Over the last 11 years, CMC has evolved from a complacent public sector company into a global, market-driven and successful infotech solutions enterprise. Overseeing this transformation has been managing director R Ramanan, whose vision and understanding of customer needs and market forces have been driving CMC’s growth. A graduate of the Indian Institute of Technology, Bombay, Mr Ramanan moved from Tata Consultancy Services in 2001 to take charge at CMC and to remodel it into a world-class systems engineering and infotech company. In this interview with Shubha Madhukar, Mr Ramanan shares his thoughts on the next phase of the company’s evolution, what he calls CMC 3.0.
CMC has been a part of the Tata group for more than a decade now.
How has the company evolved over the years?
Though competent people in the company had worked on several key projects, there were still several challenges to overcome. To set the house in order, CMC embarked on an aggressive plan — called ‘ability to agility’ — and worked on processes, people, certifications, mindsets and a new business model.
We transformed ourselves completely. We fixed the back end — got the necessary ISO certifications, established CMMi Level 5 processes, etc — and we focused on the front end. We created a solid business development team, rationalised our businesses and our product portfolio, and we started paying attention to high-margin projects, process compliance and innovation. Moving away from low-value business helped immensely. Though it meant sacrificing the top line, it ensured better margins and a healthy bottom line.
All of these created systematic benefits for the company. As of now, our operating margin is 15.1 percent, 60 percent of our business is from abroad and our domestic business has a 50-50 contribution from the private sector and the government. Within this mix, 90 percent is value-adding, high-margin business.
CMC now has bases in the United States, Britain, New Zealand and Dubai, and we handle large projects for customers in America, Europe, the Middle East and Africa.
What are the key businesses and verticals of the company today?
We have grown this practice by over 1,500 percent, through marquee clients such as the Danaher group, Motorola, Ericsson and Xerox. The work that this SBU is doing is world-class. Our Hyderabad facility houses laboratories for our customers, which are extensions of their own product development labs. For example, Xerox has set up a testing lab in India with CMC, where the latest Xerox printers to be released in the market are tested for both software and hardware, to ensure that they work across platforms, devices and networks.
A few years ago we started the process of rationalising our product portfolio (bringing our range down from about 100 to 20). We looked at what needed to be sustained, what needed to be exited from and what needed to be built or developed upon. We decided to focus on replicable and value-adding projects; we were able to invest our efforts once and reap the benefits on an ongoing basis.
Over the years, these capabilities have shaped into several verticals: banking and financial services, insurance, government, manufacturing, energy resources and utilities, transportation, hitech and telecom, retail and fast-moving consumer goods, defence and space, and education and training.
CMC has several global hubs, of which CMC Americas, the American
subsidiary, has been doing remarkably well. What is the focus area for this
With analytics becoming more and more important, digitisation has gained importance. This practice has grown fast for CMC in the United States. More than 50 percent of the company’s business comes from outside India, where, five years ago, this was nil. The same focus is now being replicated in Europe. We have intensified our presence there and we have a senior person in charge of operations there. We are already seeing some positive results.
What is CMC doing in the area of sustainability?
In 2011, we launched ePragati, an initiative to empower emerging India. ePragati focuses on 22 emerging cities in India and offers a platform for dialogue between technology companies and academic institutions, industries and government bodies that function at the local level. The idea is to develop an ecosystem in a region while addressing the needs of that region.
CMC has always been known for pioneering projects. We want to take this to the next level in all the identified emerging cities. We want to help bring technology to the masses.
People are important in an IT industry; they are also a challenge.
Being a mid-sized IT company, how do you keep people motivated?
We have several people-related initiatives. CMC Connect, for instance, is aimed at people bonding and team building. A monthly function is held in every region; it is theme-based and a fun event, with employees participating in skits and singing.
In the monthly CMC ki adalat (CMC’s court room), conducted as part of CMC Connect, employees can grill a senior executive on any issue. It provides employees with a platform to share critical feedback in an environment where they don’t feel threatened. We try to lace it with humour, but we do have a judge to deliver judgement on the issue.
We also have a scheme, called Our CEO Call, where I am available on the phone and any employee can log in and ask a question. This is held once every quarter and it gives people an open field to listen and to ask about the company’s directions and strategies. When we found that there were several HR-related questions being asked, we introduced the Our HR Call process to address such problems.
How is innovation encouraged and promoted in CMC?
CMC actively participates in Tata InnoVista [the annual innovation competition of the Tata group]. When InnoVista was launched three years back, in the first year itself we received about 150 entries, the second year the figure jumped to 227, and this year we closed at 456 entries. It is astonishing to see the level of participation, with people turning in entries and checking if they could be considered even after the last day. While not all entries can be sent for InnoVista, each entry is addressed within the company to see which of these ideas can be taken forward. This has had a positive impact.
What are CMC’s plans and projections for the year ahead? How does
the company see itself evolving over the next few years?
We want to be among the global top 20 system engineering and integration companies by 2020. There is an opportunity for CMC to be a quick value accelerator to our parent company, Tata Consultancy Services, and to the Tata group. We would also like to explore synergies with Tata companies that have a global presence. For a company of our size, there is a huge advantage in being a part of the group — we can set new standards and we can achieve them.