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N. Chandrasekaran is more than a little partial to cricket metaphors. Numerous games are visible in the park outside his Mumbai office window, while inside the chief executive of Tata Consultancy Services talks bullishly about the outlook in European and American markets, following three years of tough conditions.
“It’s like going to a cricket match when you know the pitch isn’t the best batting wicket,” he says. “If you know that, and if you’ve been warned about that, then how you are going to bat is very different.”
India’s national pastime also features on a nearby table where Mr Chandrasekaran, normally known just as “Chandra”, is pictured next to star cricketer Rahul Dravid, a sportsman nicknamed “the wall” for his dependability in tricky situations.
It is a role India’s largest IT and software group by revenue
also sometimes seems to play in its sector. Its shares jumped more than 12 per cent after strong quarterly results, despite weak economic conditions in its most important industrialised markets.
By contrast, second-placed rival Infosys’s
weak forecasts last week
caused shares to drop sharply, dragging the likes of TCS and Wipro down with it. But with net profits up 23 per cent to $558m compared with the same period last year and annual revenues of more than $10bn for the first time, Mr Chandrasekaran is understandably upbeat. “The market has responded because we didn’t strike a cautionary note,” he says, while also stressing that Europe’s debt crisis is far from over. “It’s going to be a bit of a rollercoaster for the next couple of years.”
To sustain its pace of expansion, the group needs to up its game outside Europe and America, he says, and in emerging markets in particular. Take China. Here TCS has high ambitions but is making limited progress. “We have 3,000 people there, but our interest is to grow to 5,000; 10, 15, 20,000 people as fast as we can,” he says, before pausing and looking mildly pained. “But China is very slow, being frank with you. It has been much tougher than we thought.”
With six offices in Asia’s largest economy, TCS is making some headway in financial services, traditionally its strongest industry, winning business from the likes of Bank of China. But the overwhelming majority of its small operation still comes from western companies expanding into the country.
Progress with Chinese clients is minimal, while competition from cheaper local competitors is fierce. There are operational problems too, such as moving engineers between cities, which TCS say is due partly to cultural reasons: “Even if you have employees in Shanghai you can’t move them to a project in Beijing,” he says.
Its difficulties are indicative of a broader dilemma facing the outsourcing sector, as it expands into emerging economies where local knowledge is crucial.
“These are places where all the delivery is local. We do very little from India. Most of the work is executed from Mexico or Brazil, or Buenos Aires or Kyoto or Beijing,” he says.
This means a renewed focus on “in-sourcing”, as TCS hires more local staff. It also means experimentation, as when the group launched a rare joint venture this year to crack the Japanese market, alongside Mitsubishi Corp.
Wherever TCS operates, he says, the strategy is the same: win clients with one type of service, and then persuade them to buy in other areas too. “We do consulting, then we do a mobile app, then we do analytics, then we do infrastructure,” he says.
In the industrialised world the gambit seems to be working, analysts say, at least compared with Infosys’s approach of hunting for the larger and more complex contracts that places them in competition with western companies such as Accenture.
On the table by the door, for instance, next to the cricket picture, sits a red and white toy dog. The animal sports the logo of American shopping group Target, a gift from one of TCS’s largest retail clients and a symbol of the type of blue-chip western clients the group has become accustomed to winning.
Now bringing more such presents back to India from emerging markets will determine whether Mr Chandrasekaran’s bullish outlook holds true in future.