News »Browse Articles » There will be volatility in short term: S Ramadorai

Through his 13 years at the helm of India’s largest software services company, TCS, S Ramadorai has seen the company — and the industry — through all its highs and lows. He takes ET through these phases, and how the industry is placed in the current slowdown.

Are you seeing signs of a turnaround in the global economy?

Since we travel fairly frequently, what we see from month to month is essentially a yo-yo. Sometimes we find a semblance of recovery; at others there are two to three Chapter 11 cases — either manufacturing trouble, a retail slowdown, a telecom shrinkage or suddenly, an institution asking for more resources. A client who we have dealt with for 10 or 20 years would certainly like to continue with us but if their budgets are cut and they’ve discontinued projects, asked their people to go — to that extent, our projects will go too. If they need to cut costs, we tell them the offshore leverage would be good for them. I believe the long-term prognosis is definitely good but in the short term, there will be volatility.

Economists say this quarter will see the end of recession, but that the US will not go back to earlier growth rates.

Fundamentally, people are saying even if recovery happens, it will not be growth as before. To that extent, we must be prepared. But new areas are springing up and there are opportunities. Life sciences, healthcare and pharma — a very major sector. Second, there is the whole of business of energy and sustainability. We can play a very big role in containing the carbon footprint. Then there is mobile broadband and Wimax, also digitisation in India — growth rates are bound to be there. Similarly, there are emerging markets such as Brazil, Russia or China. Even in the Middle East, in a country like Saudi Arabia, the dialogue is what do you do when the oil runs out. We have to think differently, drive innovation and collaboration.

What happens if you have several quarters of negative growth? While there’s the offshore leverage, will the overall reduction in demand overshadow Indian software service providers’ price advantage?

The first implication of any reduction in budget is, can you get more with the same money? We tell them that if you want to take so much cost out, the best way to do it is to move the work offshore. But we also tell them that the value is not in just taking the work and doing it offshore. We want to re-engineer your business processes because the way you do it is not the saving.

Source:
http://economictimes.indiatimes.com/articleshow/4796525.cms

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