WE HAVE A PIPELINE OF LARGE DEALS: GOPINATHAN OF TCS

Tata Consultancy Services wrapped up 2017 with blockbuster deals from global customers such as Nielsen, Transamerica and Marks & Spencer. As digital deals grow, Chief Executive Officer and Managing Director RAJESH GOPINATHAN tells Romita Majumdar, Raghu Krishnan and Bibhu Ranjan Mishra the IT services company is best positioned to stitch complex backend systems built for desktops with applications on smartphones. Edited excerpts:

In the past three months, we have seen TCS winning large deals? Do you see this momentum continuing?

It's been a good three months. The pipeline is strong enough so there is a good possibility of few more (deals) like that. It'll be a combination of new and legacy customers. For example, Transamerica is a brand-new customer and it's a complete end-to-end transformation engagement. It's one thing to touch only frontend or backend, but being able to do both together is a great thing. I think more opportunities for such deals will emerge as clients go beyond the design elements to more integrated enterprise elements of the digital. The Marks & Spencer (M&S) deal is a complete business transformation deal. While it might be a 'renewal', it is unlike anything that has been done before.

Analysts say there are $50 billion wroth of IT outsourcing deals coming up for renewal. Are you seeing customers moving away from traditional request for proposals (RFPs) to look at transformation contracts?

There will be all kinds of deals. When existing deals mature, people will club them together and put them out as standard RFP model, with various third parties advising them. On the other end of the spectrum, we will have collaborative deals, like the M&S deal or Transamerica deal, which evolve significantly. These are not RFPs because the deal construct changes significantly over the course of a dialogue. In a few years, these kind of deals will also mature into RFP moulds. But today, you will see a full diversified spectrum of some RFP-led deals and some which are totally transformative.

Do types of deals require investments?

We have been consistently talking about our investments in very large-scale training infrastructure. We have trained enough people to deliver this kind of scale. Deals like Rolls Royce, Transamerica are validations of what we are doing. We are competing in the global space. These are industry-defining deals.

The BFSI (banking, financial services and insurance) sector continues to remain soft. When will we see an uptick?

The BFSI industry is looking for transformation and different revenue streams. Certain parts of the industry are embracing transformation at a faster pace, especially in Europe, because they are more challenged. Other parts are still discovering these areas of transformation. BFSI is also open to experimentation and is an early adopter of technology. As it changes to large-scale adoption and gets its competitive models right, participation will change. We are very focused there and there is action happening in different parts of the segment such as insurance. Retail is relatively new for us; we have built up scale here in the past 10 years. It will take time for it to work through.

RAJESH GOPINATHAN CEO and MD, TCS Hiring continues to remain muted. What's your talent strategy?

We were positioned for higher growth last year than what we delivered. So we hired for that but we didn't consume it because growth was lower than anticipated. At the end of the day, it is a supply-chain management issue. We are also focused on reskilling our employees. We hire people for careers and we are as committed to their career growth aspects as we would expect them to commit to the company. It's a combination of the fact that we had excess bench strength due to lower growth, the fact that we were in the midst of a massive retraining exercise and the fact that automation is steady and making its impact felt, all those came in together. Our attrition was at 13 per cent four quarters ago, and now it is at 11 per cent with a steady downward slope. All these put together helped us come to a decision on employee intake.

You have been hiring in the US. Does the US have enough talent supply to meet your requirements?

The US is massively supply-constrained when it comes to technology, by various estimates. There is a gap of more than a million (people) between demand and where current supply is. Our approach is it won't get fixed unless we attack at the school level. One of the underappreciated aspects of TCS’ success is that we did a very good job of building up our talent pool and the capacity required to generate that talent pool. So higher education in India was primarily a government-led area. TCS, however, partnered with over 700 institutes and developed the supplier base. The US, by contrast, has a phenomenal higher education base. Their higher education base is multi-product oriented and not split into engineering or medical base as such. Seven years ago we started a programme called 'goIT' which touched about 10,000-odd kids. To make it effective, we needed to improve it. So we have now started another programme called 'Ignite My Future' and it is targeted at a million kids over 5 years.

It has been almost a year since you have been at the helm of TCS. What has the past year been like?

Change in TCS has always been and continues to be evolutionary. We don’t believe in revolutionary change. We’ve been investing consistently in our platform business for over 10 years and it’s delivering great deals now. Personally, it has been an unimaginable change. But for the organisation, the last year has been a steady acceleration of a path we were already up on.