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With fiscal year 2011 results out last month for Indian IT services firm Tata Consultancy Services (TCS), its top executives highlighted growth in many regions, but Latin America was conspicuously absent from their praises. Strange, considering that this region is one of the growth drivers for many, if not most, global companies, and also when considering that TCS Latin America has a five-year strategic growth plan to hit sales of US$1bn.
To find out how the company is advancing on its strategic plans for Latin America, BNamericas spoke with Ankur Prakash, TCS's VP and COO for the region.
BNamericas: What were some of the highlights for TCS in its fiscal 2011, closed March 31?
Prakash: We grew in the double digits in Latin America, and we got some important customers that form part of our strategic short list.
BNamericas: What type of double digits, in the teens or higher?
Prakash: We're talking about over 20%.
BNamericas: What were some of the strategic clients that TCS signed in the year?
Prakash: Unfortunately we cannot name them, due to confidentiality agreements we always sign with the client. What I can say is that they are leading companies in their industries, in the financial, manufacturing, telecommunications and retail sectors.
BNamericas: How much was Latin America's contribution to TCS' results?
Prakash: About 4%.
BNamericas: One of the things that called one's attention when reviewing the TCS global results was in the release, the company mentioned advances in just about every region except Latin America. The company highlights the US and Europe, strong contributions from Asia-Pacific, the Middle East and Africa. What happened with Latin America?
Prakash: We also grew, but other regions grew more. So they named regions from other parts of the world. But our focus in Latin America has been on the client. We want clients that are not just in Latin America but on a global level.
BNamericas: So you're talking about Latin American firms that have operations worldwide?
Prakash: Yes, for them, and also for global companies for whom we're providing services from Latin America.
BNamericas: But what can this higher growth in other regions be attributed to, and what can TCS Latin America take from that to emulate?
Prakash: I don't want to comment on other regions as they are not under my responsibility, but in Latin America our strategy is to consolidate and have a short list of strategic clients on a regional level, and other clients on a global level, and focus on selling our complete offer to these companies, adding value to their operations in a win-win situation.
BNamericas: So you're talking about a focus on large companies.
Prakash: Normally they're companies that are leaders in their sectors.
BNamericas: So SMEs don't figure in TCS's plans for Latin America?
Prakash: I wouldn't rule out SMEs in the region. More than the companies being large or SMEs, we have a list, and on that list there are large, medium and some small companies. But the focus is on what we need to do for the clients we've chosen to form part of our list. We think that those clients have the same strategy as we do - disciplined growth and with requirements to which we can add value.
BNamericas: What were some of the countries that performed well for TCS in fiscal 2011?
Prakash: We have presence in eight countries in the region, and we're seeing investments increasing particularly in Colombia, Peru, Brazil and Mexico, more than in other countries. That doesn't mean that we don't see economic activity in other countries though.
BNamericas: Are there expansion plans for those countries where you're seeing more investments?
Prakash: We'll expand in the eight countries in the manner that business expands. Where we win more projects, we'll expand more.
BNamericas: Last year TCS presented a growth strategy to increase sales to US$1bn in five years. Can you provide more details on this?
Prakash: It's still the plan, and we're talking about 25,000 people that we'll have in the region to reach that goal. Again, the main strategy has to do with the list of strategic companies that we want as clients - there are about 50 of them. That is in the first two years, and once we're providing a high level of value-added service to those clients, we will expand that list of clients.
BNamericas: How did you define this client list?
Prakash: The most important was the company's strategic vision - they way they want to work, what type of requirements they have and in what way they match with our strategy and what we're offering.
BNamericas: Regarding the goal to have 25,000 employees in the region, what's the current headcount?
Prakash: Close to 8,000 people right now. So we'll be expanding about three times.
BNamericas: Are there any plans you have that are specific for fiscal 2012, within the strategic five-year plan?
Prakash: It's similar to last year. We're seeing more economic activity, and the clients are willing to spend more and carry out critical projects, transformation projects. We're ready to take advantage of those opportunities and offer our services.
BNamericas: What can you tell me about TCS's competition? Would you say it's Accenture?
Prakash: On a worldwide level, including Latin America, all of the [large] IT companies are considered competition - IBM, HP, Accenture, etc. Also in all of the countries where we have presence, there are some domestic companies that are sometimes part of the competition.
BNamericas: What does TCS offer to gain on the competition?
Prakash: For the client, the most important is a company that can understand well the problem they have and provide the correct solution. We at TCS are not tied in with other companies, and we focus 100% on the client and its requirements. We can offer an optimal solution for the client to solve his problem - that's what the client always looks for.
They also look for trust in their partners, their suppliers. We can offer that as a serious company that won't disappear from one day to the next. When it's needed, we can bring an expert over from any part of the world to solve any problem that may come up during the duration of a project.
The third thing the client looks for is the quality that a partner can offer. With our global delivery model, we offer global quality. We have CMMI level 5 in development services, which is the highest standard for development services.
All of this, plus considering [offering a service] that can be within the client's budget.
BNamericas: What are some of the trends you're seeing in Latin America's services market?
Prakash: We're seeing clients now willing to spend money on transformation projects. During the [global financial] crisis in the last 2-3 years, clients were just maintaining systems without spending or investing much in transforming their business processes or in projects to provide more value for their customers.
But this year, transformation projects are being ramped up. Clients are investing in areas that cover the whole gamut of the company, specifically to generate more sales or increase efficiency.
BNamericas: Is TCS considering inorganic growth in the region?
Prakash: The answer is always that we're always open to opportunities if they match our strategy. But right now we don't have any companies identified for purchase.
BNamericas: Before you were the director of Central America and Mexico. Have you observed any differences between that region and the rest of Latin America when it comes to TCS' business?
Prakash: Since Mexico is the second largest economy in Latin America, that gives us a good way to measure what's happening in the whole region. Mexico is geographically part of North America, but in terms of culture - the market, the people, the clients - it's a similar dynamic [with the rest of Latin America].
About Ankur Prakash
India-born Ankur Prakash has been in the IT industry for 16 years, with experience in countries like Mexico, India, the US, Australia, South Africa and Japan.
Prakash was general manager of TCS's Mexico, Central America and Caribbean region from 2003-10; he was then named VP of regional business development for Tata Consultancy Services Latin America, responsible for overseeing the sales units across the region.
In January 2011, Prakash was appointed VP and COO of TCS Latin America.
He has a degree in engineering from the Indian Institute of Technology, and in management and leadership at the Sloan School of Management, MIT.
About the company
Indian firm Tata Consultancy Services (TCS) provides IT services, business solutions and outsourcing throughout the world. In its fiscal 2011, ended March 31, it increased revenues 29% to US$8.2bn, while net income hit US$1.9bn, up 31%.
TCS - part of Indian conglomerate Tata Group - has more than 198,500 IT consultants in 42 countries.
In Latin America, the company has offices in Argentina, Brazil, Chile, Colombia, Ecuador, Mexico and Uruguay.