‘Deal sizes in digital are increasing’
N GANAPATHY SUBRAMANIAM, chief operating officer at Tata Consultancy Services, talks to Romita Majumdar & Ayan Pramanik. Edited excerpts:
You have fairly met expectations. Is this what is going to happen in the future -lower growth but companies will meet expectations?
We are very proud of what we did in a market where there are a lot of uncertainties. A bit lower than what analysts predicted. Of the 170 basis points (bps) movement, a significant movement (120 bps) came out of operational efficiencies and 50 bps due to the currency (movement). The deal signings have been good, client metrics have been good. Overall, a very satisfactory quarter, both in terms of growth and efficiencies.
Two verticals — BFSI (banking, financial services and insurance) and retail — typically spend a lot on technology. In the retail front, there are sectoral weaknesses. In our client base perspective, we have bottomed out and from here on, should see an uptick, barring some bankruptcies and some M&As (mergers and acquisitions). Barring that, we don’t see any issue.
In terms of BFSI, almost every bank is restructuring. They are internally transforming their workforces. They are constructing new buildings and are making open offices. They are adopting to new techniques to deliver. At TCS, we are also completely changing our workplaces and the support we do for clients is location-independent, adopting agile, new, technologies.
Global firms are saying a lot of spending is happening in-house and they are stopping or reducing outsourcing. Is that affecting your opportunities?
A certain number of resources and a certain percentage will go towards internal spend. It could be a local vendor or a smaller vendor, niche players. That percentage varies. What we have seen is over a period of time, that remains more or less stable. As I articulated, we continue to grow. So, we are able to retain our market share. As they embark on the next wave of automation and wave of digitalisation, it has become necessary for them with our expertise with integration. For the first time, deal sizes in digital are increasing, though there are a lot of small deals.
You said digital deal sizes are increasing but at a slow pace?
As organisations adopt agile, which essentially means smaller projects. People used to put a fixed scope and we all worked together to deliver that. Instead, I want to have the flexibility to vary the scope. Today, what we are saying is, let me take each small piece of work and do it in an agile fashion and see whether I can implement it in six weeks. This is the way the industry is changing.
Specifically in retail, while e-commerce players gave a tough time for the big-box retailers, I am seeing them (the latter) coming up with newer strategies. They have found a way to increase the footfall into stores and look at the product experience and order online. They have figured a way to match the online price or even more. What they have come up with is, how do I use analytics to understand the buying pattern of the customers walking in and then assist them in terms of giving them the better experience. Retailers have also remodelled their stores to offer assisted experience, investing in virtual reality. When certain experiences are given, customers are beginning to pay a premium for certain products. With these type of investments are made, they believe they can compete with the e-tailers.
When you say fintech integration with BFSI, how is TCS participating in this?
We have a partnership approach (with large BFSI clients) and alliances (with start-ups). At this point of time to 3,400 relationships from start-ups and fintech companies, working in various domains. What the clients have to figure out is a fintech start-up is good at one area, like online account opening, and they need this expertise.
WE ARE VERY PROUD OF WHAT WE DID IN A MARKET WHERE THERE ARE A LOT OF UNCERTAINTIES”