S. Ramadorai, the CEO of Tata Consultancy Services, articulates what it will take for India’s software industry to make the transition from low-end players to high fliers

I have great pleasure in welcoming you all to the third annual conference of heads of academic institutions organised by Tata Consultancy Services. This year we extend a special welcome to representatives from institutions specialising in management education and research.

The theme for our conference this year is ‘Cooperating to fulfil India’s potential in information technology’. India can fulfil its potential in infotech only if we make the value transition from low-end software services to higher-end consulting services, product-based services and products.

I use the term value transition to describe a subtle shift in the way the Indian software industry perceives itself and, indeed, is being perceived by others around the world. I would like to share my thoughts on the challenges faced by TCS and other players in the Indian software industry, and how TCS looks to you, the heads of academic institutions, to help us make this transition.

I will start by talking about the value transition that TCS, and the Indian software industry we have helped create, has made over the past 30 years. I will then talk about the value-creation challenge posed by our own success. We have delivered a lot in the past decades and we need to ensure that the momentum is sustained in the coming years.

The steps we at TCS are taking in the value transition journey will be illustrated with some examples. I will conclude by talking about the competencies required for sustaining the value transition, which is where our partnership with you in academia becomes so crucial to us.

Let me step back a few years in history to explain where we started our journey, and where we would like to go.

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When TCS pioneered the industry in the late 1960s, we were starting with several handicaps. The sum and substance of these was that we needed to learn everything from scratch. We needed to understand the technology, the processes, as well as the domains related to infotech. This was step one of the value chain.

We started as team members, module leaders and project leaders in small assignments where we were essentially sub-contract staff. As we learned, we made the transition to turnkey projects and executing projects at our sites. We developed competencies in project management, quality and delivery processes, and infrastructure management. The next step was to work on systems integration and outsourcing assignments, where we started taking responsibility for larger projects and managing large, multi-vendor engagements.

The last decade has been characterised by TCS’s significant achievements on the software quality front, with several of our software development centres being assessed as operating at ‘Level 5’ of SEI’s Capability Maturity Model (CMM). The year 2001 has seen TCS becoming the first company in the world to have centres assessed at ‘Level 4’ of ‘People-CMM’.

This is a significant milestone in our value transition phase, since it demonstrates maturity not only in our software capability but also our ‘people capability’. It is demonstrative of our priorities for improving our workforce capabilities, and characterises the maturity of our workforce practices.

We are positioned today to be a global systems consulting firm, with an array of offerings in several domains and technologies, the processes to deliver complex solutions, and the competencies to sell and support these in all parts of the world. We have also learned to develop new business models, build brands around our strengths, and work with new business models. We have developed a global face.

We have chosen to be an Indian organisation with a global presence. In the future we may become a global organisation, a true multinational, with employees from different countries and cultures working all over the world. But our roots will always be in India and the Indian market continues to be close to our hearts. I am sure all of you are aware of the fact that we have bid for a stake in CMC Limited. Our commitment to the Indian market and our stated aim of sustaining our leadership position at home have been key drivers in this decision.

The value transition in India is no different from our global markets. What TCS did in India in the 1960s is very different from what we offer today. For example, we are helping the Reserve Bank of India build a world-class messaging infrastructure to secure banking transactions across the country. We are helping the Andhra Pradesh government automate several aspects of its governance framework. We are creating world class public-key encryption infrastructure to secure electronic transactions digitally. The Indian IT Act is one of the most modern in the world. TCS will be in the forefront of making it real in the marketplace.

Why did we need to do all this? We are facing the same challenges market leaders have always faced: our core competencies of the past have either been duplicated by others or are irrelevant in today’s world. Unless we constantly reinvent ourselves, we face the very real prospect of becoming irrelevant. True leaders recognise this and measure themselves on this very exacting benchmark. We believe we owe it to ourselves, our people and to India to maintain our leadership in this race.

This is the value transition and it places new demands on TCS as an organisation, on the Indian software industry that follows us, and on you as key partners in our journey.

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The value transition implies that we need to develop a new set of competencies, not just technical skills, project management skills and knowledge of the domain, but also about the business environment of our customer, our ability to brand and position ourselves, and the ability to develop and sustain partnerships. The value that we deliver to our customers is driven by market conditions and economics. We need to understand and control each of these to win in today’s world.

The TCS of the future will draw on its people competencies from across the globe. Our employees will need to engage in transnational problem-solving with each other, irrespective of nationality or location. Future workforces will need to be sensitised to this need.

We have been very active in transforming ourselves on several fronts. Many of you are familiar with the world-class ‘initial training programme’ conducted at our corporate training centre in this beautiful city. We bring in fresh graduates and post-graduates in technology and engineering and, in 10 to12 weeks, give them the confidence to be software engineering professionals. They go through a lifetime of learning — 20 days every year, year after year — in improving their skills.

We have instituted a management development programme in the last few years where our middle and senior leadership is exposed to the challenges of managing a global organisation. A part of this programme has been developed and delivered in association with the Indian Institute of Management, Bangalore.

We are confident that we are getting a lot of things right in our value transition journey. Let me give you some examples:

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At last year’s conference we talked about the solution that we were developing for the Global Straight Through Processing Association (GSTPA). I am glad to announce that we have successfully built the software, and that we are now working with our partners to deploy the system. While the technology part of the engagement is stunning in itself -- using our MasterCraft tools we have built one of the most complex software systems in the world in record time -- our learning is now in larger areas, such as building partnerships and working with the international financial community.

