TCS: Why India is still great for outsourcing

as cost savings hit the top of the CXO agenda, IT services' intrinsic role in fostering consolidation and integration, and enabling process and productivity enhancements indicates it will not all be bad news for the IT industry…

The financial turmoil of the past few months has hit world markets harder than at any time in living memory, and the IT industry is of course not immune. We are currently seeing an all-too understandable IT investment decision postponement and delay across many sectors. Nevertheless, as cost savings hit the top of the CXO agenda, IT services' intrinsic role in fostering consolidation and integration, and enabling process and productivity enhancements indicates it will not all be bad news for the IT industry, writes AS Lakshminarayanan, vice-president and head of TCS Europe.

Furthermore, unlike the dotcom bust period when there was indiscriminate spending in IT and therefore doubts raised on the value of IT, the business leaders have now come to recognise the contribution IT can make in their drive to make the businesses more efficient and agile.

The issue though for many is, are the management teams stable enough as they go through a period of churn and change? Stable teams are surely focusing on long term cost restructuring, simplifying their products and processes and improving their customers' experience - for these will not only take costs out but also set the company up for the growth period that is sure to come.

Complicating things, however, are last year's attacks on Mumbai and news of corporate fraud by one of the India's largest outsourcers. I believe these are only temporary set backs. Terrorism and unfortunately, fraud have now become a global phenomenon and India is no exception

In its 40-year history, my own company has witnessed many market booms and busts. Throughout this time, we have focused on value creation for all customers and stakeholders with a disciplined and professional approach that is in the DNA of the 140-year heritage of the Tata Group.

Effective spending, targeted investment and strong leadership are the key to ongoing growth and long term success - both for the industry, and that of its clients. A new paradigm in business leadership is called for, one that is based on integrity, trust and an entrepreneurial spirit: focus on customer service, quality, value, collaborative innovation and excellence in delivery (to budget and specification).

The above may sound simply like common sense, but questions need to be asked of all potential IT services partners: has investment continued, even in the downturn? Is there evidence of the global footprint, diversified business model, quality service and long-term financial strength that proves longevity and will be critical in surviving the downturn?

Acquiring Citigroup Global Services for $0.5bn late last year showed that TCS for one continues to invest where a strategic fit will drive future development. TCS has over 130,000 trained IT consultants working across 42 countries. Its Global Network Delivery Model of more than 80 global centres provides reliable, scalable and cost-effective delivery of services and solutions around the world, and it also some of the lowest staff attrition rates in the industry. It amounts to the global sourcing of services and solutions.

Because of this, TCS can be confident of its business model and long term, sustained growth potential. Others that are recognise that long term business success - especially in a downturn - is founded on this long term sustainability - backed by strong ethics and respect for the individual, the environment and communities.

And for those companies, the opportunities to grow their customers' and thus their own businesses are out there: they just need to offer clients certainty. As late as September 2008, Forrester found 45% of firms planned to increase use of applications outsourcing, and 43% to increase use of infrastructure outsourcing and move more work offshore - a clear opportunity for IT services companies.

No-one is suggesting the year or so ahead will be easy, but the need for the benefits of global IT expertise will prove to be greater than ever.

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