Ramadorai, under whose stewardship the company’s annual revenue grew from $160 million in 1996 to $6 billion in 2009, tells Sayantani Kar what it takes to build an enduring business.
When you took over from F.C. Kohli as CEO, the building blocks of the company were still being laid. Compared to your predecessor, how did your list of growth factors differ?
We had been part of the creation and the evolution of the industry. To us, it was very clear that India was going to be very critical to acquire and disseminate technology whenever the market opened up. We understood that technology was mainly available from the West, the US, and we had to build capabilities through the human capital that was available to us. So, when I took over (in 1996), the fundamentals never changed because I was already a part of that from the beginning.
All I wanted to do was to enlarge the pie. Yet, I had to make sure that growth did not compromise quality and profitability. We expanded both in terms of geographies and domains and made sure that the leadership development took place through the human capital to handle the growth.
Strategically, there was leaning towards more empowerment, systems and focus on the market. Empowerment was more to do with decision-making at the operating level and focus on customer.
When building TCS, what were the principles that you knew would be indispensable and which ones needed to be tweaked around?
Building a team of people who would then foster similar talent was very important. Remember, every business unit, every leadership team, every manager builds the next level of talent that can succeed them, which essentially means building to last.
While I just needed to continue and enhance the investments in R&D and new locations, I also distributed R&D across centres. Investments were also shored up in management development, strategy-building, talent and technical programme development.
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How did you decide on a strategy?
We had a very inclusive dialogue on strategy by getting some core people to take part in it. To get an outside view on the strategy, we got Pankaj Ghemawat as an external facilitator. The strategy then became the central theme of everything we focussed on.
We followed its implementation on the ground so that initiatives were carried forward. For example, digitisation for internal efficiencies: we digitised the whole organisation so all our employees could access relevant information related to our organisation. This was started way back in 1997-98. Then came customer relationship management systems, financial accounting systems and HR systems, all integrated into one. These were necessary to improve efficiencies, focus on consumers and get relevant customer insights.
Why focus on these areas?
One, the market was beginning to expand. We could not have waited for the market, so we had to be proactive in strategy. Investing in technology, people, marketing and sales along with R&D were some of the building blocks that we had to focus on. It was either those to build the market or else wait to follow it.
| Meet Subramaniam Ramadorai |
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In the process to make the company last, did you divide the growth phases or just pick up unfinished work?
Each had a different phase to tackle. Each was relevant at that time. It was not that my predecessor did not do a task, hence, I had to take it up. What I saw as the future in 1996 was very different from the future that Kohli saw in 1968 and from what Chandra (N. Chandrasekaran, the incumbent CEO-MD) sees today.
Kohli had the formation of the company on his hands. For me, it was time to take it to a different level, across the world, to different geographies and domains. As we speak, further delineation is happening. In technology, for example, mainframes have all but disappeared, with solutions becoming more cloud-based and mobility-based.
Differentiation goes a long way towards making a company last. What has helped differentiate TCS from its competitors?
I think it is the development of people and their talent. We have never been shy of investing in our people. We have given a lot of importance to our homegrown talent. Since our early days, we were always about recruiting the bottom-most echelons from the campuses and nurturing that talent within the company. The bulk of our recruitment has always been from the ground up. That is a trait that has stayed with us.
Are there any entry barriers? How do you retain talent?
For us, it was all about people, people and people. Everything revolves around talent even now. If the culture permits people to work in an empowered way then even when they leave for perceived better prospects, they would want to come back. What also matters is the connect of the people with those at the top. We interact with the people and take such interactions, both formal and informal, very seriously. There are multiple ways of connecting with everyone, even through roadshows, for instance. We encourage dialogue between employees and leaders within the organisation.
Even after my retirement, I continue to interact with a number of people in TCS. It is important for employees to feel connected to the CEO and senior management. While such interactions help employees to understand their respective roles in the company, it allows the topline management to identify good talent and potential leaders.
How does a company retain its entrepreneurial vein as it grows?
Idea generation has to be vertical and horizontal and not just flow from the top. Empowerment must be created at every level. If there’s a good idea, employees should find a platform to present it. If the openness is not created, companies become hierarchical. Our digital platforms help employees log in their ideas and there are umpteen fora to publish them. To be sure, we have the highest number of submissions in the Tata Innovation Forum every year.
With scale comes slow bureaucracy. How did you build your company to keep it nimble?
If five of us are there, then we see if we can make do with four, because one of us is just a bureaucrat. The same can be applied to a process too. The efficiencies are continuously looked at, which looks at how we cut down on bureaucracy. Bureaucracy happens when you do an efficiency exercise once and think it will last the company’s lifetime.
How crucial was it to build domain competencies over technology competencies?
Every domain needs IT. So, to integrate IT with the domain, we needed specific knowledge in that area. Nobody else was focusing on it then, because the market was not aware of it yet. Technology used to be first discussed and then its fit in a domain was considered. Today, domain comes first. The integration of the relevant technology comes later.
How does one balance the short and long terms? Did you have to give up some short-term achievements for long-term gain?
We look at multiple horizons. One is the immediate year, then three years and then five years and beyond. Short-term was about working on the project today. If at all, one ditches some long-term aims because removing the short-term goals would mean one will have to close down the company.
How have the long-term plans fared?
The short-term plans ultimately feed the long-term vision. TCS believes in playing for the long-term. When we went for a public listing in 2004, we said we will not give guidance. That was a choice that reflected our philosophy. Any investor coming in had to view this company as a long-term value creator, not in short- term for a quarter only.
Second, the way we invest in people is in line with our long-term views. We don’t wait for an empty slot before hiring a person. When we meet a good person, confident that we can develop the talent, we hire. Even in terms of technology, we think similarly. So, we may look at robotics technology. It may not be relevant today but two years from now, once we build the capabilities, we may have a market for it.
Did you have to let go of any long-term plans?
In multimedia area, for instance, we invested in R&D and made other relevant investments. However, we realised that the market was not ready and we had entered too early. So, we decided to revisit it after a couple of years, which we did. We had some accounting systems like DX and R2 which never came out in the earlier avatars, but later got merged into our financial services practice.