-cultural workforce. Secondly, M&As enhance our ability to deliver from any part of the world using local talent, which is what the market needs. Thirdly, they play a role in building the TCS brand. What does TCS stand for? TCS is a global company headquartered in India. This is very clearly our new positioning and we are building this position through branding and marketing efforts, and through local recruitment in the geographies in which we operate. Our acquisitions will bring in professionals from other nationalities.

How will this international workforce be integrated and motivated to become brand ambassadors for TCS?
TCS has a global workforce of 5,000 professionals and the number is growing. The challenge is to ensure that every employee in any part of the world has the same passion for TCS as any employee in India. We need to culturally integrate them so that they see one organisation, one value system (the Tata value system), believe in it and practice it.

TCS has a great facilitator in Maitree (a support organisation for TCS employees and their families), which has local chapters across the globe in the cities we operate in. Maitree engages employees on different planes. It helps create a strong awareness of our organisational culture and Tata's value systems. Participation is voluntary but it has become a very good enabler for us for employee engagement.

Within TCS the way we connect with our people is very critical. We communicate in multiple ways — through Ultimatix (the intranet), employees management programmes, one-on-one discussions, open house, chat sessions and workshops.

The communication is enhanced year-on-year. Our managers aim at meeting more and more people every year. These are not structured five-minute meetings but an hour or two of free- flowing dialogue with groups of 25-30 people. We understand that ideas can come from anyone in TCS, anywhere in the world. So we discuss opportunities and ideas, talk about Vision 2010, the new areas we can look at, competitive threats.

TCS is also working at building relationships with academia. Are you able to attract talent from institutions and universities abroad?
A crucial role for our HR is to build a strong relationship with academic institutions abroad just like we do in India. We are proactively approaching academia and have started talking to heads of academic institutions in the US, UK, Hungary, Canada, Australia, and Singapore.

Additionally, we are making ourselves visible at universities with pre-placement talks and collaborative programmes in management and technical schools where faculty and students are involved in joint research. We have been able to go to business schools like Harvard, Sloan, Wharton and NYU.

Many students from Europe, Africa and South America are joining us through the AIESEC internship. These students spend a year in various departments either in India or abroad and some of them join TCS after their internship. Today our focus is on recruiting people who are aligned with our practices. They may come from consulting, marketing, banking and financial services, retail or insurance industry but they must have a delivery mindset rather than a focus on pure strategy.

How is the company gearing up to meet the goal of 'Vision 2010'?
Our first challenge was to get our employees to understand what it really means: is it about revenues, number of employees, customer satisfaction, productivity, profitability, employee satisfaction, delivery excellence, etc?

We spend a lot of time explaining these parameters and making people aware of the areas for improvement. It has helped us get credibility as employees bought into the vision and became passionate about it. Otherwise it would have remained merely a slogan without a purpose.

Today all our employees are aligned to the vision. The internal framework has been mapped onto the Tata Business Excellence Model framework for greater clarity. But more importantly, we have been able to work on a combination of vigorous processes and become innovation-led.

It is innovation that drives our growth. In our business there is constant flux in technology, markets, business models, competency requirements and if we don't encourage innovation, we will not grow. Innovation is what will lead to accelerated growth.

And this holds true for the industry as well. As chairman of NASSCOM (National Association of Software and Service Companies), this year I am pushing for innovation in a big way.

Do quarterly targets put pressure on you to think long term?
It does put an enormous amount of pressure to think long term but it is in line with our Group's philosophy and it gives us a guideline. But Vision 2010 is not about quarterly results. It is a long-term, well-articulated plan. It is for people who believe in us. If you look at the history of the company, I think people would agree that TCS does what it says it will, and does better than what it says.

Sixty per cent of TCS's revenue comes from the US market. Do you see this trend continuing or are you looking at growing in new geographies?
The US market, based purely on strength, will always be the largest market not only for TCS but also for the IT industry. But there are other markets, like Europe, which have a large base and spends. Europe is going to grow aggressively because it now realises that it needs to source talent from other parts of the world to enable it to be globally competitive.

The third market we are looking at for very aggressive growth possibilities is the Asia Pacific region (APAC), including China and India. India, like Europe, has realised that it needs technologically enabled organisations in order to be globally competitive whether it is in the area of manufacturing, telecommunication, retail, healthcare or even government agencies.

The TCS model in China has been quite successful. Will it be replicated in any other countries?
We are already operating in Brazil on a similar model where we have a local partner. We may have to replicate it in some other countries as well, probably France. The markets in France and Brazil are fairly large because of the IT spend and the potential growth opportunities, but one needs a local partner. In other markets TCS can exist on its own as an independent organisation with local recruitment, marketing and sales, and delivery capabilities.

Tata Infotech was recently merged with TCS. What steps were taken to ensure a smooth integration?
We first created a framework for the integration process. Two cross-functional teams, one each from Tata Infotech and TCS, were set up. Their mandate was to ensure that they understood the processes existing in the two organisations and then map each person's competency to a function that he or she is going to perform.

