Exploring Latin America's potential for services delivery
SSON interview with Ankur Prakash, VP & COO, TCS Latin America, Tata Consultancy Services
Ankur, TCS has been taking a pretty aggressive BPO approach in some of the emerging markets. Globally speaking, 60% of your revenue is generated outside India. Looking at Latin America specifically – what’s your strategy?
Let me give you a little background. Up to 2002 we were doing a lot of business in Latin America, but it was all going either through India or through the US. From 2002 onwards we started our journey towards establishing operations in every country that we wanted to have a presence in; and today we have a presence in eight countries across Latin America with approximately 9,000 people working for us. What is notable here is that 96% of our employees are locals. The balance is made up of project or skill-set experts from India, who we use to "seed" particular projects to start. For example: suppose we want to start a new relationship with a customer. We bring the best talent that we have from whichever part of the world as a "seed" starter, and then we build the local team around that talent. Once we finish the skills transition from the global team to the local team, that global team moves on – either to a different project back to the base location. This model works very well for us.
Our strategy since 2002 has been to ensure that we have an important presence in the local market with the local and regional customers; that in turn helps us to attract global customers. Part of our delivery strategy is the Global Network Delivery Model, through which resource decisions are made based on the specific skill set and employee profile required for a project, and the location best suited to provide that profile. This helps us to implement the best practices that we have created in that particular industry across the globe, and it also helps us to utilise our talent so that we can reduce time to market and continue to deliver the quality that our customers expect.
Ankur, for the last ten years we’ve witnessed Latin America rising on shared services agendas, and a corresponding expansion on the part of BPO providers. What is it that’s driving this growth?
There are multiple sectors driving growth for us in the region, aside from our normal bread and butter work, which is application development, maintenance, and implementation. Other services that we have seen a lot of traction in include XXX, ERP implementations, and BPO. These are the three specific sectors that are driving growth in Latin America.
Looking at these three areas, to what extent is the work purely domestic or regional – and to what extent is it driven by global customer operations?
About 60-70% of our customers are domestic or regional and the remaining are global. For the global customer base, the decision is generally about establishing their presence and having a delivery capability in Latin America, to act as an alternative supply base. For the domestic and regional customers, we use our infrastructure and people to provide the value-added projects and products that make a positive impact on their operations.
Are there certain industries where you see more growth potential than others?
I think the good news has been that all the industries that we have a presence in are growing. Those are basically the financial sector – banking, financial services and insurance; telecommunications; retail; travel; hospitality; utilities; and manufacturing.
The global marketplace is changing, with more and more business today conducted across the Internet, for example. How is the fact that your clients’ business is changing so significantly impacting how you partner with them and how you provide support services?
No matter how the client model changes, what is never going to change is that everybody wants to deliver a better service to their end customers; everybody wants to do more with less; and everybody wants to create a space for themselves in their marketplace. Those are the basic fundamentals of a company that are never going to change. We believe that we can touch upon those aspects of a company. That is how we can create value and demonstrate value to our customers to win projects.
I’ve read about your four "pillars," one of which is innovation. You also run some pretty interesting "co-innovation" and "co-invention" groups. How are you leveraging innovation specifically for Latin America and what kind of research or innovation groups do you have there?
Innovation always helps us in creating an environment where we can be more competitive and where we can come up with specific practices or services to directly help the customer in a positive way. So, all of our services include some aspect of innovation. Our new services lines, like mobility, big data, social networking, or platform BPO ... all of these have emerged as part of this innovation or co-innovation network that we have going. We analyse the different solutions and decide which solution makes the most sense for a specific market.
So, what are some of the big trends that define the marketplace right now? Where is TCS pushing forward, or investing in its own people?
As we are a services company, it is very important for us to keep investing in training and retraining for our people, because they are our biggest assets. As I also mentioned, we are seeing a lot of traction and growth specifically in infrastructure services, enterprise solutions and BPO as well as the new service lines we are focusing on and which I mentioned earlier – mobility, big data, etc.
