TCS realigns consultancy practice, revamps energy, telecom units
Tata Consultancy Services Ltd (TCS) has undertaken a management change at two of its customer-facing industry unitstelecoms and oil and gas-and brought its consultancy arm to work with the team that implements business software such as SAP and Oracle for clients.
The changes, the first since the Mumbai-based firm named new business division heads in March 2015, do not alter the direct reporting structure to chief executive officer N. Chandrasekaran. Company executives believe that the changes should revive growth at the country's largest software firm, which has grappled with slow growth over the last 18 months.
TCS needs to record a 5.25% sequential revenue growth in the current quarter to end the fiscal year with an 8% growth in dollar terms, lower than the 15% growth it recorded last year, and the slowest annual revenue growth since 2009, when Chandrasekaran took charge as chief executive. TCS has appointed Carol Wilson, formerly a senior vice-president at TSystems (a subsidiary of Germany's largest telecoms group, Deutsche Telekom), to head its telecoms business in Europe. Wilson will report to the company's global head of telecoms business, Kamal Bhadada, who reports to Chandrasekaran.
The company also moved TCS's global head of energy and resources business unit, Jayanta Banerjee, to work in the planning and sales strategy division, and the oil and gas unit will be directly overseen by Debashis Ghosh, president of manufacturing, life sciences and energy business. "The telecoms business globally is getting impacted by OTT (over-the-top firms such as Skype and Google). Telecom firms are cutting down spend on traditional outsourcing. A person like Carol helps us to increase our business with telecom firms by offering solutions in Internet of Things (IoT) and cloud computing," said an executive familiar with the development.
TCS declined to comment, with a spokeswoman saying: "We do not comment on our internal structure; hence, do not want to participate in this story." An email sent to T-Systems and Wilson on Friday seeking comment went unanswered. TCS's consultancy practice, which has close to 3,000 consultants, has started to work with what the company calls the enterprise solutions division, and the October-December period saw TCS reporting its performance in enterprise solutions along with the consultancy practice.
TCS's move to realign its consultancy practice mirrors the approach followed by its two smaller Bengaluru-based companies, Infosys Ltd and Wipro Ltd, as both companies have brought its consultants to work with engineers. Homegrown software firms are looking to leverage their consulting units, something which Nasdaq-listed Cognizant Technology Solutions Corp. claims to have perfected, in order to win bigger orders from clients who want to improve the way they have done business until now.
"We are in a massive transition," said Ray Wang, founder and chief executive of Constellation Research, a technology advisory firm. "All the system integrators are seeking growth and are willing to shake things up with proven leaders from outside of their firms to do this. We will see a bit more of this. Having a consultancy arm in play is key to having higher value deals and better engagement with the C-suite (senior executives such as chief information officer or chief marketing officer)."
To be sure, domestic software firms have been hit as their largest clients in oil and gas space, like BP Plc. and Exxon Mobil Corp, have put on hold new technology spend on account of volatility in crude prices. Wipro, which generated 14% of its $5.46 billion revenue in the nine months ended December 2015 from oil firms, has been the worst hit. However, a bigger problem for TCS has been that firms such as BP are working with fewer technology vendors in order to save cost and TCS has lost out to Wipro in this wave of vendor consolidation at some oil and gas companies.
TCS's energy and telecoms verticals, which together account for 12.5% of company's $15.5 billion in revenues, have done poorly over the last 18 months even as the company's growth itself has slowed. At the end of July-September 2014, which was the first quarter when TCS's growth slowed, the company recorded $3.9 billion in revenue.