Let me put this in perspective: The system design and development productivity in this project was four-to-six times better than the best reported figures in the world. As a technical achievement, this is definitely world-beating. In the past, we would have been satisfied with this level of achievement. Today and in the future, we feel that the best technology offerings need to be branded and positioned, sold and serviced with equal capability.

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My second example is the new set of offerings and a completely new business model we have built around our Quartz products. We built this product based on internal experience and in consultation with leading banks (Quartz is now sold to customers like Skandia and Dresdner Bank). We have, in partnership with McKinsey, SE Banken and Ankar Capital, recently defined a completely new market in the Asia Pacific. We will be offering a Quartz-based solution in an Application Service Provider mode to small and medium banks. This will be taken to the market through eAsia Finance, a new entity based in Singapore.

The lessons from this example are similar to the GSTPA case. We had an excellent product right from the late 1990s — with futuristic technology, a good domain base, and a dedicated development and support team — and we were working very hard. What has changed the picture is that we have evolved a new business model to complement these strengths, and brought in strong partners to ferry this to the market. We believe that success in today’s world needs all these ingredients and perhaps a few more.

What does this tell us about the competencies that we need to be successful? A quick summary is that while technology and technology-based offerings are the core, these by themselves are no longer a winning proposition. Let us consider the challenges that need to be addressed by us and, as academic institutions and our key partners, by you.

The ‘competency map’ for TCS is a good way to determine what we need to build for the future. Clearly, we need our basic set of technical competencies: in software and software engineering, in processes and technologies. We also need to build on our knowledge of our customers’ businesses, whether it is banking, financial services, insurance, telecommunications, retail, transportation, government, healthcare or utilities. We need to constantly build on the internal competencies that help to sustain us as an organisation.

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This is a completely new way of looking at ourselves, and is very different from the way we have been thinking in the past. Infotech was an esoteric profession when I started my career. The distinction between hardware, software, services and products was blurred. The only things that were clear were:

• that this was an extremely specialised, very difficult art, not an absolute science;
  
• that the use of this technology was universal in scope; almost any aspect of human endeavour could benefit from it;
  
• that the degree of determinism was low in most areas related to this domain.

Taken together, these presented opportunities as well as challenges. The complexity of infotech meant that people who wished to work in this area needed a highly specialised education. The universal domain of applicability meant that information technologists would need to work on a very wide canvas, and interact with a large number of people in a large number of domains. The lack of determinism made this branch of technology closer to human and management sciences than engineering sciences.

Let me explain. The designer of a bridge classifies the users of his work product by number, weight and other deterministic parameters. The designer of an infotech system has to understand the business of the users of his system and, more importantly, the mindset of a potentially infinite set of users of that system.

Some elements of deterministic thinking have come into the hardware world. Computing systems are now built on fairly strong engineering principles. Of course, the rate of change and the rate of innovation are somewhat high, but the overall principles are now close to many branches of classical engineering.

Today’s hardware systems are fairly predictable in terms of interface and behaviour. They are expected to be reliable, easy to service and repair, and at a level where they can be items of mass usage.

The area of software is still not as well-defined. We are now able to build good systems if we start from good requirements. This is true for a fairly good set of simple systems. As systems become more complex, a large number of states of the system become apparent (these were not anticipated by the original builder and the original user). Here is where the knowledge of domain use becomes critical.

We at TCS realised this requirement several years ago. We have been experimenting, with some success, in areas like systems engineering, systems thinking, systems dynamics and concurrent engineering in our quest to build stable, functional and reliable software systems.

We continue to build excellent technical solutions in areas ranging from wireless and bio-informatics to public-key encryption and software engineering tools. We have also built significant domain capabilities in different businesses. (Some of our people are good enough to take up full-fledged careers in banking, financial services or telecommunications!)

We are building competencies in strategic thinking, branding and positioning, and marketing and selling. As we have seen earlier, these are equally important aspects of the face we present to the market. The TCS professional of today is ready with these abilities. I now ask of you to help us build the ‘global system consulting professional’ of the future.

He or she has to have these attributes:

• a sound technical mind, well grounded in engineering principles and software technology;
  
• good software engineering practices, with the ability to imbibe and adopt processes, and to continually look for ways to improve these processes;
  
• knowledge of one or more domains;
  
• the ability to work in teams, to be an effective leader as well as follower;
  
• good presentation and communication ability, specially the ability to listen and elicit all the necessary information, and eventually the ability to ‘sell’ the solution;
  
• the ability to synthesise different inputs into a coherent output, particularly the ability to use visual metaphors for the problem at hand;
  
• an elephantine memory and the ability to find correlations and patterns from past experience and knowledge;
  
• confidence in one’s own abilities, tempered with the humility that there is always a lot more to learn;
  
• an acceptance of the value of building and sharing knowledge assets, because no single consultant is as good as the collective whole.

Professionals with these qualities will drive TCS and the Indian software industry into the future.

This is an edited version of the presentation made by Mr Ramadorai at the third annual conference of heads of academic institutions, held at the TCS Corporate Training Centre in Thiruvananthapuram on October 5, 2001. The presentation was titled ‘Making the value transition: The challenge for Tata Consultancy Services and the Indian software industry’.