Monday, July 27, 2009

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Worst may not be over yet, says TCS chief

Chief executive officer S Ramadorai has spent 13 years at the helm of Tata Consultancy Services (TCS). In this time, he has turned the company into the largest IT services provider in the country. As he prepares to bid adieu to the organisation in a couple of months, he spoke to Sharang Limaye about the present economic crisis and his post-retirement role. Excerpts:

Are ‘Green Shoots’ sprouting?
To some extent, it is true. We must see how it plays out. There are some signs of improvement. But we should not get carried away by these. One should be prepared for some more volatility. The volatility has not disappeared. There will still be some shocks along the way.

But is the worst over?
In terms of some parameters, the worst may not be over. For example, when you look at unemployment, it looks like more bad times are in store. We are still seeing increasing unemployment. When people see the banks performing well, they think there has been some recovery. But it remains to be seen whether it’s a one-off thing.

Do you see pricing pressure easing?
There is some extent of easing of pricing pressure. But, there may be specific sectors with pricing problems. Telecom, for one, will certainly experience some pressure. So also will manufacturing. Hi-tech may also find the going tough in terms of pricing. But this will be due to sector-specific issues.

Domestic market contribution to your turnover is less than 10 per cent. Will we see more focus on India?
We are anyway focusing on the domestic market. But we have to see how much Indian companies are ready to spend on information technology. Right now, the IT budgets are nowhere near what Western economies do. If the growth is not faster, then the contribution of the Indian business as a percentage would still be minimal.

What could be done to increase the size of the domestic market?
I have always said that the government must spend a lot. It’s the right time for it to work on digitisation of data at both the state and central levels. Consolidation of information in areas such as taxation, healthcare and education should be of high priority. This expenditure will show in the GDP growth and also lead to improvement of services.

What about the contribution of the domestic private sector?
If the Indian private sector wants to be globally competitive, technology adoption and deployment is a must. Also, in sectors like microfinance, IT can help in greater financial inclusion.

What’s the outlook for TCS from a human resource point of view?
There is recruitment at entry level jobs for the year 2009-10 based on the offers made in 2008-09. For the year 2010-11, recruitment will take place at the time of students’ graduation, unlike in the past where we did three or four quarter earlier. Experienced professionals will be hired on a need basis.

How do you see the European market doing this year?
Currently, Europe is facing bigger problems than the US. Countries like Germany, Italy, UK, Spain and Portugal have been under a lot of stress. To me, Europe is a very important market, but it will recover slower than the US.

Does TCS have an inorganic growth strategy?
We have a Mergers & Acquisitions (M&A) group for this purpose. But haven’t planned any acquisition strategy as such. The M&A group will continuously look at opportunities for synergies. If there is anything that makes sense from a growth perspective, we will look at it. But there is nothing in the pipeline as of now.

Is there a move to concentrate more on the retail vertical as compared to telecom and BFSI?
There are opportunities for growth in the retail sector. Hence, it is very important for us. Having said that, the IT spends in the BFSI sector are still the largest. We would like to have presence in multiple domains and geographies. Our new focus areas include healthcare, lifesciences, energy, utilities etc.

What are your plans post-retirement?
I will continue to be on the board of TCS. I am also on the board of other Tata companies as well as some non-group companies. I would continue mentoring people in TCS. I would also be involved in some brand-building exercises. I might have lesser time on my hands after retiring.
Source: FinancialChronicle

2 comments:

  1. It seems company executives are just milking this situation for their benifit.
    They have constanly been winning contracts.
    In first 6 months itself Indian It cos have won contract more than $40 Billion.
    On none side they are reducing salaries of employees, firing them on the other side constantly increasing perks and salaries of their top executives and higher management.

    Its just the opposite in US, salary reductions start from top in India its from the bottom.
    Recent graduates who are already struggling to cope up with fewer jobs, reduced salaries increasing living cost and education loans feel cheated by companies who are on one side showing better than expected financial performance on the other hand on the pretext of slowdown reducing jobs and salaries.

    It seems Mr COO is just trying to prolong the enviornment so that they can keep on exploiting their employees who make money so that they can keep flying business class.

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  2. Yes they are just utilizing the recession situation for their benefits.

    ReplyDelete

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