BANGKOKTata Consultancy Services, India's largest software services exporter, is boosting its investment in digital technology by 80% to $450 million this financial year, seeking to enhance its platform and penetrate deeper into the 46 countries where it has a presence.
Trends such as automation and artificial intelligence are at the core of digital technology, a business that has seen major growth over the past five years. Tata Consultancy's digital business grew 52% last financial year, and the company's optimism is growing.
"About 18 months ago, I said we will bring our digital business to about $5 billion in four to five years. We will far exceed the number, because our current run rate is pretty strong in terms of adoption of digital," Managing Director and CEO Natarajan Chandrasekaran told the Nikkei Asian Review in an interview.
During the financial year ended in March, Tata Consultancy invested about $250 million of its budget in what is touted as the "Digital Five Forces," which includes big data and analytics, cloud computing, mobile and so-called pervasive computing, social media, artificial intelligence and robotics. Part of that spending also went into exploring and servicing new markets.
The company is also open to acquisitions to enhance its capabilities, something it has shied away from since taking over Alti, a French IT services, consulting and business solutions company, in July 2013. Unlike competitors such as Infosys and Wipro, Tata Consultancy has preferred partnerships to takeovers.
"We have built many partnerships, and we get access to technology because of those partnerships, but it is not to say that we won't acquire. We keep looking, and if the right opportunity comes, we will also acquire," Chandrasekaran said.
The technology investment will be important in order for Tata Consultancy to maintain its market share in countries where it has a strong presence, as well as capturing markets where it is still struggling to find a foothold.
"Our focus will be to build deeper relationships with customers in these markets -- how can we be large enough, expand our portfolios in every market," Chandrasekaran said.
TRANSFORMATIONAL ERA At present, the U.S. makes up 50% of the company's market, while 25% of revenue comes from Europe. Asia, including India, contributes 20%. "We would like to be present in Japan a little bit more," Chandrasekaran said. "It is currently 3%. I would like it to grow to 5% over a period of time."
His optimism holds significance at a time when the entire information technology industry is entering a transformational era, in which systems will update themselves automatically and adapt to changing business needs. Clients will increasingly judge IT service providers on their technological chops rather than the cost and quality of their human resources.
Indian companies are not just in a cutthroat competition among themselves, but also with global rivals such as IBM, Cognizant Technology Solutions and Accenture.
For the company to stand out, its offerings must stand out. "Our core competence is about customer centricity," the chief executive said. "Fundamentally, [digital] is about bringing together the knowledge we have about industry, business process, specific customer and technology landscape and digital technology know-how," to help customers become more agile, efficient and intelligent, which in turn will give them a superior experience.
Software services companies have sounded warnings about clients holding back on IT spending. But in the long run, even amid such uncertain circumstances as the aftermath of Britain's decision in June to leave the European Union, "every company has to invest in technology," Chandrasekaran said. He added, "The only thing that we can do is to be very agile to ensure that we adopt future changes and adapt our business model. That is what we have done and will continue to do."