'We are not merely a low-cost hub'
Hindustan Times — November 29, 2005

India's premier IT company TCS is constantly looking at new vistas in its quest to go head-to-head with global biggies. In conversation with Sandeep Bamzai and Arun Kumar, TCS Managing Director and CEO S Ramadorai outlines the new order. Excerpts:

TCS has a market cap of over $16.5 billion and yet it is acquiring small companies of less than $50 million. Where do these acquisitions fit into your global delivery model?

We are doing this by design. The acquisitions are meant to scale up the global delivery model. Size is not important. The important aspect for an acquisition is what value addition does it bring to the table in terms of domain knowledge, geography or its clientele. We have categorised six verticals or bubbles in TCS -- IT services, business process outsourcing (BPO), engineering and industrial solutions, package-enabled solutions, consulting and infrastructure services.

Going forward, one has to separate between voice and transaction-based services, which is why we divested from voice before the IPO. Using technologically intensive modules, the future is in platform based, domain based, transformational based and transactional-based services. The recent multi-million dollar with the Pearl Group is to achieve this end.

We have seen CMC and Tata Infotech adding mass to TCS in different ways -- through a collaborative model and a merger, what does it mean for the Tata group?

We are going to leverage Tata Group companies' strengths to bring comprehensive solutions for our global customers at competitive prices. In addition, we are in the process of amalgamating all the different platforms into one, which will help us in offering best of breed and best in class services at a comparable price.

What is the differentiator or USP of TCS? Is it price competitiveness?

Let me make it clear that the labour arbitrage model is history. Indian companies are providing end-to-end solutions. We are not merely a low cost hub, we are much more starting with research & development to service delivery to product delivery. We compete on the global canvas not because of price alone. Though price is an important ingredient, it is not the sole criteria. There are a host of other reasons that goes in favour of India such as credibility of delivery on or before time, offering a comprehensive solution that helps these companies in achieving higher productivity.

What about merger with other group companies?

No more mergers. The buck stops here. Basically it is the issue of synergies. All the group companies in the technology space have their own space. It is better to have a collaborative model then to go in for a merger.

Given the kind of growth rate you have registered in the recent past. Where do you see TCS in the next three to five years in terms of revenues?

It is difficult to give you a number. But our aspiration is to double the turnover every three years through organic growth. While doing so we would also like to ensure our margins should increase or at least remain protected. In fact, each of the six bubbles should give us revenues of half a billion dollars in the next three to five years.

Last year, when TCS was listed on the Indian bourses, we were told that TCS would be listed on the US bourses after one year. When is this going to happen?

We have planned to list overseas, but as of now there is no dialogue. It is difficult to guess on a timeline. We will be deliberating on this in our board.

But what is the purpose of overseas listing?

Let me clarify that an overseas listing would not be for the purpose of raising funds. TCS is a global company.