Red Herring: Interview with Tata Consultancy EVP

| About: Infosys Limited, (INFY)

Following TCS & Infosys's curing of a large deal from ABN AMRO, Red Herring interviewed TCS executive vice president and head of global operations N. Chandrasekaran. Excerpt:

Q: What does this deal mean to TCS?

A: The deal is the largest IT services deal for an Indian IT company. It is very significant from multiple points of view. It has a global nature and (NYSE:TCS) will serve ABN Amro from Brazil , Netherlands, and the American market. It will fully leverage our global delivery model, and the committed revenue for us is $250 million, which is two-third’s of the (application support) contract. We are the most significant supplier who has won a large deal. The other thing is, it’s the largest deal outside the U.S. (for TCS) and shows our spread in Europe ’s banking and financial services industry. The transition will be for a period of 12 months.

Q: What do you mean when you say global delivery model?

A: TCS operates all its development on a global level; not only do we have development centers in India but also in Europe, Brazil , and China . We do work for some clients where we serve them with different development centers. In this case, we are fully exploiting all our capabilities, the regional skill sets, and know-how.

Q: Which was the largest deal for TCS before this one?

A: We signed another large deal with a global financial services institution based in the U.S. We don’t have the permission to reveal the name but we announced it last quarter and it was a $100-million committed deal. We also announced a deal with GE Healthcare.

Q: What is the significance of this contract to the outsourcing industry in India as a whole?

A: This deal was won by TCS competing not only with Indian companies but also with global majors like IBM and Accenture. The fact that we are all in the race and they decided to go with TCS; that’s a big move. We think that this will invite Indian companies for deals on the same footing as Western integrators and it will act as a reference for many other deals in the financial services industry.

Q: How important is the European territory for TCS?

A: It is very important. We have been doing a lot of deals in Europe and U.K. but not so large, and U.K. is not part of continental Europe . This is our largest deal in continental Europe .

Q: Will TCS take over some of the 2,000 full-time equivalent employees, a majority of which are expected to go to IBM?

A: We will be taking over and rehiring some of them in Europe and Brazil . The number will be in a few hundreds.

Q: What is TCS’s current position and how will it change with this contract?

A: In India , we are the largest player in terms of revenues, profits, and margins and this will only enhance our position. Last year, TCS had $2.2 billion in revenues and $512 million in profits, and we have 49,000 employees. We are looking to continue to grow at that pace and are quite bullish about the future. Globally, 60 percent of our revenues come from North America, 23 percent from continental Europe, 10 percent from India , 6 percent from Japan and the rest of Asia, and about 1 percent from Latin America . We are expecting growth in North America, Europe, and across verticals such as manufacturing and retail.

[Red Herring]

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