RSSThoughts of the TCS CFO
Sandhill has an interview with the CFO of Tata Consulting Services – S Mahalingam, below are some interesting excerpts from the same that cover the current concerns and opportunities in the outsourcing market.
SH: "What about wage inflation? Sometimes the rate hits 12 to 15 percent annually, on average. That figure seems significant, especially when labor arbitrage is one of the advantages that you seek."
Mahalingam: "There are 500,000 engineers but then we go through the employable number of persons and they might not have the skills that we value. So that takes the figure down to 250,000 or 300,000. And what is happening now is that it isn't just the computer industry that is attracting people. It is all the other industries which are doing well in India at this time. The competition for talent is intensifying and that leads to the wage spiral that is taking place.
We think that the 12-15 percent increases we are going through at this time will last a few more years but not beyond that. [If it does continue beyond that], the wage inflation coupled with the rupee appreciation will come to a point that the margins will get eroded significantly.
Companies such as ours also try and see how we can have additional productivity improvement to pay for additional wage expenses. We use a lot of incentive systems which put us in a better position to handle it."
SH: "Over the past decade, the Indian tech companies arrived on the world stage in a major way and have been a tremendously disruptive influence on the tech services giants, such as EDS, Accenture and IBM. Over the past few years, Indian companies have become more like Western companies and Western companies are becoming more like the Indian companies. How does TCS differentiate itself from the other Indian companies and also from the Western companies?"
Mahalingam: "The competition is really heating up now. Almost on a monthly basis, we hear about an Indian company with a lot of talent being acquired by one of the global organizations. And when we visit clients, they tell us that there is an Indian story with almost every services company now.
From a customer perspective, the kind of value proposition that you get from India is compelling. We can offer the 'full services plate' – delivering all the services needed from one shop, that's a desired capability.
To be able to serve the customer from multiple locations is another. If there is a need for multinational service in different countries with different languages, we can offer that. We also give the customer a great experience through processes, and so on. And very importantly, the cost element: India has a very good advantage here. The differentiation [between services companies] is blurring at this time. The key is the complete capability that you bring in with the agility to work in many different tech environments… We can offer all this and hopefully we can offer it at a better value… that remains the primary differentiator at this time."
SH: "When you think about it, most people say 'Tech services, that's not innovation.' So what do you mean when you talk about innovation in your services?"
Mahalingam: Although you say services is not an innovative area, we are really the ones who have brought in disruptive processes to the industry. We said that we could do offshore work – we could take the process away from the customer's location – and that was very disruptive.
In the 1970s, when we [introduced the concept of offshoring], the world was not as connected as it is now. That's when we started talking about process and process maturity and we continue that kind of business model innovation today.
Now we deal with innovation in three ways. First, what can we derive out of what we are doing. Second, in the platform itself, can we create a new platform… and can we create an ecosystem around that platform?
The third is looking far out in the future. We have a research and development organization … of about 200 scientists. They keep evaluating what we do and they have a close linkage to the business side where if they see something they come back and tell [R&D]. We have built a good team of people there."
Source: 1
Tags: tcs – india – it+offshoring – outsource – tata
A few years back when I was working in TCS Business Consultancy group, all the Top performers were getting victimized , misutilized (given low quality projects deliberately) and even personally harassed quite often and ended up leaving TCS, while all the non performing staff who used to mess up and mis-deliver client projects, but were very good in NEGATIVE internal TCS politics and groupism, used to get high importance/recognition internally. Was a very disillusioning first hand experience..Typically, either you had great client performance references but were a bad internal cultural fit in TCS, or you were a great fit internally in the negative political TCS culture but with extremely bad client references!!
All the good professionals (new people) who tried to take initiatives for improvement, were harassed and even abused by the highly predominant low quality non-performing older staff in TCS, and left the firm after demotivation on this environment. As a result, all the low quality and less educated people who stuck to TCS past 10-20 years are probably occupying most of senior positions nowadays, while all the good people left due to demotivation and harassment etc. This was a major major failure on part of the organization’s culture. There are hundreds or thousands of ex TCS staff who agree to this sad fact about the company’s negative work environment past years..
I really agree with the NEGATIVE internal politics which still happens in TCS. I am currently working in TCS Kolkata and have been victim of cheap politics so many times. The basic problem lies with the unlimited authorities given to Managers. Overt humiliation, mocking someone’s serious problem, harassment, unprofessional behaviour is quite common in TCS. TCS Kolkata specifically is known for unprofessional behaviour and poor RMG staff. Here even Managers have never been taught to speak in English instead of Bengali in office. RMG is meant to give right work to right person at right place considering emlpoyees satisfaction. But here they are meant to humiliate and harass associates of TCS. Approaching HR seems to be an obvious step that should be taken but it always results negative for ur existence in the company. I have no proud feeling being part of such organisation where cheap politics dominates talent.
http://www.lieffcabraser.com/lawsuitagainsttata.htm
http://www.expressindia.com/news/messages.php?newsid=62949&from=0
These links convey everything on the unethical culture of TCS, no need to explain any more. (Distinction of being the FIRST ever Indian IT firm to invite a CLASS ACTION LAWSUIT !!!! ) . Real shame..
Totally agree…very bad culture, very bad people, very bad political structure, going is good so all old-timers are enjoying…sometimes being so cocky has its fall-outs and TCS will go down and that is a fact and will happen soon…very bad company to work for…lateral hires just stay away for your own good…