Outsourcing rumpus has helped business: TCS

Phiroz Vandrevala

All the backlash against outsourcing has come as a blessing in disguise to highlight Indian IT as a primary location, according to Phiroz Vandrevala, executive vice president, Tata Consultancy Services.

Speaking to mediapersons on the sidelines of a roadshow on account of the up-coming TCS initial public offer, Vandrevala said that contrary to expectations, backlash in the US and the UK against outsourcing and off-shoring IT services has benefited the Indian tech sector immensely, leading to more awareness and business traction from global firms.

Vandrevala added that apart from attracting global tech firms such as IBM, HP, Accenture and EDS to set their captive units in the sub-continent in order to capitalise on low-cost high quality talent pool, the backlash turned out to be a "blessing in disguise" to global Indian firms, enabling them to pitch for multi-million dollar deals with competitive edge.

"During the last two quarters, we have seen a steady increase in our business growth from outsourcing and off-shoring. Global firms in the US and UK have realized the cost and quality advantages of Indian tech firms like TCS vis-...-vis our peer players.

Instead of cascading effect on our offshore/onsite operations, the backlash has created greater awareness of our presence and more client visits from these countries for due diligence of our domain expertise," he said.

According to him, this has in turn increased the ability to bag deals, especially for companies like TCS which has "gained more traction" on this front.

"In fact, we were also told that doing business in India will result in reducing operating margins. Today, nearly 13 per cent of our business comes from India. Also, we cannot afford to stop doing business with Indian customers for the simple reason that TCS is an Indian company."

"We are well positioned to compete with any country in the world. The fact our global peers have set shop in India to compete with us for the same pie of the IT services business has created a level-playing field. The battle is being fought on the same turf but on our (Indian firms) terms," he added.

Though TCS has listed (as risk factor) in its Red Herring prospectus for its ensuing IPO that curbs on outsourcing or immigration in the US may adversely effect its business and profitability, Vandrevala ruled out any impact on the company's global operations from the backlash or the proposed legislations by some US states.

"As the US economy recovers and tech spending picks up, we are upbeat on sustaining the momentum to maintain the growth rates, especially after the ensuing US presidential elections due to our competitive edge and ability to provide end-to-end solutions across domains," Vandrevala said.

On the BPO strategy for the company, Vandrewala said that this division would focus on the transaction processing space and not the low-end call centre space, expect in cases when it bags contracts for providing end-to-end solutions.

He said the company would increase its offshore projects to strike a balance in its service offerings for maximising operating margins.

Post-listing, TCS will continue to look for mergers and acquisitions (M&A) in line with its business prospects. "Our appetite for M&A remains as before. We may make further acquisitions or investments to expand our access to large clients, acquire new service offerings or enhance our technical or research capabilities," Vandrevala said.