We are cannibalising our own business: TCS COO

BENGALURU:

TCS COO NG Subramaniam

says revenue cannibalisation is integral to its growth strategy. In an interview with TOI, he speaks about how TCS is repositioning itself for higher-value work and the reason behind discontinuing the practice of calling out its digital revenue. Excerpts:


TCS’s growth in Q3 was the weakest in eight quarters. You missed the double-digit mark in Q2 and again in Q3...

It’s a disappointment because we were caught by surprises in the second quarter (on account of slow down in BFSI and retail), given the trajectory that we had projected at the beginning of the year. But we are encouraged by how we performed in the December quarter despite being a seasonally weaker one. We want to stay focused and make the best use of opportunities ahead of us.

Are there structural changes happening in the BFSI space?

After the September quarter, we did an analysis of our BFSI customers. And what’s heartening to know is that we’ve gained market share. Banks are continuing to spend on tech, in particular, they are leveraging AI and algorithms. `Less is more’ has been the new paradigm for a while. In that scenario, the right thing for us to do is to disrupt ourselves. Revenue cannibalisation is integral to our growth strategy. If we don’t disrupt ourselves somebody else will. I will amplify this with an example. For a large customer in the capital markets space, we ran an initiative called March to Zero where we automated a trade support function that previously was being supported by 200 of our people. We lost out in revenue for 200 people in the process. But I’m well positioned to get higher-value projects from the same customer. The IT industry is in transition and investments we’ve made in the machine-first approach is helping us to be more relevant to our customers.

You have done away with giving a break-up of digital revenue from the December quarter. What was the change in thinking?

At some point in time, everything that we do becomes digital. Even when we do legacy work, we embed components of digital. It’s very difficult to distinguish what’s digital and what’s not. About 12 quarters ago we started this (giving digital revenue) because at the time the rhetoric in the market was that Indian IT industry is dead, it’s going to be irrelevant. It served the purpose of not only telling our stakeholders that we are upskilling our people in agile and digital, but it also enabled us to feel that the work we are doing involves digital. But today, we have achieved what we wanted to and It doesn’t serve any purpose anymore. When we announced last quarter that we will discontinue the practice, the market didn’t react at all. It’s an artificial number.

How do you then demonstrate the new? Some of the older metrics like TCV (total contract value) is still debatable on what eventually gets converted.

Digital is integral to what we do and it’s a horizontal. We give metrics related to growth, efficiency, margins and how analysts rank us in terms of offerings like blockchain. We track other metrics too, but we will have to take a call on when to publish those based on how they play out over a period. We have to make sure that it’s meaningful data.

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