TCS eyes global consulting biz
IT players generally prefer to enter consulting via acquisition, but TCS will build this organically
After 2019-20 forced information technology (IT) major Tata Consultancy Services (TCS) to focus on operations, helping clients navigate the Covid quagmire, the company is getting back to its strategic agenda of chalking out a growth road map. On the agenda is its single-minded focus to break into the global consulting space.
Rajesh Gopinathan, chief executive officer and managing director, in a select media roundtable said it was time to take the next big step since the company was back to double-digit growth.
“The overall opportunity — what we call ‘growth and transformation’ — is huge. We are still early-stage participants. We are investing across the value chain — developing capabilities by harnessing contextual knowledge, through innovation and experimentation, and investing in new opportunity,” said Gopinathan.
Gopinathan said upstream work — generally led by traditional consultant service providers — also needed to change. He said traditionally consultants have used a cookie-cutter approach to solving problems.
“We have consistently applied this approach to ourselves — an organic inside-out transformation model that takes the company along the transformation path, rather than trying to change in a disruptive way,” he added.
Traditionally, IT services firms have focused on downstream work/contracts that focus on execution. Upstream work has been led by consultants, such as Mckinsey & Company, Boston Consulting Group, and others. This is where Accenture has had the upper hand.
Indian players wanting a consultant-led strategy have tried to acquire these capabilities. For instance, Wipro recently acquired Capco, a British consulting firm, for $1.45 billion. Infosys, too, in the past has acquired firms with consulting expertise. TCS, however, has rarely acquired a company — its strategy has always been to develop capabilities in-house.
Analysts tracking the company and the sector say this should be next on the agenda for IT companies, given they have the desired scale and investment. “Earlier TCS and other larger players would stay away from pilot projects. They would fight it out on a request-for-proposal level. But clients prefer to work with someone who has been there from the start. But clients are now struggling with the business and technology side, especially during the pandemic. This is a huge opportunity for players like TCS,” said an analyst.
“The pandemic has made it possible to have such discussions with clients, especially when IT players have shown their capabilities in operations. If you look at pure-play consultants, they are equipping their technology presence,” said Pareekh Jain, founder and lead analyst, EIIR Trend.
As TCS engages with customers, it has seen greater acceptance of this evolutionary, inside-out organic model.
“Over the past few years, we have created capabilities: Enterprise-agile and contextual knowledge, which allows us to get collective knowledge and articulate to customers; machinefirst thinking; machine learning; and data capability. We have also created a platform, were customers can collaborate with us, take a problem and rapidly come up with a solution, create a prototype. Upstream is about anticipating customer need, anticipating our understanding of where the customer is trying to see opportunity. It is about shaping future opportunity with clients with appropriate technology,” said N G Subramaniam, chief operating officer, TCS.
With Covid making businesses realise that business is embedded in technology, taking this discussion to clients is becoming easier. “Our approach will be very different from a legacy approach. It is more integrated and holistic. We are aiming to be part of the transformational agenda and participate in the value chain — from conception to execution,” added Gopinathan.
TCS has already worked on such integrated deals, such as setting up the first digital bank in Israel and working with State Street on retirement services, among others.