Mr. Phiroz Vandrevala
Executive Vice President, Tata Consultancy Services
Thanks Dharen. What he didn’t tell you is that 2 minutes ago we were discussing how to plan this. We said make it 8 or 10 minutes, so we were being….yes (mild laughter). And the other thing…I haven’t been here the whole day, one of the comments we got here was that the Q&A that is supposed to take this a little bit soft, the audience is not really picking it up. So I said we have 30 minutes to do that, and 3 hours to chat among ourselves. So that is just to set the record straight.
When I walked in here just when the last session was ending here, I saw these billboards saying Building Global Brands out of India, I was trying to put that in the context of the Indian IT industry, and what we have done, and a lot of what I am going to say is will also rely not so much on TCS content but on content out of the industry, because this is one industry we thought of stayed together in this body called NASSCOM, and all of us stay associated, and try to do things as an industry and address the industry issues. I actually thought that may be, from my perspective, in the Indian IT industry perspective, the view that we took, we took that view almost 7 to 8 years ago, was instead of building global brands out of India, which we think is happening and will happen, was actually building a global brand for India. And I do not know whether any of you noticed the NASSCOM logo over the last few years that actually says “India is IT”.
This little…I will take a minute to go into the history behind this. When the question of how we should look at the world, especially after the 2000 dot com bubble burst and things were not looking very good. Clearly there was an issue around whether this industry is going to remain as competitive as it has, and show the growth rates that we have had, the issue that came up and lot of us deliberated in terms of how we would handle this, we also had a turn over in the NASSCOM where Devang Mehta, who was the torchbearer and we lost him at that time. We actually sat down and took a view, and the view that emerged especially among the leading IT players who all had aspirations of building global brands for themselves-TCS, Wipro, and Infosys, Satyam, HCL, Cognizance. The view that we took is that though we have been very successful, the main reason why we had been successful, and at least in the short term, the main reason why we would continue to be successful is, if we could build a brand or sustain the India brand. Because, in reality, the way it works is that today id you look at a large outsourcing deal that emanates from a United States company, Europe, Japan, or Australia or whatever. I don’t think we have reached that stage where they pick up a list and say “we think we should invite TCS or Infosys or Wipro or Satyam or whatever”. (10:03)
I think the process that goes through when a large piece of work comes up, and is deliberated at the sea level is “why should we outsource this large piece? Is it something that we can run from being outsourced? meaning, not within the confines of the company but being managed by some body else, that some body would be a company with in their own geography or a global company or whatever. In this process of evaluation, I think it is very important that India emerges as an option first, and when we have looked at lots of large companies that are engaged with India at the moment, the process that actually gets followed is that we go to different countries, they go to India, Malaysia, Philippines, Sri Lanka, Israel, Ireland, Russia, Mexico, Belgium, whatever, and a consensus emerges that India has to be an acceptable proposition first. They don’t pick up…in a rare case a company may qualify, but in the first case India itself has to qualify, and once India qualifies, then of course every company that is short listed has to go out and do their own number, and try. So, all of us have to focus on the fact that India is well represented. (11:11)
So, what IT has done for India is clearly changed the perception of India, what Dharen talked about this. The very good way of reflecting of how that perception is changed is that, all of us let us look at the key events that take place. I think the visit of the Head of State is a reasonably key event that takes place in any country. If you go back 7 or 8 years, any Head of State that visited India spent 3 days in India, of which 2 and ½ days were spent in Delhi and ½ a day in Agra or some such tourist spot. In that 2 and ½ days spent in Delhi would have one business lunch organized by CII or FET or some body and they would all sort of get together for 1 and ½ hours in a 2 and ½ day State visit. Let us take a look at any State visit that has taken place in the last few years, whether it is the Clinton’s or Bush’s or the Moreau’s, Beautaine’s or Blair’s or Schroeder’s or take African countries or Latin American countries. The political end of the visit is no more than a day, if that and everybody wants to do what? Go to Hyderabad? Chennai? Bangalore? Bombay? What do they want to see? What do they want to do? They want to understand what it this whole IT thing is about in India is. So clearly when we talk about positioning India I think no one is able to take away, and I am glad Dharen covered this in his introduction that we certainly are responsible for changing the perception as far as India is concerned. Now clearly the issue is that, and I got some statistics here which I’ll allude to, our leadership position currently is that we now account for roughly about 65% of the global industry in IT offshoring, and roughly 46% of the BPO industry globally. This is that part of the industry that is actually offshored, that is, sent out from within the confines of the geography from which it emanates.
This year the IT export industry would be about 23 billion dollars, our vision is as you know in terms of the reports that we have done to do 60 billion dollars, plus a head room for another 20 by 2010. The addressable market is around roughly 300 billion dollars, and even if we discount those 300 billion dollars in terms of what people will actually have appetite to offshore is roughly about 110 billion. So we are currently playing at 23 billion in what could be a 110 billion dollar market. So our vision of trying to look at these percentages retaining market share achieving the vision by 2010 is eminently achievable. (13:54)
We currently account for roughly 28% of the total talent that is available globally in this particular business. Another important statistic is that the total quantum of that 110 billion that we talked about is only the IT services. The BPO industry is evolving, and is clearly there is no clear set of numbers that is available, and that is some thing that we have to see how it comes along.
Coming back to looking at where we are in terms of individual companies, building brands, and moving away from the India brand perspective in the last 2 or 3 minutes. I think one thing is clear…most of the companies that emanate from our business are clearly now focused on building a global brand. The issue that is coming on the table is that when you talk about the fact that when you are a global company, building a global brand calls for a certain amount of discipline and a certain amount of money we put on the table which has to be committed for a long period of time. Out of all the study and analysis that has been done (bell rings) by different companies, including ours, I assume that is the bell telling me that 8 minutes are over. I will take just a minute to focus on where the company position is. There has been a whole day’s discussion and you are all market practitioners who can understand brands and how they are measured and how they evolved, but at the end of the day where the company stands in the global league table of the business citizen is also an important function I would believe before you embark on the journey of the brand. If you look at today, let us take the example of TCS since we are the largest in our business. The brand names that come to mind when we look at the services at the end of the business, forget the Microsoft, and Oracle at the product end, and I think Pradeep will talk about the product end of the business…Accenture, EDS, CSE, CapGemini, Logica. IBM HP…yes, but they are again combined entities, they are services business. If you look at the parameters…let us just leave revenue aside for the moment, what are the other parameters that you can use to evaluate? What our global positioning is? I am not talking about brand but I am talking about just global positioning, because the positioning will lead to where we need to work to go to the brand. In terms of market cap, today based on the yesterday’s price, TCS has the higher capital for Accenture, forget CSE, EDS, all of them put together probably won’t come to the same number. Profitability? For the year that has just ended, TCS net profit is higher than Accenture. Talking in terms of number of employees, we are 60,000 they are 130,000. I suspect in 3 years, we will have more employees globally than a company like Accenture will have.
So everything is in place and we now have to get into the mind set to make that investment to build that brand, find the tide line and all of these things that go with it. Just to conclude, what oil is to Saudi Arabia, automobiles was to Japan, electronics manufacturing is to Taiwan, luxury goods is to France and Germany, I believe IT and overall services will have exactly that potential positioning to India. The reason I am saying overall positioning is because that the last question to the speaker’s session was about demographics. If you take the sole issue of demographics think like health care services, and a whole lot of services we could as a country actually in the next 5 or 7 years be like as I said what oil is to Saudi Arabia. The overall services could be something that India will have a global platform. We can discuss about these things later. Thanks. I am sorry I have exceeded my time.
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