How India’s largest IT company TCS makes its billions

03/09/2018

NEW DELHI, Mar. 9: Tata Consultancy Services gets nearly $2 billion in revenue a year from analytics, the company’s CEO Rajesh Gopinathan told ET in an interview, making it the largest chunk of its digital revenue.

India’s largest IT company gets over 22 per cent of its overall revenue from digital — a number that will be well over $3 billion for the financial year ending March 2018. This is the first time TCS has defined the contribution of the business segment that makes up the overall digital revenue figure.

Last year, TCS appointed Dinanath Kholkar, who used to run its $2-billion business process outsourcing business, to head its analytics division. “Analytics in itself will be equal to the portfolio he (Kholkar) was running earlier. Analytics was distributed across a very wide set and once we are done bringing it together, we will have to think how we report it and all, but we run probably one of the largest analytics groups,” Gopinathan said. The IT firm’s $2.5-billion mega deal with Nielsen is in the analytics space, which has helped TCS grow that business, Gopinathan said.

Soon after Gopinathan took over last year, the company went through a reorganisation that was focused on growing its digital business. He rejigged service lines and put them under Krishnan Ramanujam, who was named president. Individual service lines were clubbed into three buckets — cognitive business operations, digital transformation services, and consulting and service integration.

Large service lines like application development and maintenance, which contributed 38% of TCS revenue last year, were broken down into smaller units such as enterprise application services, cloud applications, microservices and APIfication.

Cloud infrastructure will be a separate unit. Each was given aggressive goals. Two other digital units, other than analytics, were also carved out, internet of things and automation. Gopinathan tasked the head of the company’s engineering services division — Reguraman Ayyaswamy — to head its IoT services and PR Krishnan, who formerly headed the infrastructure services division, was put in charge of automation services.

Gopinathan said the new units were still building out their teams.

“They are still building out their organisations and go-to-market and so forth but early success is strong and it really is bringing it all together... IoT and automation are quite new essentially; we are building it up from bottom up. Analytics is the larger piece,” Gopinathan said.

 

 

 


This is the first time that an Indian IT company has broken out a part of its digital revenue, a move that analysts have long wanted them to make. Larger rival Accenture gets over 55 per cent of its revenue from new technologies.

 

 

 


“IT companies should be breaking out more of digital revenue clearly. Currently, the definition is different from company to company so it makes comparisons harder. But if you look at the commentary, companies have been saying that they will look at giving more data in FY19,” an analyst with a Mumbai brokerage said.

 

 

 


He declined to be identified. In its latest earnings call with analysts in January, Infosys chief operating officer UB Pravin Rao said digital technologies contributed more than 25% to the company’s revenue and that the IT firm would publish this metric in the coming quarters. TOI

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