How Chandra Helped TCS Climb To The Top
t was December of 2005 and the Galapagos Islands were teeming with the plants and animal forms that had caught the attention of Charles Darwin more than 100 years ago. Darwin’s study of the island’s finches, among other things, helped him devise the theory of natural selection: Species that adapt to their environment have a better chance of survival. It was perhaps natural that S. Ramadorai, then CEO of Tata Consulting Services, the oldest company of the Indian IT industry, selected Galapagos Islands for a tour of learning and therefore pleasure. He discussed this with N.
Chandrasekaran, popularly known as Chandra, and Gabriel Rozman, TCS’ Latin America head. They agreed. They were anyway in Ecuador to look at the possibility of opening an office there.
“Ram was fascinated with things on the island,” says Rozman. There was so much to see! The Galapagos penguins, green turtles, iguanas, cormorants, Nazca boobies and, of course, three varieties of Darwin’s finches. Ramadorai wanted to soak it all in. “After the third day, Chandra came up to me and said ‘I have seen what I wanted. Let’s go back to Ecuador’,” says Rozman. They flew back and over the next two days, they worked out a detailed plan to increase the business from Latin America. The results are beginning to show now. TCS is poised to make $1 billion a year in revenue from its Latin American operations. In Rozman, Chandra has also found his next delivery network head, the first non-Indian to play that role.
For Chandra, who succeeded Ramadorai as CEO in October 2009, Darwin isn’t just about a theory. He is busy making TCS adapt to the new demanding world of IT services, where if you don’t adapt, you vanish. And Chandra is passing on this message in his quiet, yet firm way to the entire company.
TCS House, the headquarters of the $8-billion IT giant, is an unlikely IT office. It isn’t a symphony of steel and glass like the offices of its peers Infosys or Wipro. The sandstone concerto, located in South Mumbai, is just four floors and offers some grand views from an older time. The best one is of the building across the road: The Deutsche Bank building. That’s where Ratan Tata grew up. The Tatas had to sell it in the Nineties. Today, TCS, the crown jewel of the Tata group, has over $2 billion in cash but the building isn’t on sale.
Chandra, the man in charge of Tata group’s cash machine, isn’t in the office. He rarely is. He travels 20-23 days in a month, meeting customers in different corners of the world and employees at various TCS campuses.
On this particular day, he is in Bangalore pushing the envelope on his other passion: Long distance running. TCS is sponsoring the 10K run in the city and because ITC is a hospitality partner, there is the unlikely combination of a senior Tata group official in an ITC hotel. When he steps into a deserted part of the lounge to meet with Forbes India, he looks a little weary and a shade older than 46. His gaze is remote. In the course of the next 60 seconds he finds his voice and his rhythm.
“It is okay to fail but you must push yourself. And you have to look at scale. Small improvements are fine, but you must go for things that will make a big impact,” he says.
He has lived those words. Since the time he has taken over, revenues have increased from $6 billion to $8.2 billion. The market value of the firm has doubled. Margins have improved. In the last one year, TCS stock has bettered all its peers listed in India — Infosys, Wipro and HCL.
The biggest shift though is in the way the industry, analysts and media now perceive TCS. Till now TCS, though big, was stodgy. Infosys was the cool one whose campus was on the itinerary of visiting heads of state. Infosys pretty much set the tone for the entire industry. But now it is TCS that is being taken as a yardstick of how the industry is performing. Part of it has to do with Chandra’s charisma and performance. There is now a hugely saleable face to TCS. The other factor is timing. Chandra’s ascent has come at a time when his rivals are a weakened lot. Infosys, with its fearsome combination of N.R. Narayana Murthy and Nandan Nilekani, was formidable competition as was Wipro during Vivek Paul’s time. Today that charisma is all Chandra’s.
Chandra has taken all the elements that the company’s previous CEO S. Ramadorai built over his 13-year stint, and infused it with energy. Ramadorai built TCS with a steel frame of solid engineer-managers like S. Mahalingam (the CFO), S. Padmanabhan (now with Tata Power) and of course, Chandra. Over time the size of the steel frame grew, but so did the bureaucracy. “When I joined, I found the administration and procedures very stifling. It resembled a government organisation,” says a TCS vice-president who joined the company six years ago. When Chandra took over, he devolved decision-making down the line and improved IT systems so that inefficiencies could be spotted. The company is now lighter on its feet.
Ramadorai led TCS, for most part of his tenure, away from the cacophony of the stock markets. TCS listed only in 2004, while all its peers listed at least a decade earlier. The culture at TCS is therefore to take a slightly longer view. The best example is its projects in India: It had a hand in the India business even when the India business wasn’t big.
“Ten years ago, you would hear of TCS writing a software program for the forest department in Kerala! We used to think ‘they must be nuts’,” says a senior executive in a company that will challenge TCS in the near future. In those days, the returns from Indian markets were peanuts in comparison to Western markets.
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