January 2016 | Nithin Rao

'We want to encourage global innovation'

Singapore has played a pivotal role in Tata Communications’ business expansion since 2004. The company was awarded official international headquarter status by the Singapore Economic Development Board in 2011.

Vinod Kumar, managing director and CEO of Tata Communications, speaks to Nithin Rao about the significance and promise of the market and how it is strategically positioned to continue to drive business growth globally. 

What role does Singapore play in Tata Communications’ global operations? What are the advantages of having a substantial presence here?
Singapore has always played a pivotal role in our global business — acting as a springboard to other international markets and a co-ordination point for the company’s business and operational activities. The company’s Singapore entity is the holding company for all our international businesses and accounts for roughly 75 percent of the total turnover of the Tata Communications group today.

Strong trade and investment has made Singapore one of the most competitive Asian countries today with a vibrant economy that has led it to become a growing business hub on the world map. It has a very robust financial infrastructure and a pro-business environment. It is globally recognised as the world’s easiest place to do business, with supporting regulations protecting intellectual property and complemented by a range of dispute resolution channels.

Tata Communications Exchange: The company’s internet data centre in Singapore

Additionally, its location makes it an ideal hub in terms of global business connectivity — it is located at the centre of the key growth markets of India and China and the fast-growing emerging markets of the ASEAN region. This positions it as a natural gateway to access international markets.

What is the importance of the ‘international headquarter’ status and what does it translate into?
Tata Communications has been recognised widely in the business community and by the Singapore government as a player that has long-term interests in Singapore.

For a young company, we have displayed tremendous growth and resilience and the Economic Development Board recognises that. The official accreditation of international headquarter status by the Singapore government came on the back of our long-term commitment and continued investment in the region and we’ve maintained that momentum.

Research and innovation are seen as critical to Tata Communications’ future success. Does Singapore provide any benefits in this regard?
In Singapore, we have access to great local talent and local universities along with access to world-class technical and business expertise. Singapore offers the ability to tap into the rich university system and the research programmes that the government is proactively supporting to fuel innovation in the country.

As a country, Singapore is focused on building a knowledge-based, innovation-driven economy which aligns well with our business objectives. The Singapore government has renewed its focus on small and midsize businesses (SMBs), offering more financial aid to help drive initiatives in innovation and research development, as well as upgrading of skills among employees.

Start-ups and small businesses are early adopters of new, cutting edge technology and can truly embrace and become the leaders of innovation. These companies have the potential to scale up globally and disrupt industries — we’ve seen this with AirBnb, Uber and other Silicon Valley companies, many of whom are now our customers. It’s encouraging to see the government support and offer grants for tech adoption and innovation.

From a market research perspective, Singapore offers unique benefits. It is a strong developed market surrounded by several developing and emerging markets. This makes the country a great test market for trying out new services and offerings that have relevance for both mature and emerging markets.

What kind of challenges does the company have to cope with in the context of its Singapore operations?
The only challenge we face in Singapore is on finding talent in large numbers for higher end engineering roles. We are in keen on expanding some of our R&D functions in Singapore, but the highly competitive market for talent makes this a challenge.

How do you foresee Tata Communications evolving in Singapore in the future? Which businesses and markets will the growth come from over the next few years?
With our international business growing rapidly, Singapore will continue to play an important role for the business. We have some key product functions in Singapore and they are among the fastest-growing components of our portfolio.

For example, the head of the mobility and collaboration enablement business is based out of Singapore and we will most definitely leverage Singapore as a base to create and grow our mobility services portfolio. The growth of our collaboration and mobility services will propel Singapore into becoming one of our prominent locations for services creation.

Our expertise lies in the emerging markets and we’ll continue to focus on some key regions. We expect good growth regionally in Indonesia, Thailand, the Philippines and Malaysia, and Singapore will function as the base to cater to these markets.

This interview is part of a special report on Tata group's presence in the ASEAN region, featured in the January 2016 issue of Tata Review:
Overview: Foothold in ASEAN
'Singapore is the nodal country for ASEAN', KV Rao, resident director for ASEAN, Tata Sons
'We learn a lot from this market', Girish Ramachandran, president, TCS APAC
'NatSteel will focus on sustainable profitability', Ashish Anupam, president and CEO of NatSteel Holdings
'Singapore is pivotal to our ASEAN growth', Anish Raghunandan, vice president, East and South Asia, Tata Technologies
'Singapore is a key market for us', J Niranjan, CEO, Tata Capital Pte
'This year looks set to be a record year', PV Balasubramaniam, CEO, York Transport Equipment (Asia)
'An asset-light strategy is our preferred path', Dinesh Shastri, managing director, Tata NYK Shipping Pte
'We will consolidate our business here', Alfred Egli, head, minerals vertical, Tata International Singapore Pte
'Our opex costs are industry benchmarks', SS Varma, vice president, operations, Trust Energy Resources Pte