Looking beyond the storm clouds

Ramadorai: “We have pilots where we are exploring the possibilities of cloud”

Given his 38 years at the company, 13 as chief executive, you would think that Tata Consultancy Services’ (TCS’) Subramaniam Ramadorai would be easing up in preparation for his retirement in October 2009. Within two minutes of speaking to him, such notions are firmly dispelled. His talk is peppered with references to five-year plans and goals that are still to be reached.

The word in India, where TCS is based, is that while Ramadorai will undoubtedly step down, he will not walk away from the company he has helped to turn into a global IT services heavyweight. Some form of non-executive advisory board role is frequently mooted. “It’s too premature to talk about details,” he says.

It is also easy to understand why Ramadorai may find it a wrench to leave TCS. During his time as chief executive, Indian IT services companies have rewritten the rule book. Offshoring IT work to the subcontinent was virtually unheard of not so long ago, but is now a path well trodden by organisations looking to not only lower costs but also, increasingly, to access high-quality skills. Under Ramadorai TCS has been at the forefront of this industry-changing trend, and last week his contribution to Anglo-Indian business relations was recognised with the award of a CBE.

But Ramadorai has little appetite for reflection. When pressed, he’ll acknowledge that building up a company that now employs more than 140,000 staff in 42 locations across the globe and has annual revenues of £4.1bn ($6bn) was no mean achievement. Of more immediate concern, however, are the changes under way in the outsourcing industry.

The global economic downturn has undeniably refocused IT leaders’ minds on costs, to the potential advantage of Indian service providers. But the spectre of mass unemployment has heightened concerns about moving jobs offshore.

The impact of the slump on TCS has so far been hard to gauge. For its last fiscal year, revenue continued to grow healthily, but profits dropped by 10 per cent.

Efficiency drive

Ramadorai says his priority is to “focus on internal efficiencies”. But he denies that that means pulling more client work back into India.

“Customers want service delivery models that are the most beneficial to them, and we aim to do that work wherever it makes most sense for them, whether that’s in India, China, Latin America or anywhere else,” he says.

However, the fallout from the financial scandal at Satyam has cast a pall over the Indian IT services industry. But Ramadorai says he has yet to detect any sign that potential customers are taking longer to complete their due diligence. And rather than bid for a stricken competitor, TCS has preferred to pick off unsettled customers. “There are some [Satyam] customers who have wanted to come and talk to us,” he confides.

Future expansion

However, TCS may well consider other acquisitions. In October 2008 it bought financial services group Citi’s Indian-based business process outsourcing unit for $505m (£287m). Any further acquisitions would have to complement TCS’s existing portfolio, says Radamodrai, “or be for things we cannot build ourselves”.

But despite the approaching end of his tenure, Ramadorai is focused on much larger changes. The ability to build innovation into outsourcing contracts has not been diminished by economic circumstances, he says, and increasingly customers are looking to add analytic capabilities to their arrangements, to better understand outsourced operations.

As companies contemplate how far outsourcing relationships can be taken, it is impossible to ignore the potential of cloud computing, where a significant proportion of an business’s IT needs is delivered as a service. “We have one or two pilots where we are exploring the possibilities of cloud,” he says.

And while those pilots may take a few years to evolve into market-ready offerings, it would a brave person to bet against Ramadorai not having some involvement with TCS when they arrive.