TCS aims at higher revenues from emerging markets
The Hindu Business Line — March 12, 2008

Tata Consultancy Services (TCS) expects to almost triple revenues from emerging markets in the next 4-5 years.

"Currently emerging markets contribute about seven per cent to TCS' overall revenues; we expect that to go up to 20 per cent in next 4-5 years," Mr Gabriel Rozman, Executive Vice President - Emerging Markets, TCS told Business Line.

In January this year, TCS had consolidated its operations in Eastern Europe, West Asia, Africa and Latin America into a strategic business unit for emerging markets

Most of TCS' revenues in the emerging markets will come from domestic business pertaining to the Government, telecom and banking and insurance space, Mr Rozman said.

"This is because a lot of the solutions that we develop in the above three verticals are replicable in other geographies. For example, A solution developed for an Indian carrier in the telecom space can be replicated for companies in Uganda or South Africa," said Mr Rozman.

Moreover, these regions are able to provide the same time zone advantage to overseas clients who want to get work done out of some of these low-cost destinations such as Chile, and Uruguay. "Our customers are going global and they are looking at emerging markets to balance the slowdown in Western countries," said Mr Rozman.

According to analyst estimates, emerging markets today account for 25.5 per cent of the $730-billion global IT services market, growing at a faster annual growth rate of 8 per cent versus the developed markets rate of 6 per cent.

To raise headcount

In order to cater to this demand, TCS will raise its headcount in emerging markets to 10,000 by the end of next fiscal year, from 7,000 at present, added Mr Rozman.

TCS agrees that margins in emerging economies are not as lucrative as compared to mature markets such as the US or the UK.

"Margins are lower, but there is an upward bias and they are increasing every year. As we scale up and consolidate our presence, it will get better," he said.

Egypt, Morroco and Tunisia are other countries which look attractive for TCS to set up a base.