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September - 2006 - issue > In My Opinion
Creating and Sustaining Growth through Knowledge & Innovation
Subramanian Ramadorai
Monday, November 17, 2008
In the short space of just two decades, India, has established itself as a leader of the global IT industry. Today, we account for 65 percent of the global offshore IT industry and 46 percent of the offshore BPO industry.

Already more than a million people are directly employed by this industry and if this growth is sustained at an annual rate of 25 percent or more, the industry can provide employment, directly and indirectly, to over nine million people by 2010, and generate export revenues of about $60 billion. And what will deliver such strong sustained growth? The answer: Through sustained innovation.

Transformation through Innovation and Growth through innovation, are constant themes in the IT industry. There are tremendous parallels in the journey called life that we all undertake and the journey that a company like TCS has had. Soon after its birth in 1968, when TCS was an infant, we were governed by the regulatory environment, where prohibitive customs duties meant we couldn’t import our tools of the trade: computers.

But just like a child can fashion a piece of wood into great cricket bat, so did we. When resources are limited you learn to use them wisely. We learnt to extract the most from the computers. We made sure our processes were more efficient. These small innovations led to the birth of quality movement, which has became a part of our DNA today. Today TCS is the only company in the world with an enterprise wide CMM and PCMM level 5 certifications – to use a schooling analogy, we were just given A+ for our quality processes.
There was a second Innovation as the result of the economic atmosphere at this time. Since the computers could not come to our country, we took our people and our skills to where computers were – to the U.S. Thus began our tryst with overseas markets. Just as genes shape a person these two factors shaped the nature and scope of the Indian IT Industry.

The IT Industry reached adolescence in the 1990’s; And like all teenagers who are fired by their growth hormones, Indian IT and TCS began to grow exponentially. The Internet reduced the cost of reaching millions worldwide; it brought together instantaneously unrelated buyers and sellers in seamless and low-cost ways. Accelerated business spending was also driven by the preparation for the Y2K switchover. These created huge defining moments for companies such as TCS. The West needed Y2K resolvers – India had the people, The West wanted it at the best cost – India had the cost advantage.

It was a great supply – demand fit.

The Industry matured in the late 90’s. Companies like TCS became adults, but the path we cleared through the forest resulted in many new kids on the block. Following the human evolutionary cycle, many of these new firms, I am happy to say, were started by ex-TCSers, industry bodies such as Nasscom came into being, and the IT
professional became the aspiration and symbol of a resurgent economy.

The evolution of TCS clearly illustrates that in the 80’s the West was just about admitting that Indians could write software, in the 90’s they wanted Indians on their team, by year 2000 companies wanted India on their plans. TCS moved from a domestic to multinational to a global company as customers that came to us for cost, stayed for quality. But as other countries vie for a piece of the pie, cost and quality are no longer a clinching competitive advantage; Innovation led value has the new compelling differentiator, illustrated by the distinct shift towards R&D as seen from the over 100 multinationals investing in India.

I always tell youngsters joining TCS that the important aspect of survival – leave alone growth, is to acknowledge areas of uncertainty and reassess strategy on a continual basis. As we continue to pursue multiple modes of growth simultaneously, we are conscious that our only constant is change and change can be beneficial only if we continue to innovate constantly in all aspects of our business.

Creating new products, new services backed by R&D and new technologies are other ways we innovate. Even today, we at TCS are re-strategizing our innovation led efforts. I say re-strategizing because it’s not as if we were not innovating before, but dynamic market forces demand that we
re-align the way we innovate. Flexibility and agility is a key imperative to growth.
Another growth strategy is to expand into new geographies. As IT becomes more pervasive, more and more people and companies in more and more countries are realizing its benefits creating opportunities for companies such as TCS. For us a global presence means being able to offer services to our customers from an optimum location, which could be anywhere in the world.

Innovation also plays a key role in ongoing business strategy and determines the structure and functioning of an organization. In other words, what do you need to get there?
Whatever be the growth path, it is important to carve out an operational model that enables it. Organizational elements, processes and technologies need to be aligned to meet these needs - a digital nervous system which connects anything and everything involved in the company’s business including IT systems, process chains, employees, as well as suppliers customers and products on a common platform. It makes real information available to the right person at the right time.

Winning Culture
In a knowledge-based industry our collective intellectual capital is our prized possession. Providing a vibrant and challenging work environment, professional development programs and avenues for leisure activities all form a part of our engagement with our employees. We also believe in creating communities of like-minded people, who, when put together, fuel and energize each other. Innovation is stroked by the exchange of ideas amongst such clusters. Silicon Valley is a good example.
Innovation has been the hallmark of our heritage and culture ever since the Indus Valley Civilization was created. But only in the last decade and a half, Innovation has been brought to the head table – encouraged by government and private sector, to help India realize its economic and social objectives.
Walter Bagehot, a great British economist of the 18th
century and probably better known to all of us as having founded the weekly newspaper, The Economist, said about Innovation that, “One of the greatest pains to human nature is the pain of a new idea.”

From my perspective, this pain of innovation soon gives way to the pleasure of acceptance and then on to the exhilaration as it gets widely adopted.

All of us have the ability and do innovate constantly to make our lives a little bit easier. After all as my friend and thinker, Edward De Bono said: Innovation is simply the chef who takes the same ingredients as everyone else and produces the best results.

Subramanian Ramadorai is the author is the CEO and MD of Tata Consultancy Services.
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