‘Made in India in IT as strong as Made in Japan in mfg’

Mumbai: Rajesh Gopinathan, the new CEO of the $17-billion TCS, said in the world of technology services, the India brand is as powerful as the Made in Japan brand was in manufacturing.

Gopinathan said the industry is taking steps to meet the new digital transformation requirements of customers just as it transformed itself after the Y2K episode to meet the then e-business needs of the world. He also said technology had become so pervasive across organisations and so integral to their success that the opportunity for Indian IT had exploded.

In an hour-long interaction with TOI two days after he took over as CEO from N Chandrasekaran, Gopinathan expressed disappointment at the spate of reports in recent times decrying the state of Indian IT, some going to the extent of suggesting that the industry is in its death throes. “We see something articulated as Made in Japan and we are happy about it. But, when it comes to India, see the extent of negativity we face in our own country!” he said.

Gopinathan said the contextual knowledge of the customer and the trust of the customer that Indian IT has is phenomenal. Both of these, he said, are very difficult to create. “A startup looks great. But nine out of 10 startups fail, not because they have bad technology. Actually, they have great technology. But they don’t have contextual knowledge and trust. And so they don’t have a chance to make it work,” he said, seeming to suggest also that the media obsession in recent times with startups may be overdone.

He said Indian IT’s success was made possible because early on, companies took steps to perfect quality. TCS, he said, was the first company in the world to achieve CMMI level 5 (a global service quality certification) across the enterprise. “In manufacturing, when Japan came out with the ability to deliver phenomenal quality at scale and at a price point unmatched by anyone in the world, Made in Japan stood for something. In technology, India represents that because the customer knows that he can sleep well if he has given a work to us,” he said.

Gopinathan, 46, graduated with an electronics and electricals degree from REC Trichy and then completed a post-grad diploma in management from IIM-Ahmedabad in 1996. The same year he joined Tata Strategic Management Group (TSMG), a division of Tata Industries. In 1999, he moved to Tata Internet Services and two years later to TCS. Gopinathan was CFO prior to taking over as the 49-year-old company’s fourth CEO.

Coincidentally, on February 21, the day he took over as CEO, his wife Lekshmi, an architect, received a PhD degree from IIT-Bombay. “I became CEO and she became Dr Lekshmi,” he said with a smile. Gopinathan and Lekshmi have two children — a daughter, Malini, and son, Anirudh.

Gopinathan said there has also been an almost unbelievable expansion of the market opportunity for Indian IT. Both within companies and across industries, the addressable IT spend has exploded, given the uses that new digital technologies can be put to. “This has been in the making for a long time. Now it has reached critical mass. No other industry has seen this kind of market opening,” he said.

Periodically, he said, technologies come in that change the entire stack of technologies. “Digital is like that now,” he said. For enterprises it is not incremental change. “The biggest difference today is that tech has gone from being an enabler, a cost centre, a back office operation, to being a front office transformation. Technology for industries is defining from where new revenue streams will come. A car advertisement now talks about how the car will park itself, no longer about how fast it can go. For a retailer, it’s no longer about just fashion, it’s about how well he knows the customer and how he can customise the product for you,” he said. This, he said, had resulted in tech companies participating no longer just in the 15% of SGNA (sales & general administration) spends of companies, but in 75% of their overall spends.

Gopinathan said TCS is fully prepared to deal with this opportunity, partly because of what he called an extremely entrepreneurial structure and culture. “Structurally, in 2008, we created the business units and gave full profit and loss responsibility across a diverse set. We have empowered people at the unit level. They go out, they experiment, they invest in what they believe and they are the closest to the customer,” he said.

He noted that people are today talking about automation, but TCS has been building automation tools for some 10 years now. He said TCS’ MasterCraft automation suite combined with an early focus on fixed-price projects has been a major reason for the company consistently delivering industry-leading operating margins of 26-28%.

He attributed the recent revenue growth slowdown to a simultaneous drop-off in IT spends across several non-traditional markets. “We were the first to diversify into Europe, Latin America, Middle East, Japan. Diversity reduces risks, but sometimes, like now, it creates temporary problems,” Gopinathan said.



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