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Cover Story
“Our Company Has To Be Nimble And Agile”
Chandrasekaran is hungry for growth and profits. That is what is behind his move to make TCS entrepreneurial. Edited excerpts from an interview with him:
IN THIS STORY:
Ramadorai built a big company full of great managers. Chandrasekaran wants tocarve it into smaller businesses, each led by an entrepreneurial CEO.
When did you first get to know you would be the next CEO?

On May 26, 2009. After the board meeting, they called me and told me that I would be the
new CEO.

Surely, it wouldn’t have come as a surprise…

There was always the possibility and the opportunity. But, finally, it’s a board decision and you never know.

You have been applying your mind to the challenges ahead ever since?

I have been a part of TCS for a very long time and have been working in a leadership capacity for a long time. I also worked with Ram all through his 13 years (at the helm). So I had an insight into how things work at TCS and had a hand in many things that got implemented. In that sense, the challenge is to step away and look at it.

Surely, you don’t want to double your employees to 300,000 in order to double your revenues to $12 billion?

It’s a very important question we have pondered over. We have lots of ideas and made some bets. We have launched a number of non-linear models and they are all in their nascent stage. Over the next 12-24 months, we will get some proof points to learn with. Even if the financial projections are not fully achieved, there will be a lot of learning. The point is not the destination but the path. Even if you don’t get the numbers two quarters down the line, it’s alright with me. My slogan is: be impatient on the path, be patient on the revenues (laughs).

What’s your strategy to break out of linearity?

Non-linearity is just one track of our strategy. There are five tracks. We have five core elements in our strategy. Customer-centricity, integrated full services, a global network delivery model, growth in emerging markets and non-linearity is very important.

TCS is the largest IT services company, but not the most profitable…

 
 
Growth is the top priority. Growth in volume, in pricing, in full services...in caps, in bold, in point size 12, in point size 20...
 
 
Growth is important for TCS. Without growth, there is no energy. Without profits, we cannot plan our future. At a gross margin level, we are better than peers. We have a drop between gross margin and EBIDTA levels and PAT levels—the fundamental reason is that our sales, general and administrative expenses are higher. In the last two quarters, we increased our EBIDTA margin by 257 basis points. It’s important to generate commendable profits. Go back to 1996 when Ram took over, or in 2001 when we were not a billion-dollar company, or today when we are a $6 billion company, we have not lost on margins. Margins are going to be a huge area of focus.

Will you rethink the TCS policy of not giving a guidance on earnings?

If the last 12 months is an indicator, we are not looking at changing that. I have managed the business in the last 12 months…everyday, I have seen what’s coming in, what’s going out. Currently, we are not looking at changing our view against giving earnings guidance. But we always give a lot of qualitative insights.

Past infosys CEOs have kept a low profile. That worked for them. Will you be different? 

Kohli and Ram have done incredibly well for themselves and the company. I have respect for Infosys. I am going to focus on innovation. We are geared for a market recovery. If I do the right things, our credibility goes up.

It’s important that one has both an inside-out and outside-in perspective. If you don’t have the outside-in perspective, you don’t position yourself correctly. If you don’t have the inside-out perspective, you don’t deliver. Both have to go hand-in-hand.

So, what is your top priority now?

Growth. In volume, in pricing, in full services, in our global delivery network, in non-linear perspective, in people. Growth, growth, growth…in caps, in bold, in point size 12, in point size 20, in Times New Roman (claps and laughs).

This is a very large but fragmented industry. Nobody has a double-digit market share. We have to remember that we are just a $6 billion company and there is a lot of headroom for growth. We have to be nimble and we have to be agile.


For full text, go to www.outlookbusiness.com

IN THIS STORY:
Ramadorai built a big company full of great managers. Chandrasekaran wants tocarve it into smaller businesses, each led by an entrepreneurial CEO.
 
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