Inherent strength has to come out during slowdown: TCS CFO Seturaman Mahalingam

TCS's Chief Financial Officer Seturaman Mahalingam is more than just a bean counter. In his four decades at the company, Maha, as he is popularly known, has been involved in marketing, operations, education, and even human resources. He retires in February next year. In an interview with Goutam Das, he talks about the fast-paced growth of India's largest software services exporter , and how the company became a bellwether.

Q. You have been with TCS for a long time. How did the firm evolve to what it is today?
A. I have been here 42 years - pretty much from the time it started as a small unit. We have created the industry in its present form. We were very technology oriented and were doing complex projects even 30 years back. One of Chandra's earliest projects was a challenging technology project. When an organisation has huge systems, how do you create a unified view? That is what it was.

Then, we had geographical penetration. We were in many countries even in the 1980s and 90s. The UK, US, Netherlands, Switzerland, Australia etc. Our credibility was established. Thereafter we went to a stage where we could grow substantially.

Because of our technology foundation, a lot of people stayed with the company. The leadership bandwidth developed. Many of our business unit leaders are home-grown products who have been in the company for 25-30 years. So, there was a lot of depth from technology, market and leadership bandwidth.

One thing that has been a constant right through is that we have never given up - even when competition seemed to be catching up. When we went public many were saying that our onsite revenue was very high, that our client concentration was very high. GE was so high. So, we changed it.

When the ecosystem is growing, everybody grows. But when there is a slowdown, the inherent strength has to come out. In a changing environment, we seem to be doing quite well. That is because of the depth that we have. It is not about winning one project or bidding for one project. Are you really prepared for the future? That is really the critical one.

Q. How has TCS evolved in terms of importance in the Tata group?
A. The Tatas looked after us. There was some profit left for TCS to build itself . From the early 90s, the importance of TCS in the group was well recognised, mainly because we were in a growth area. And we were a well-run operation with profits. Even when we listed it was not that the group lost out. From the time we listed, we have grown substantially. This means wealth generated for the group in terms of market capitalisation. The total value of their investment, in terms of the returns they are getting, has become very substantial. This is a new-age industry and will continue to be a prominent part of the group. The computer revolution is not going to end.
 
Q. What is the difference in leadership styles between S. Ramadorai and N. Chandrasekaran?
A. It has been a continuation. Ram was aggressive in terms of ensuring that there is continuous growth in the organisation. The scale is much higher now, and so, many of the things Chandra does are at a higher scale. One great thing from my point of view, having watched three leaders - F.C. Kohli, Ram and Chandra - is the extent of continuity and change that has come. Kohli created the foundations, in terms of technology, market, business model. Ram decentralised the organisation. He created a growing institution with a lot of customer contacts. He created a data-driven organisation. Chandra is focusing on growth, differentiation, making sure that all parts of the company are leaders. The leadership team has stayed put. You cannot run a $10 billion organisation without a team.

Q. Is the average age of the organisation coming down?
A. That is a function of growth. If I am recruiting 70,000 people of which 50,000 are freshers, the average age will come down. The average is 27 now (it has been in the same range for the last few years).

Q. Analysts have credited TCS with superior cost management over the last few years, leading to higher margins. How was this achieved?
A. The bread and butter activity is client engagement. You have to keep on mining customers. The work is not going to be dramatically different. We ensured people communicated, travelled etc. SG&A (selling, general and administrative) expenses were looked at. Onsite-offshore ratios were looked at. Between April 2009 to June2010, cost management happened in a significant way. In this period, we improved margins by 410 basis points.