TCS floats new unit to focus on emerging markets
The Economic Times — January 18, 2008

Outsourcing pioneer Tata Consultancy Services, which was the first to recognise the potential of Latin America nearly six years ago, now plans to use the rich experience it gained in serving those markets to fashion its emerging markets strategy.

The firm has created a new business unit within the company which will focus exclusively on emerging markets such as Russia, the Middle East, South Africa and other potentially big IT markets. Gabriel Rozman, who was reportedly hand-picked by Ratan Tata himself, spearheaded the company's operations in Ibero America (which TCS defines as comprising of Latin America, Spain and Portugal). Now, he will head TCS' emerging markets expansion.

Mr Rozman told ET that TCS plans to get its next $1 billion revenue from such growth markets.

"If there is a recession in the US, some of these will provide counter recession revenues," Mr Rozman said, however, adding that the firm devised its emerging markets strategy much before the subprime crisis surfaced.

Unlike the more homogeneous English-speaking markets of the US and UK, the emerging markets unit will have several sub-region teams working under the broad central structure for emerging markets. A specialised M&A team focusing exclusively on emerging markets will also be formed to drive growth in the region.

"Acquisitions in emerging markets are not easy. You need to have specialised teams that understand these markets," said Mr Rozman, adding that the growth strategy could be similar to what TCS has followed in Latin America. In Chile and Brazil, TCS formed joint ventures with local partners and eventually bought out these partners. Among the emerging markets, the strategy will be to focus on 6-7 high potential regions - Russia, Middle East, Turkey, sub-Saharan Africa, North Africa, South Africa and Eastern Europe. In Russia, for instance, the challenges, such as a non-English speaking audience and a different legal system, are similar and could warrant a similar strategy, according to Mr Rozman.

"Our strategy will be to focus on these big IT markets and specifically on verticals such as BFSI (banking, financial services and insurance), telecom and government. We have replicable products in these areas," said Mr Rozman.