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Upskilling India: TCS and the IT sector

  While today it might be one of many mega-firms in the Indian technology space, TCS must be given full credit for building a skilled workforce, as well as India's identity as a software services hub. After 50 years, let's take a look at TCS's contribution to the industry.  

Dr Suresh Srinivasan

Tata Consultancy Services (TCS) recently    completed 50 years in business. In the process, the company has achieved many accolades — India’s largest software services company, the largest company in terms of market capitalisation of more than `8 lakh crore, the first Indian company to cross the $100 billion market capitalisation threshold, etc. Today, TCS stands as one of the two biggest companies in the India, along with Mukesh Ambani-run Reliance Industries Limited. Globally, there are no more than 65 to 70 companies at this level of market capitalisation; Appleis the world’s largest company and is leading the pack with a market capitalisation of a trillion US $ (roughly ten times bigger than TCS). What TCS has achieved, therefore, is by no means a meagre feat!
TCS’s market capitalisation is in fact more than the gross domestic product(GDP) of many countries like Sri Lanka, Kenya and Bulgaria. While these are manifestations of TCS’s success, how exactly has TCS managed to achieve this success? What are some of the factors that helped TCS achieve this? This is an interesting question, and the answers are bound to inspire young managers and the various new start-ups that are springing up across the country.

Skilling the workforce
It is often said that India is poor in manufacturing, and as an exporter, our dedication to manufacturing quality products is dismal, we are not competitive in the global market with our products, etc. One of the main complaints for this is that there is no adequately skilled labour force available for the manufacturing industry to absorb from colleges and universities. This is one of the main allegations the manufacturing sector makes — we do not have a “manufacturing industry-ready” skilled workforce, and our universities just do not produce them!
Similarly, back in the mid-70s and 80s, there was no“software industry-ready” skilled workforce in India. TCS, and other large companies, nurtured and trained the workforce to become software conversant, pretty much from nothing.Seeing India’s opportunity in the global software arena, TCS and these companies slowly but steadily developed a quality conscious workforce that would be ready to take on the challenges.
Moreover, India was, and never is, associated with quality products, and this continues to be the biggest challenge for the manufacturing sector today. But instilling that quality consciousness, which is the heart of software services, in the hearts and minds of the IT workforce has been the single largest achievement of players like TCS.

Education sector steps in
As the critical mass in the IT sector picked up, colleges and universities developed courses like Bachelor of Computer Applications (BCA) and its subsequent Masters. Six Sigma and black belt certification were rampantly introduced, and the entire workforce and the academic universities were sensitised on the importance to quality and the “conformance to requirements” in the global IT industry.
From nothing, TCS, and the movement it created, has been responsible for scaling up the “direct” workforce in the Indian software industry to around 45 lakh. The indirect employment generated can be considered to be around three times that of direct employment, as a thumb rule. This is an amazing contribution to the country. Although many other players eventually joined this movement, it would be unfair if the lead credit does not go to TCS.

F.C. Kohli, widely considered to be the father of the Indian software industry, spearheaded India’s software journey, and provided the foundation for TCS to reach where it is today.Kohli was at TCS’s helm from 1974 to 1996, and during his journey with TCS, he nurtured a number of young leaders who subsequently moved to other Indian IT companies, jointly creating the so-called Indian IT revolution.
It must be remembered that back then, India didn’t really have anything called an “IT industry”. The concept was at a nascent stage, and there were very few players in the country. Kohli and TCS, of course along with Infosys and Wipro at a later stage, created a business model that delivered software services to international clients, precisely meeting and conforming to their requirements, and exponentially ‘scaled up’ the operations. India eventually became a trusted and dependent global software hub, serving virtually all the key global clients across industries. The leadership pipeline in TCS has been quite exemplary —Ramadorai and Chandrasekaran followed F.C. Kohli. Although there were changes in the leadership, the heart and soul of the company had been kept intact as it continued to scale.
The people that were nurtured within the TCS umbrella and the culture that was set out consistently over the last five decades is an important success factor, and these leaders must be given due credit. Although the salary levels of the TCS executives cannot be said to be the best in the industry, the culture and motivation levels have been quite unmatched, and this even showed up in attrition levels as compared to industry level benchmarks. In all, the employees and middle management make up an important component of an organisation’s success.

The Infosys angle
It is extremely challenging to sustainably and successfully run companies over long periods. Take, for example, Infosys Technologies, which recently crossed 25 years.Infosys has seen a lot of ups and downs in its journey that can be described as extremely volatile. Branded as one of the most successful start-ups in the country, it reached great heightsand was touted as one of the best functioning companies in the country.
However, over the last decade, Infosys’s stellar runwas marred by a number of arguably avoidable controversies, leadership crisis allegations and boardroom battles. The company which, at one point, was even considered to be more competitive and promising than TCS, has seen such issues disrupt its progress.Its market capitalisation is around `3 lakh crore, less than 40% of TCS. Make no mistake though, Infosys too is a great company with leaders who can stand tall; but its achievements don’t match up yet to the TCS’s!

Challenges ahead
The industry landscape and competition has already moved from just coding and information technology to the core technology space comprising artificial intelligence, social media, machine learning and analytics. TCS, being part of this technology industry, needs to reinvent and transform itself, re-skill its large workforce and managers to continue to be globally competitive; this is an extremely challenging task. Till now, over the last 50 years, TCS has managed to remain relevant, but the challenge now to differentiate itself from the competition will definitely be a major challenge, especially given its size and scale.
For now, TCS is the cash cow for the Tata Group. Althoughthe Tata Group has a portfolio of close to a hundred companies, TCS is the largestcontributor in terms of revenue and profits to the Tata Group. The well-being and sustainability of TCS is vital for the survival of the Tata Group as a whole.
Within the global IT and technology industry, TCS is still not in the top 5.If it manages to pull through a major acquisition, bold, well articulated, carefully planned and more than anything, seamlessly executed, it has the potential to become one of the largest global technology players.