One of the things that can go wrong in such cases is that people can develop incorrect impressions if communication is not proper. Also, if mapping is not done correctly, people can say that their competency has not been taken on board.

The mapping criteria we adopted included the person's competency, role, background experience, potential, and where he or she can enable organisational growth and take responsibility. This was done through interviews, collective dialogues, discussions and one-on-one sessions. In some cases, I met people too.

The whole process was communicated in a very transparent manner across Tata Infotech by the integration team. A website was created that allowed people to pose questions or air their opinions. People believed in the process because they were part of it throughout.

Mapping helped employees clearly understand the role they were going to play post the merger. After integration people will be evaluated on performance and not on whether have come from Tata Infotech. When we recruit people from outside we evaluate them on their performance not on how long they have been with TCS. That is what matters and we need to keep reinforcing this because when a good professional is neglected, it is the company that loses.

We think it the mechanism we adopted for integration is one of the best, because the engagement, the transparency and the communication were of a very high order. We have shared it with senior leaders in the Tata Group. We feel that the framework can be used, if required, for other Tata companies and also for outside companies.

Do you see other Tata IT companies also coming under the TCS umbrella?
The other Tata IT companies have their own boards and will make their own decisions. We have not had any discussions with them on the subject at this stage. But we do talk to them about enabling competencies, if required, for some projects. Similarly, there are areas where they find TCS is the right organisation for collaboration.

What is your outlook for the IT industry, domestic and global?
Today, exports are about 18 per cent. We have projected a turnover of approximately $36 billion by March 2006. This will include hardware, IT services, BPO, engineering. The figure reflects 32-per cent growth over last year.

Between now and 2010, we are expecting growth of about 28 per cent in the domestic market year-on-year and about 32 per cent growth in international markets. The IT industry, at an overall level, has been projected to grow from 30 to 32 per cent. This means it can grow to be a $60-billion export industry. In addition, through innovation and R&D investments, the industry has the potential to look at a turnover of another $10 billion.

These growth figures will offer potential employment opportunities to about 2.3 million professionals, up from the current 1 million professionals. This requires investments in education and infrastructure building. We recently presented a report to the employment minister, the Planning Commission and the IT minister on the growth potential and the industry requirements.

Where do you see these 1.3 million professionals coming from?
They will come from various tier-1 and tier-2 cities such as Aurangabad, Bhubaneshwar, Coimbatore, Chandigarh, Kanpur. We are already trying to enlarge our recruitment base and go to other institutions, beyond IITs. We are looking at investing in institutions that are being upgraded.

Are fast growing salary costs affecting your competitiveness globally?
Increasing salary cost is the reason why you go to other geographies — China, Latin America or tier-2 in India. Wage difference is addressed through productivity. Today, if the company can do a project with 100 people, the next question to ask is if it can be done with 20 people. So magnitude of productivity improvement using intellectual assets of TCS and repeatability of those assets and number of situations within the same industry or other industries - that's where the R&D efforts, productisation efforts and framework enablers will go. Productivity is very clearly going to be the second dimension in addition to location choice within tier-2 cities in India.

The third dimension is the differentiators through the business model itself. When we see software as a service, as a platform through which you deliver, but you charge on the basis of usage, then you increase your volumes. BSNL recently announced OneIndia (STD calls of one rupee per minute anywhere in India), which will result in an explosion in volumes of consumers. People who could not afford a telephone call will suddenly start communicating with each other. You need to start thinking about the content that can be pushed to these people.

There will be dramatic changes in the way people will be using technology-enabled services. A company like TCS has a great role to play and a great future if you look at market creation in those areas. These are fundamental ways to disrupt the business. If we don't disrupt it, somebody else will.

Has TCS ever thought of setting up a training institute?
This is an area that we are now exploring after the recent Tata Infotech merger. The training needs which we have projected are critical for the industry as a whole. TCS has internal training programmes which are constantly enhanced. We also interact with academic institutions continuously and enable change in their training curriculum on a need basis. We will be looking at externalising TCS training content products in the market.

What do you see as your greatest accomplishment?
When I look back, the greatest accomplishment for me, professionally, was building a world-class institution [TCS] and, in the process, grooming a large number of young professionals with the capability to build institutions of their own. On the family front, there is a sense of satisfaction at seeing what they have accomplished in spite of the little time that I have spent with them. The world has changed and the separation between family and work is very blurred today. We have to make time, whenever convenient, for our work and family needs.

How would you describe your style of management?
It's very informal and not at all hierarchical. I am very involved with the people who work with me. I am easily accessible and connect to the people frequently in a collaborative way. It is the younger people who grow in confidence, have the ability to look at every day as a challenge, and are able to get a sense of accomplishment which is far beyond what can be described. I feel I am very professional in my approach and that's what's needed in an organisation like TCS.

How would you define a good leader?
A leader is one who enables other people to give their best. He does not take credit for everything but gives credit to the people who make things happen.

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Uploaded on June 1, 2006