India going to be main provider of ICT services in the not too distant future

Phiroz Vandrevala is clearly pleased with himself.

The days are over when India’s information technology (IT) services firms were seen as the sweatshops of the computer world. Today they provide the full range of IT services, from call centres to software development to consulting.

With growth consistently in the double-digits, TCS is starting to play in the same league as the big boys, competing with well-known IT giants like US-based EDS and France’s Cap Gemini.

The firm’s global reach gets bigger and bigger with every new contract rolling in, like a ?900m ($1.73bn) deal earlier this year to provide IT infrastructure for the UK’s National Health Service in a Fujitsu-led consortium.

In the global charts, TCS currently lie 14th with a turnover of USD1.5 billion. At the top is IBM with USD89 bil, followed by HP with USD73 bil, then EDS with USD21 bil.

By 2010 this company wants to be in the top 10 of IT services firms. With six years to go, TCS is nearly there.

They are optimistic: “We are number 14 in terms of revenue, ranked 6 in profits, and are number 9 in people employed.”

The roots of TCS go back to 1968 when, in what would later become known as outsourcing, the company started to provide software services for US insurance firm Sun Life (whose products include travel insurance).

TCS had a comparatively easy start, backed as it was by parent firm Tata, the giant tea to telecoms conglomerate.

Today the firm operates in 33 countries, has more than 35,000 employees worldwide, boasts an annual turnover of $1.56bn (?803m), and a whopping return on investment of about 25%.

Made in India

But with big Western firms still ruling the roost, how far up the value chain can Indian companies go?

There are plenty of critics who are dismissive of the challenge. Indian IT services firms, they argue, are mere body shops, churning through young graduates that do repetitive, boring and ultimately not very demanding work, and just about good enough for the outsourcing of some basic jobs.

Not so, argues Mr Vandrevala, TCS VP. “We are active in all six ‘boxes’ of the IT services industry – application development, IT engineering, IT products, infrastructure support, business process outsourcing, and consulting – which allows us to compete at the same levels as IBM.”

Ultimately, though, for most jobs firms like TCS are mere vendors and service providers, helping other companies to efficiently implement and run software written by firms like Microsoft, Oracle and SAP.

It’s “Processed”, not “Made in India”.

And so far only a few Indian software houses have had much success taking a different route.

I-flex Solutions is one of them. The company emerged 12 years ago from a Citicorp outsourcing outfit and has now grown to more than 4,000 employees.

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