TCS @100 Billion – Leadership is the difference

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23rd April 2018 – Proud day for investors and management at TCS. The market capitalization of the company crosses $100 Billion mark for the first time and it is also the first Indian IT Company and overall second to achieve such milestone.

What is more of essence here is that this feat has come at such a time when challenges are upfront and increasing for the IT industry. As we all are ushering through the IT revolution age, we can see for ourselves that how fast technology is getting obsolete.

Now the numbers: –

TCS' market-cap is equal to the GDP of 128 countries of the world.

It is now worth one-third of the total estimated budget expenditure of India for 2018-19.

In 2009, TCS was 1.5 times smaller than its nearest rival and then industry leader Infosys. Today, it is 2.5 times bigger than Infosys. Within 7 years, TCS has added $10.9 billion to its revenue, which is the total revenue for Infosys in FY 18.

Its valuation today is more than combined valuation of HCL, Wipro and Tech Mahindra.

It also surpassed its global rival Accenture in market capitalization.

There are more numbers and comparisons but,

All said and done, what has led to this extravagant rise when all others seem to fail?

To me the answer is Leadership: the consistency in leadership and smooth transitions. And yes by all means I would give a substantial credit to the Chairman of the company Mr. Chandrasekaran. A fact to be kept in background – He was the CEO of TCS for good 7 years before he became Chairman of Tata Sons last year. The one good thing about TATA is their preparation and grooming of the people for the leadership roles. And not just the top management, they groom the second level leaders too.

When last year, after the top level struggles were out in open at Bombay House in Mumbai, I was shocked and surprised because that was not something I ever thought would happen or even associate with in TATA. But nonetheless, after having first non-parsi chairman, the doubts which arose then have been silenced today and things have been on the better side.

TCS chief operating officer N. Ganapathy Subramaniam recently said in an interview that the thought leadership framework of Business 4.0 has been the key and it would help continue on the right profitability and growth path.

“We now understand that digital is not technology. It is a series of technologies. This is why we have defined Business 4.0, under which we can come up with new offerings. Chandra (Chandrasekaran) always believed in giving a much larger role to people he believed had potential, and so the organizational change we undertook was a phenomenal move. We organized ourselves into smaller units. Each of the units was run by leaders who were told to run it the way they wanted,” Subramaniam said.

The company has its own internal startup incubation programme which has provided it with its automation platform Ignio, and other platforms such as Bancs, ION, HOBS, Optumera, etc. to name a few. It uses and builds capacity, capability and efficiency from its more than 4 lakh strong work force which is keeping them relevant in this ever changing technology market. This has also helped a smooth transition on automation for TCS as compared to its peers and this vertical has also helped them generate revenues.

This is why TCS has succeeded, the culture it possess makes the people stay at the company, consequentially reducing attrition rate which has helped develop, grow and conserve this culture. TCS is simply reaping the fruits of the seeds it has sown over the years. This is how a business grows organically. To put it in more simple language, it is us humans who have created technology. So we form the core of this technology age. TCS has been right as it has successfully harnessed the same.

If we can recall, in one of the previous blogs, “Attitude vs Arrogance-startup challenges” I had mentioned the real difference between the start-ups that survived and the ones that didn’t. The answer to the question and the answer to the company reaching $100 billion dollar mark is the same: Leadership.

I would like to again quote Mr. Royston Guest, founder of Pti Worldwide, “Leadership is everything; the ultimate responsibility will always lie with the person at the top. There is always inspirational leadership wherever you see a high-performing business delivering accelerated, sustained and profitable growth.”

But it works both ways. Although TCS today breaches the billion dollars club, it has still a task at hand to match up its global peers. Although TCS is around the corner to overtake Accenture in terms of market capitalization, Accenture has twice the revenue of TCS. While the current news looks promising, it will be a test of time ahead too for the company to prove its mettle. Also, for Mr. Chandrasekaran, who now sits at the helm of the group, has a job at hand: to take other group companies to their respective pinnacles.

If you take a look at the theme of last year annual report of TCS – ‘Reimagining the Enterprise’, I think they might just have achieved it.