What Sluggishness? TCS Exec Sees Robust Nearshore Momentum

By Robert L. ScheierDays after Tata Consultancy Services (TCS) announced a 14 percent growth in quarter-over-quarter revenue, Ankur Prakash, Vice President and COO for TCS-Latin America talked with our affiliate Global Delivery Report about prospects for the Nearshore amid continued economic uncertainty.

Prakash, who is ranked number 15 on the Nearshore Americas Power 50 list, lauded for being “a strong supporter of Latin American services,” does not see the slowdown in demand for outsourcing that some analysts are forecasting.

Some observers are predicting slower demand this year. Are you?

Prakash: I don’t see any sluggishness. We have seen good momentum in the last couple of years, and I do not see the momentum is going to decline over the next 12-18 months.

There’s also some talk that larger service providers are seeing stronger demand than smaller or mid-size firms. Your thoughts?

Prakash: In general, providers like TCS who can offer stability, certainty, and flexibility will always be in demand. That’s what I’ve seen over the last four to five years, not just the last few quarters.

Several analysts have recently said they see a trend toward customers doing smaller, less complex deals. Is that true for TCS?

Prakash: I think it’s relative. I have seen deals…ranging from $200,000 to more than $25 million.

Attrition is always a concern for customers. In the earnings call, TCS said attrition had fallen to 12.8 percent. Is that true across all the Nearshore geographies?

Prakash: Attrition for Latin America also fell to below rates in the overall Nearshore market. We were not as close to the TCS overall number, but [throughout Latin America] we were lower than market attrition… [which is] in the range of 16 to 17 percent.

In the recent earnings call, the company also said “Latin America showed significant momentum followed by India and Asia-Pacific.” Was this demand from the domestic market or for global services provided by Latin America service centers?

Prakash: Almost 70-75 % [of the demand came from] the local market, the remainder in global services. All the markets showed consistent growth, within a few percentage points [of each other].

Specifically in Latin America, how quickly are you growing revenue for testing, remote infrastructure management, and agile application development?

Prakash: We’re growing quite fast in infrastructure services, followed by assurance services such as testing. Another area where there’s a lot of momentum and growth is in enterprise solutions such as ERP [where we are doing] application maintenance and management, implementation, hosting, and remote management

What is top of mind for customers these days?

Prakash: They are asking for innovation, and things like mobility, big data, and business intelligence, more often than they have asked in the past.

TCS has also said that pricing is stable and its pipeline is strong. What could change that? What danger signals are you watching out for?

Prakash: [Laughs] I always get this question. I believe a business has to be run with the same fundamentals [all the] time, not because today there is no crisis, so we can expand everything, or tomorrow, there is a crisis, so there [will be no] investment. The basic fundamentals of a business cannot be drastically changed [without], some way or another, choking the business.

< Watch our interview with Prakash here. >