TCS Gets A Makeover

India’s biggest infotech firm, the jewel in the Tata crown, is revving up its digital business to take the company to the next level.

- T. Surendar

IN HIS FIRST EVER MEDIA briefing in April 2017, the CEO, just 50 days into the job, had to announce the company’s poor results after TCS’ annual revenue growth slowed to single digits for the first time in five years and only the second time since the company listed in 2004. The Mumbai-based company’s shares dropped 6% soon after the results were announced, which was a culmination of several quarters of tepid performance, including a rare negative quarter. The industry was already abuzz with talk about the lack of capability of Indian information technology (IT) firms to compete in the new world of digital technology. In February that year, rival Capgemini India’s chief executive, Srinivas Kandula (now chairman), went so far as to say that 60-65% of local engineers cannot be trained to adopt new technologies.

His words rang true as TCS’ oft-compared rival, Dublin-based Accenture, didn’t show any signs of tiredness. It was posting its best-ever sales and profits on its fast-growing digital business. But TCS didn’t seem to be seized of the grave issues it faced: Much like an ostrich with its head in the sand, the software services company hired 78,912 software professionals that year at a time when its local rivals were laying off employees.

The problem did not end there. Two months after the results, when the appointment of Gopinathan and new chief operating officer, N.G. Subramaniam, came up for shareholder approval, a noticeable chunk voted against the resolution. Institutional investors made known their dissent as they felt the baton was being passed on to unproven executives, especially when the company was faced with its biggest challenges. In the next quarter, TCS again posted negative revenue growth.