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IT can fight rising costs: Ramadorai

November 27, 2008 10:29 IST
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S Ramadorai, the chief executive officer and managing director of the country's largest information technology company Tata Consultancy Services, remains unperturbed by the current global financial crisis.

This, despite the fact that nearly 45 per cent of the company's revenues come from the banking, financial services and insurance (BFSI) vertical. Even under difficult times, the industry veteran tells S Kalyana Ramanathan, IT can be a potent tool to fight rising costs and removing systemic inefficiencies.

TCS had announced that it was buying Citigroup Global Services (CGSL), (the India-based captive business processing outsourcing arm of Citi for an all-cash consideration of about $505 million) in the first week of October this year. Do you think the deal makes sense?

Definitely. The deal is not just about BPO capabilities. It brings us a force that is a combination of operational knowledge and IT capabilities. It also brings a workforce of 12,000 people with an average age of 27-28 years. The services from CGSL can also be offered to other clients (and not just Citi Group).

Given what Citigroup has been through in the last few weeks, is the deal (Citigroup Global) that entails $2.5 billion (Rs 12,500 crore) worth of business from Citigroup over the next 10 years still valid?

Of course. It is a contractual obligation that has to be honoured (by Citigroup). It is all in writing.

The global recession seems to have hit the financial services business the most. With nearly 45 per cent of your revenues coming from the BFSI vertical, are you worried? Would you consciously reduce your exposure to this vertical?

I cannot say that we will reduce our exposure to the BFSI vertical, since it will worry our existing banking clients. Our strategy would be to look beyond the US and Europe and explore new geographies such as India, Latin America, China, Australia and Japan. We will look at new domains beyond BFSI like life science & healthcare, retail, media & entertainment and government.

Is the recession in the US and Europe forcing you to look at the domestic market?

Nearly 11 per cent of our revenues come from the domestic market, which is one of the highest among domestic IT companies. It is a market, which a company of our size, cannot afford to ignore. It is not just now. We have always focused on the domestic market, while some of our competitors are only now looking at it.

Have you taken any big decisions like curtailing spending on acquisitions, freezing headcount or holding back expansion plans?

None like that. Cost cutting has always been on our agenda be it on power, travel or communication. The only target is to ensure that there is continuous improvement. And the only blanket decision we have taken (which was taken years back) is to collect money on time (smiles).

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