SSON runs Shared Services & Outsourcing events around the world, as you know, and we have just run the Latin Americanevent this month. "Big data" is one of the key themes we focused on this year. It appears the provider side is leading the market though – most of the buy side [inhouse practitioners] seems aware of the need to develop some competency in this area, but I’m not sure they know what to do. How are you helping your clients with data management?
Big data might sound new, but big data along with analytics is what’s absolutely important for any company in order to take intelligent business decisions. That is where we come into the picture. Internally we reflect this strategy, from starting a project up to delivering it and collecting the money – everything is handled through systems. If you don’t analyze the data and present it in the right moment to the right audience, you won’t be in a position to take an intelligent, smart business decision. So, that is where it makes all the difference.
Now, there will always be a progressive approach to it. What I mean is that nobody, at any given instance, will know what to do with all the data that they have; but slowly and steadily, with the right approach and the right analytics, I’m sure that we will be in a position to add value so that the customer can take a better decision.
What does "mobility" mean and how does it impact the customer?
"Mobility" refers to any transaction that you can execute while you are mobile – meaning through phones or similar channels. So that applies to paying your phone bill through your mobile, banking on the go, and getting your boarding pass on your cell phone. All of those things fall into mobility, for me. This business has picked up a lot in the last three to four quarters, and we are focusing heavily on it, as I already mentioned. Our customers are requesting solutions around mobility and we have a lot of value to add in this area.
One of the trends we’ve heard a lot of talk about is industry "verticalization" – ie, developing industry-specific expertise in given processes. Is this an area you expect to see growth in?
All of the things I’ve already mentioned … you cannot develop expertise without having the industry-specific capabilities. The subject matter expertise is absolutely important. That is why we can add value to the customer – it’s by speaking and understanding the customers’ language. But first you need to understand their industry. That is absolutely a must. IT is just an enabler. The important thing that we have to bring to the table, our differentiator, is how quickly we are able to adapt to the customer’s language.
I want to ask you specifically about BPO now. You said that this represents about 30% of TCS’s business in Latin America. Does everything we’ve discussed also apply to BPO?
Everything that we have discussed so far applies to BPO in exactly in the same way. There is absolutely no difference because all of our services and all of our practices and offerings merge. What we do is try to offer all our services to every single customer, and that is why even at the global level more than 90% of all our revenues come from repeat customers.
Could you summarize what most of your Latin American customers are asking for right now?
Customer spending, if I can put it like that, fall into two areas. There is "run the business" – which accounts for 40-50% of customers’ budgets; the remainder of the budget goes towards "transforming" the business. The point is, because of the current economic scenario, the discretionary spend – even though it has increased compared to recent quarters – is still low. We foresee that it’s going to improve in the future, but at this point of time the discretionary spend is lower than what it could be. So, that is where the customers are spending their money at this point of time.
Your career at TCS has taken you around the world. How does BPO in Latin America compare with some of the other regions where the concept of BPO is more developed?
I think there is still a lot to cover in BPO in Latin America. For example, BPO is still really only perceived as a "voice" capability, within Latin America, so there is a large green field opportunity. Companies like ours can add value not only in terms of transactions but also by taking the business to a different level, getting involved with business decisions, defining areas for improvement, outsourcing, etc.
You talk about very high prcentages of local talent. What’s your greatest advantage from a recruiting perspective? How do you promote your brand?
For us the most important thing is that we find the people who are hungry and who remain hungry. We have the engine to train them for different industries or service lines or customers. So we are looking primarily for the people who are hungry and remain hungry, because hunger is something that you cannot create. Other things, you can teach. That’s why more than 70% of our recruiting happens in campuses because we want to catch them young and we want to teach them the way that we work, the TCS way, and the customer way. So we have very specific lateral recruitment for specific profiles and specific cases.
As the marketplace for talent is obviously heating up, are you finding attrition is rising? Is this becoming more of a challenge to you?
I think our attrition rates are at least 25% to 30% lower than the market generally. Attrition is going to be there, and is there, and I think some amount of attrition is healthy, but our attrition rates are quite in control.