Interview

Retail is an industry undergoing transformation, says TCS COO

CHENNAI, TAMIL NADU, 05/12/2017: N.G. Subramaniam, Chief Operating Officer, TCS, during an interview with The Hindu in Chennai. 
Photo: R. Ravindran

CHENNAI, TAMIL NADU, 05/12/2017: N.G. Subramaniam, Chief Operating Officer, TCS, during an interview with The Hindu in Chennai. Photo: R. Ravindran

 

Information technology clients are no more in the ‘business as usual’ mode. And, ‘less is more’ is the new mantra for IT spending. These two philosophies now rule the thinking of clients spending on technology, said N. Ganapathy Subramaniam , COO, Tata Consultancy Services. The IT services industry has also been facing challenges in getting retail and banking clients to spend on technology. Mr. Subramaniam dwells on these headwinds and new opportunities:

What has changed for IT staff in the today’s scenario?

We can’t have teams that do only programming. We need more all-rounders. People should have functional knowledge, the ability to corelate and understand the experience being delivered to the client. Coding is important. But you also have to ensure that we are coding for scale, that there are vulnerabilities in your code; you should know how to test, how to document. More than anything else, make sure that your code does not freeze other pieces of code. In a jigsaw puzzle, you can’t worry only about your piece. Earlier, it was possible. Now you have to understand big picture; understand what you are trying to deliver in terms of experience.

Isn’t it difficult to get a large number of such people? Unemployability of graduates is still a problem.

The IT industry in India has invested considerably in the supply chain. We took the responsibility to train the people we require. If you have solid analytical reasoning capability and understand a good amount of maths, then we can teach you. You can always learn, relearn and upskill for yourselves. Sure, it’s Yes, difficult to get all rounders. Next year we [the company] will be 50 years old. I have spent 36 years in the firm. Out of 400,000 employees, 50,000-60,000 would have close to 20-years plus of experience. That is a huge level of contextual experience and knowledge that is difficult to replicate. That is what we are banking on. These people know how to deploy systems and where things can go wrong. That cannot be taught overnight.

Are discretionary spends still a worry? You had indicated in the beginning of this fiscal that they were.

In the agile world, there is nothing like discretionary spend or ‘business as usual’ spend. You build something new or change something that is existing.

With agile, the whole run-the-business [RTB] versus change-the-business [CTB] concept is gone. Obviously, there are some huge transformation initiatives that might come in. That is different. In a traditional sense you viewed anything below six man-months as RTB, and anything above six man-months as CTB. Now, everything is discretionary; our ability to convince clients to spend is key.

Have the boards of these companies become comfortable with the idea? Earlier annuity businesses lent some certainty…

There will be some annuity business. But for a chunk of spending, the differentiation is diminishing.

How far down the road is TCS with respect to artificial intelligence (AI)?

We have Ignio that has seen over 10-12 years of investments and research into automation and AI. As a product today, it has embedded AI algorithms to learn and improve itself. We have deployed it for certain slivers in our business, predominantly on the infrastructure side and for execution for operations. For example, consider a payment file that comes in daily at 4 pm. Intelligence should check whether that has come; what happens if it comes at 4:10 pm; How to avoid duplication if it comes again; can we predict volumes of payment transactions on December 31? If you already have this capacity and plan for it, then instead of expecting it at 4 pm, you run the process as and when it comes. You manage this without risk. Or, if there is a problem in that transaction, the 4 pm window is closed. Before another window later opens up, you need to make corrections. So you consider manual intervention. Or you configure it so that for a value less than ₹1,000, you correct it and push it through. So you optimise throughput on one side and enhance the experience on the other.

You are restructuring the way you deliver services, even to the extent of cannibalising your own revenues.

It’s about doing the right things for the customers. If there is an opportunity to disrupt our own work, we should do it. Or someone else will and you will lose the whole pie. We tell our clients that with the aid of automation or business intelligence, doing things differently could help reduce the cost. That kind of conversation is regular today with almost every one of our 800+ clients.

How do you quantify savings?

Hard to say. It depends on the adoption; all this takes time for clients to embrace too. We are talking about real business. They also don’t want to disrupt significantly.

They have to evaluate business risks. ‘If a bot is going to do it, who is responsible for it?’ is a key question. They would like to do a pilot and test it in some places. About 30-50-60% is the savings possible, in terms of capacity being freed up. It is a CFO’s delight.

In a recent analyst call, you talked about agile at scale. The basic tenets of agile refer to small teams, location in a single place…

Co-location is fine in an ideal situation. Nothing in life is ideal. Even in the same city, you can’t co-locate. So, you have to find a way of bringing them together in a way to deliver value. This is called distributed agile or location independent. This is similar to what containers did to the logistics industry.

With ‘containerisation’, people were willing to plan the volume that could go in. Because of the container concept, the whole supply chain became optimised. In IT today, you don’t know what you require in terms of effort or the functionality to be delivered.

It evolves as you go along. No specifications are signed off. There is a sense of iteration after we broadly agree that ‘this is what we want’. And, we expect to see results early.

It is also about the experience we want to deliver. It is no longer about ‘I want to bring a cereal brand’s product to the shelves; I write code for it’. Now, an end user buys online and will pick up the order at the store. The store person gets the chance to cross-sell — maybe a zoom lens or UV filter to the buyer. So, the stores person, the online person, the IT person together re-imagine the user experience to be delivered.

So, is the retail vertical picking up?

I won’t say it is picking up. It is an industry in transformation. A number of retailers are having challenges, trying to re-imagine their businesses into the phygital [physical + digital] world.

Or, they are trying to consolidate and merge. Having said that, what we are seeing is that it has, kind of, bottomed out. We are seeing green shoots of recovery from our perspective. Retail clients are starting to look at new business models.

At the end of the calendar year, do you have a sense for client budgets for 2018?

We are getting the information — there are no alarming signals. It’s largely work in progress. Gone are the days when anyone tells you ‘In 2018, this is how much we will spend’.

Will they spend the same $100 million in this year’s Q1 as they did last year? There are no guarantees. There are two paradigms today. There is nothing like ‘business as usual’.

People now plan for ‘business unusual’. Previously, ‘more for less’ was the paradigm. Now, less is more. We have to do it faster, quicker and cheaper.

Earlier, growth and efficiency cycles alternated, with the innovation cycle coming somewhere in between. Now, all three are being fired at the same time.

Growth is important. That comes from giving the end user greater experience. Now, clients are not only taking risk, but are embracing risk. Earlier, they were mitigating risk. Now, they structure business models by embracing risk.

If digital is driving this, tech spends by banks should have gained the most. But that is not apparent.

But they [major banks] are all making profits. Tell me, which bank is making losses? Every bank is making money; more money than before. Their stock prices are going up.

But they are spending less on technology. Business unusual. And ‘less is more’ is fast becoming reality.


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