As president, Tata Consultancy Services America, Arup Gupta manages 50 offices across the United States and Canada with a staff of more than 8,000 technical consultants at client locations.
Mr Gupta has been with TCS for over 20 years and has been instrumental in nurturing several relationships with the organisations clients. Until recently he managed one of TCSs largest development and delivery centres, at SEEPZ, India, with over 1,000 consultants working on more than 150 projects for clients such as General Electric, Kelloggs and Cummins Engine Company.
Mr Gupta, who has a masters degree in computer science from the Indian Institute of Science and is a long-standing member of the Institute of Electronics and Electrical Engineers, talks here to Christabelle Noronha about the slump in the infotech industry, TCS Americas chief thrust areas, and the challenges of operating in the United States market.
Infotech companies around the world have suffered the consequences of the global economic slowdown, but TCS has bucked the trend by registering impressive growth rates. How have you managed to do this?
There are two aspects to our services: outsourcing to offshore centres and building a strategy consulting service. The economic situation and cost pressures made companies cut down on strategy consulting assignments, inadvertently bringing our way work which would have otherwise gone to Accenture.
Also, since September 11, the North American market is looking at stable companies with a strong business continuity plan. This has now reduced options to the top Indian companies TCS, Infosys and Wipro, in that order. TCSs strength lies in having 5,000 people right here, with 40 marketing offices, and in having the Tata brand name.
Then theres our spread of customers. While the telecom industry saw a slowdown, the pharmaceutical and biomedical industries were booming. This spread has helped us manage the risk. So, by managing risks across multiple domains, between offshore outsourcing and strategy consulting, and with a large customer base, we very consciously and judiciously made sure we did not suffer a slowdown.
How important are TCSs American operations to the organisations overall business, and how has your division been doing in comparison with other TCS divisions worldwide?
In very simple revenue terms, excluding the revenue from CMC, TCSs worldwide revenue was about $900 million for the fiscal year ending March 2002. Of this, TCS Americas contribution was over 60 per cent. This has resulted in us making a significant contribution to the worldwide operations of TCS.
TCS has been attempting to reposition itself as an IT consulting enterprise. How successful have you been in this regard in the United States?
We have organised the company into various geographies: North America, South America, Asia Pacific, etc. We work on various industry and service practices. The strongest practice we have is financial services. We did a 400-man month project for SegaInterSettle, the Swiss stock exchange. Then we partnered Sega on GSTPA software.
Major custodians like Morgan Stanley and Bank of New York wanted to interface to either GSTPA or a competing product. So we, as a partner of Chase JP Morgan, actually developed the middleware, called FIG (financial industrial gateway). We just completed phase I for Canadian Depository, which is a $20 million, two-year project that will prepare them for T+1 T+0.
We have acquired enormous business process experience and are now in a position to advise major financial institutes here, thus building a strategy consulting group.
We are doing a lot in India in a relatively weaker domain like healthcare, but in the US we have to start afresh. Ray Hanson, the former president of the American Healthcare Association, heads the practice and is in the process of assembling a team comprising some of his associates from the industry as well as some of our TCS people from India. In certain other cases, we are just hiring fresh talent.
Would it be right to say that TCS America is more focussed on service offerings than on product offerings?
Yes, today less then 5 per cent of our revenue comes from products, but there is a big thrust in the product area, especially in the financial services sector. The network custodian services (NCS) product has an impressive customer base, including Citibank, Bank of New York, Chase JP Morgan and Fidelity.
We have already installed our other universal banking product, Quartz, at Dresdner RCM in San Francisco, and we are talking to several other customers too.
Are these products proprietary to TCS or is the IPR jointly held by the customer as well?
In the case of NCS and Quartz, the IPR is owned by TCS. Sometimes we start as a project and, halfway through, we might want to make it a product. The IPR is then owned jointly by TCS and the customer. When TCS makes a sale, the customer will be paid royalty. An example is the financial industry gateway fixed product that evolved because we were doing a project for Chase JP Morgan to link them to GSTPA and OMGEO.
We are building assets and products and then taking them to the market as well. But today, because our product development is in the building stage, our services are growing very rapidly, so the percentage of service continues to be high.
How far are you from realising your ambition of being among the global top 10 in 2010?
According to Consulting News, we are the 22nd largest IT consulting firm and the second fastest growing IT company in the world.
What are some of the challenges for an Indian enterprise in the American market?
The first challenge is definitely brand building. Unlike in India, the Tata brand is yet to be known here. A public relations firm is helping build our relationships with the media.
The brand must be known for the right reasons. We are still perceived as a company that provides offshore services and that hurts. The TCS brand really needs to mean a full service consulting firm, rather then just an offshore service provider.
In addition, we need to ensure that our services do not get commoditised. This is where our product offerings, our alliances, etc will make a difference in creating value. Brand management, perception and controlling attrition are the other big challenges.
TCS has been successful in India in attracting the best talent. How has it been in the United States? What percentage of your employees are local Americans?
A majority of TCS Americas workforce today is from TCS in India. But our plan is definitely to have all our North American development centres staffed with North American residents or citizens.
Though we are flooded with resumes everyday, we dont want to take whatever is available in the market. We are actively participating in job fairs for brand building, etc to change the situation.
There has been talk about TCS listing on the New York stock exchange. What are your views on this move?
The option to list is being considered by the management. I would not like to comment further on this.
Does TCS have a uniform global strategy as it charts its future course, or do you alter your approach and systems to suit individual markets?
Its a combination of both. There is a global strategy, and we also customise our approach for individual markets. The strategy to be followed will depend on the situation in each market.