The US Immigration Bill could hurt Indian software companies, Tata Consultancy Services MD & CEO NatarjanChandrasekaran believes, even though he points out the final version isn?t out yet. Meanwhile, TCS continues to cash in on the good environment and is keeping a close watch on innovations in technology, which Chandrasekaran feels are going to be rapid in the next few years, requiring IT vendors to be more than agile. He tells Shobhana Subramanian that he finds it difficult to even visualise the kind of work TCS might be doing five years from now, given how dramatic the changes in technology could be.
How serious do you think the impact of the US Immigration Bill could be?
The Bill, in the form in which it has gone through in the Senate, has tough provisions for companies like ours. The overall quota for H1B visas will be increased, which is good, but provisions like outplacement are tough not just for our business model but also for clients in the US because the ability of companies to service them will be difficult. We do, however, appreciate the need for an Immigration Bill in the US; they have issues to address.
From our point of view, the Bill that?s in the House is developing and the early version does not have some of the clauses that are of serious concern. There will definitely be some impact in terms of wage hike and visa hikes though that should not be serious. The outplacement clause, however, could be tough; we need to see how the clause is detailed in the Bill. In all these things, the final impact can be assessed only when you?re able to correctly interpret the rules, so the impact could be high.
Meanwhile, you?ve said it?s business as usual for TCS?
The environment is very good across geographies?the US, Europe, Asia, Middle East?and across verticals and we see excellent opportunities. The US accounts for 50-52% of our business and that share should stay that way.
You have been stressing the importance of technology?
The importance of technology for customers in transforming themselves is growing. Companies are trying to do two or three things. One, they?re trying to definitely become more efficient, they want to streamline their back-offices and go to a different cost base. I call it simplification, for want of a better word, but it entails two things. One is going to a right cost base and in the process creating an infrastructure or IT footprint which is future-proofed. It may involve rationalising their systems, their hardware infrastructure or ERP infra or finding a balance between a cloud infra and a private dedicated infrastructure. It could mean many things to many companies but they have to simplify because they have to invest in the front-end; all the investment now is in front office and it?s all about consumers.
Is this trend being seen across industries?
Yes, FMCG companies used to worry about the product, how it was doing, where it was on the shelf and how fast it was disappearing. But now they want to worry about who is picking up the products. FMCG companies are totally focused on consumer analytics and not only on product analytics. It?s the same for retail, banks and insurance companies. For some the attempt is to see to get the staff to sell better and for some it is to see how to get analytics on consumer behaviour.
So how big is the opportunity for IT?
There are huge investments being made and digital plays a big role. A few years ago, even until five years ago, if a technology came in, it used to get adapted over a period of 8-10 years. That cycle has shrunk and there is a new technology every six months. Also, each technology is adjacent to the other; it is not replacing something else. If there is social, there is cloud; if there is cloud, there is analytics; if there?s analytics, there?s mobility. When they work together and sit together they make a larger impact than individually.
For the first time we are really talking about real time. We used to say anytime anywhere with the internet, but that?s not true. If you were sitting at your desk it was anywhere, when you were walking on the street you could not do it so it was not anytime. Now it is truly anytime, anywhere, and the combination of 4G adoption and all these technologies is really making a lot of difference.
What does it mean for companies?
Companies are doing two things, the first is that they?re having to rethink whatever processes they have, I call it re-imagine. So a company thinks, I?m doing payments like this or KYC like this or procurement like this or order management like this. But they?re now asking how would I do it in the context of these technologies? So every process is getting re-imagined and that?s where a lot of innovation, co-creation and agility comes in. Actually, agility of enterprises comes in because you?re able to re-imagine in the context of these technologies. The second question they?re asking is, is my current business model the right model or do these technologies offer me a new business model? So there are a lot of business model innovation opportunities. These are the two areas on which companies are focused.
How big is the challenge of keeping up with the technology?
Technology is changing rapidly. My father will go to the bank everyday to deposit a dividend warrant and will have coffee with the branch manager at least three days a week. In my generation, we never walk into a bank, we go to a website. My son?s generation thinks everything is in the cloud; the payment is in the cloud, the account is in the cloud. Why can?t it get settled? I don?t even have to initiate a transaction. As a result, financial institutions across the globe are simultaneously servicing three different generations. Brick and mortar, online and beyond online, which I call digital.
We can?t even comprehend the transformation that?s going to happen in the next few years and it?s going to be difficult even for us to figure out how it?s going to work five years from now. Today we have shopping without a credit card swipe?transactions are done on the basis of facial expressions because the expression is connected to your credit card! Immigration will happen like that. This has huge possibilities and means there?s going to be more technology in everything?in a car, house, retail store, you and me. It?s a question of how you align and make yourself relevant as a company?you cannot say I?m used to doing this and I cannot do that. If you ask me what TCS will do five years from now it?s very difficult for me to say. But I only hope that we will do everything to be agile and to move and pick areas where we need to invest.
What are the challenges as TCS becomes bigger? Is talent an issue?
Talent is not an issue, it doesn?t bother me because all we need to do is to train and skill. At 2,77,000 people we are probably the largest pure services IT employer in the world. I try to think of size as an advantage; there are positives and negatives to everything and I try to leverage the positives. The only disadvantage with size is that there is the danger of becoming bureaucratic if you are not careful. So we have split the company into smaller units and and each unit is empowered to run on its own with goals and targets and doesn?t come into conflict with other units. The way we have built the company is that we have management teams running smaller units. We did this about 3-4 years ago and we continue to refine the model every year so that we can react to the market.
How do you retain talent?
We have to worry about it everyday. The company should constantly think about making the company an attractive place to work; our attrition in Q1FY14 was the lowest in 27 quarters. We have a flat structure. I kind of emphasise that everyone has to work towards being the most valuable player; not everyone needs to be a captain. It?s difficult to be a captain all the time. So we need a culture where everyone tries to become the most valuable player. We have been lucky, I have kept the team together, it?s a young team and we are all driven. Growth is the biggest booster and is fulfilling.
In the BPO space, India seems to be losing out to the Philippines?
In the voice space we are definitely losing out to the Philippines partly because of costs and also because of the accent. We need to train people. The overseas regulations are going to be tough, the lack of jobs in those economies will continue to put pressure on the Indian IT industry. Also, in previous technology transitions, the size of the industry was not big enough, we were small. In future transitions we should try and be ahead so we play a lead role in shaping the adoption; we don?t have to be a follower.
As a nation we are not innovative?
We shouldn?t be too critical of ourselves. You must remember that in India the ecosystem is just beginning to get formed, it takes a while. No one has replicated the Silicon Valley, everyone has talked about it, there have been some one-off successes from different countries. We have to work on creating an entrepreneurial culture and that happens when the economy has to improve. Otherwise people don?t take risks.
