Building the new TCS

Disruption is a term used most often these days to explain the wide range of changes taking place in the business ecosystem. In terms of management capabilities, companies where managements have been able to foresee such disruptions and take quick steps to steer their companies to safety amidst such choppy waters are those that can grow in these times and, as a consequence, get rewarded by shareholders in the stock markets. The tech world is one where such disruptions have become par for the course. Take the cases of all the Indian tech majors—Tata Consultancy Services (TCS), Infosys, Wipro, and the rest—and you will find this common thread of companies grappling with a new world. Tech companies today are dealing with ‘digital’ as the biggest disruptor to their existing plans as clients demand digital solutions in a world where artificial intelligence, machine learning, and cloud-based services become the norm. Indian tech companies, long used to being outsourcing options for Western markets, particularly the U.S., have consequently had to change their game and adopt digital offerings rapidly to survive and grow.

Our cover story this month tells you how TCS, for long the jewel in the crown in the House of Tata, is undergoing a similar transformation driven mainly by the need of its clients for the latest in digital solutions. TCS’ challenge is twofold: One, it must, despite its size (it is a $19 billion giant, with 411,000 consultants—one of the largest private sector employers in the world), pivot rapidly to ensure it remains current in its offerings, competing with global giants like Accenture which now has 60% of its revenue coming from its digital business. Second, and equally important, it must do so at a time when its top leadership is still relatively new, after long-time boss N. Chandrasekaran moved to lead the Tata group following the unceremonious exit of Cyrus Mistry as Tata Sons chairman. Current CEO and managing director Rajesh Gopinathan, however, is not new to TCS or its challenges. Gopinathan, who joined TCS in 2001 from Tata Industries, is familiar with the innards of the company, having served as chief financial officer since 2013, until he took over from Chandrasekaran in February 2017. And in his current role, he knows only too well that the new TCS is a work in progress. So far, the results have been fairly good, with 30% of TCS’ business now coming from digital. As Gopinathan tells deputy editor T. Surendar who wrote the story, TCS has fundamentally changed itself over the past two-three years. And clients are liking what they see. So are markets, with TCS hitting the $100 billion market cap mark in April 2018. Whether the tech giant continues on this trajectory will be the story to watch.

TCS apart, a key highlight in this issue is also Fortune India’s annual list of India’s most profitable public sector undertakings (PSUs). The 2019 list of the 50 most profitable PSUs has some very interesting takeaways. The biggest one being the near absence of public sector banks in the list. While there were 17 banks in the 2015 list, contributing 21.24% to the aggregate gross profit, this year there are only three, who together contribute a measly 2.47% share to the total. This is evidence enough of the state of India’s public sector banks, something the government is also deeply concerned about. As our lists editor Rajiv Bhuva points out, on a sectoral basis, the banking sector’s gross profits fell 68.62% this year, while those of non-banking finance companies grew 10.46%. That’s a story in itself.

This was originally published in the February 2019 issue of the magazine.