Under N. Chandrasekaran’s watch, the company is more visible, more aggressive. The challenge now is to make sure it remains out of rivals’ crosshairs
It was December of 2005 and the Galapagos Islands were teeming with the plants and animal forms that had caught the attention of Charles Darwin more than 100 years ago. Darwin’s study of the island’s finches, among other things, helped him devise the theory of natural selection: Species that adapt to their environment have a better chance of survival. It was perhaps natural that S. Ramadorai, then CEO of Tata Consulting Services, the oldest company of the Indian IT industry, selected Galapagos Islands for a tour of learning and therefore pleasure. He discussed this with N.
Chandrasekaran, popularly known as Chandra, and Gabriel Rozman, TCS’ Latin America head. They agreed. They were anyway in Ecuador to look at the possibility of opening an office there.
“Ram was fascinated with things on the island,” says Rozman. There was so much to see! The Galapagos penguins, green turtles, iguanas, cormorants, Nazca boobies and, of course, three varieties of Darwin’s finches. Ramadorai wanted to soak it all in. “After the third day, Chandra came up to me and said ‘I have seen what I wanted. Let’s go back to Ecuador’,” says Rozman. They flew back and over the next two days, they worked out a detailed plan to increase the business from Latin America. The results are beginning to show now. TCS is poised to make $1 billion a year in revenue from its Latin American operations. In Rozman, Chandra has also found his next delivery network head, the first non-Indian to play that role.
For Chandra, who succeeded Ramadorai as CEO in October 2009, Darwin isn’t just about a theory. He is busy making TCS adapt to the new demanding world of IT services, where if you don’t adapt, you vanish. And Chandra is passing on this message in his quiet, yet firm way to the entire company.
TCS House, the headquarters of the $8-billion IT giant, is an unlikely IT office. It isn’t a symphony of steel and glass like the offices of its peers Infosys or Wipro. The sandstone concerto, located in South Mumbai, is just four floors and offers some grand views from an older time. The best one is of the building across the road: The Deutsche Bank building. That’s where Ratan Tata grew up. The Tatas had to sell it in the Nineties. Today, TCS, the crown jewel of the Tata group, has over $2 billion in cash but the building isn’t on sale.
Chandra, the man in charge of Tata group’s cash machine, isn’t in the office. He rarely is. He travels 20-23 days in a month, meeting customers in different corners of the world and employees at various TCS campuses.
On this particular day, he is in Bangalore pushing the envelope on his other passion: Long distance running. TCS is sponsoring the 10K run in the city and because ITC is a hospitality partner, there is the unlikely combination of a senior Tata group official in an ITC hotel. When he steps into a deserted part of the lounge to meet with Forbes India, he looks a little weary and a shade older than 46. His gaze is remote. In the course of the next 60 seconds he finds his voice and his rhythm.
“It is okay to fail but you must push yourself. And you have to look at scale. Small improvements are fine, but you must go for things that will make a big impact,” he says.
He has lived those words. Since the time he has taken over, revenues have increased from $6 billion to $8.2 billion. The market value of the firm has doubled. Margins have improved. In the last one year, TCS stock has bettered all its peers listed in India — Infosys, Wipro and HCL.
The biggest shift though is in the way the industry, analysts and media now perceive TCS. Till now TCS, though big, was stodgy. Infosys was the cool one whose campus was on the itinerary of visiting heads of state. Infosys pretty much set the tone for the entire industry. But now it is TCS that is being taken as a yardstick of how the industry is performing. Part of it has to do with Chandra’s charisma and performance. There is now a hugely saleable face to TCS. The other factor is timing. Chandra’s ascent has come at a time when his rivals are a weakened lot. Infosys, with its fearsome combination of N.R. Narayana Murthy and Nandan Nilekani, was formidable competition as was Wipro during Vivek Paul’s time. Today that charisma is all Chandra’s.
Chandra has kept that long view alive. For instance, he has got TCS to scale up its India business and build out profitable businesses in telecom, banking and even enterprise automation. The India business doesn’t have the same profitability as the US businesses, but that hasn’t deterred TCS. “What I like about TCS is that they don’t play to the gallery from stock market perspective. If they believe in something, they go ahead and do it,” says a former Wipro senior executive.
Historically, Infosys has been the company with the highest revenue per client. Today it gets $10 million per client per quarter according to research agency Prabhudas Lilladher. In the last two years, TCS has managed to close that gap considerably. But rivals say that the numbers have improved mostly because of one client, Citibank, which is now at a $500 million run-rate. “Take away Citi and the numbers will not be so attractive,” says a senior industry professional. Selling more to the same client ensures lower selling, general and administrative expenses, better management of resources on the bench and better client servicing. But Chandra is not losing sleep over this.
(This story appears in the 15 July, 2011 issue of Forbes India. To visit our Archives, click here.)