TCS to continue aggressive growth strategy with big spending ahead

08 January 2020 3 min. read

Tata Consultancy Services is set to splurge on technology in the coming years according to a recent interview with the firm’s CEO Rajesh Gopinathan.

Tata Consultancy Services – already India’s largest information technology services provider – isn’t about to grow complacent, with the firm set increase its spending in key areas such as artificial intelligence and data analytics by as much as $8.5 billion over the next few years in an effort to keep up with US competitors such as Accenture, said CEO Rajesh Gopinathan in an interview with Nikkei Asia.

Speaking to the finance publication during a visit to Japan, Gopinathan, who oversees a business operating in some 46 countries worldwide with revenues in excess of $20 billion, stated that the firm would continue with its aggressive growth strategy despite rising uncertainties in the world economy, such as to the ongoing US-China trade spat and US moves to tighten visas for skilled foreign workers.

On recent figures, Tata Consultancy Services (TCS) sits behind only Amazon and US-headquartered rival Cognizant for US government-issued H-1B visas, receiving more than 2,300 of the 85,000 coveted visa approvals (from around 200,000 annual applications in total) for highly-skilled migrant workers in 2017 alone. The US however has made recent revisions, with higher fees and stricter definitions.

Rajesh Gopinathan, CEO at TATA Consultancy Services

“Political tensions, trade disputes... If they are not settled through diplomatic channels, it’s always negative for any business. Having said that, I think the space that we are in is significantly supply-constraint,” Gopinathan said in the interview, noting that over one million IT positions remain unfilled in the US due to a short-fall in supply. Altogether, TCS has a global headcount in excess of 450,000.

Nevertheless, Gopinathan according to Nikkei ‘remains sanguine’ about the company’s business outlook, with the CEO and managing director stating the firm’s intention to ramp up investment in developing new services and personnel. “We will continue to invest for growth,” he told Nikkei,” adding that the slated figure for the 2018-2023 period represents a 60% increase on the preceding five years.

In dollar terms, that increase could be as high as $8.5 billion, outpacing similar announcements from cross-over players such as the Big Four, which have in recent times announced tech and skills-building investments collectively worth over $9 billion – including a $5 billion five-year declaration from KPMG last month. Accenture meanwhile continues to add capacity through an ongoing acquisition spree.

The Nikkei report notes that although TCS has increased its sales over the past five years at a faster rate than its established rivals, the firm’s digital division, covering areas such as AI, cloud computing and data analytics, considerably lags – contributing roughly 30 percent to overall sales compared to a 60 percent rate for Accenture. TCS still generates over two thirds of its revenues from traditional ICT.

To address the gap, the firm will according to Gopinathan channel investment into fresh research & development facilities and talent, along with the establishment of new data centres to meet the rising client demand for cloud services. In addition, the company will increase its retraining programmes for its existing engineers, with the aim of creating an agile workforce capable of meeting the demands of changing customer needs.