Tata Consultancy Services (TCS) has based its Cloud strategy on an ‘own brand’ model, CEO N Chandrasekaran told reporters in Delhi today.
He said TCS’s strategy for the Cloud market — in which software is not purchased or ‘deployed’ by customers, but used through the Internet — will not be dependent on other big cloud-brands.
“Our approach will be one of TCS branded cloud solutions,” Chandrasekaran said.
TCS already has such a product aimed at the small and medium enterprise (SME) market — which typically does not purchase costly ‘packaged’ software such as those provided by SAP and Oracle.
Chandrasekharan said the SMB solution — which covers a lot of products such as HR, accounts etc within it — has around 200 companies using it.
There has been much debate and discussion about what Cloud strategy Indian IT service providers like Infosys Technologies, TCS, Wipro, Cognizant and HCL must adopt for the emerging cloud market.
As far as the traditional packaged software market is concerned, none of the Indian IT companies can depend on their own brand of software to drive their practice. They get nearly all of their revenues from the installation, customization and maintenance of software that is branded and created by mostly foreign software companies such as SAP.
Even in the Cloud market, the Indian companies have such an option. Most of the foreign brands such as SAP, Oracle and Microsoft have built their own Cloud platforms and applications.
An exact replica of the ‘packaged software’ model in the Cloud World would mean that the Indian companies concern themselves purely with the deployment, customization and maintenance of these cloud products sold by foreign brands.
However, unfortunately for the Indian IT service providers, the effort required in deploying, customizing and maintaining Cloud software is a tiny fraction, perhaps as little as 1%, of the equivalent effort required in case of packaged software. The Cloud architecture prides itself in being able to cut down total expenses by as much as 90% or more. Unfortunately for the Indian providers, this 90% is mostly what would otherwise have come to them.
As far TCS is concerned, Chandrasekharan says the emphasis will be on owning the platform and the services, instead of simply being ‘helpers’ for other cloud brands. Since the entire Cloud ecosystem is in its infancy and lies halfway between the ‘software product’ industry and the IT services industry, TCS and others believe that they have as much a shot at the market as the traditional software vendors.
The intellectual property, patents and technology and the brand recognition in the market is not so far advanced in the Cloud that it would be impossible for new brands to come in, giving hope to Indian players.
Besides TCS, Infosys, HCL and Wipro are also working on bringing their own Cloud products to the market. However, HCL for example, is focused on a dual strategy. On the one hand, it is developing its own brand of Cloud services, while on the other, it has also built up a pure-services business that helps customers move from ordinary customer relationship software to a Cloud-based one such as salesforce.com.
In such a case, the customers technically belong to salesforce.com and the Indian provider’s role is that of a ‘migration assistant’ and customizer and ‘acclimatizer.’ Once the migration is done, there is very little scope for continued services in a Cloud market, unlike in the traditional set-up where an army of technicians would be needed to keep the set up running.
In the Cloud model, the ‘running’ part is handled by the software vendor like salesforce.com as the software resides in its own premises, instead of the user’s premises.
Chandrasekharan said TCS was not too focused on such a model but was wanted to own the brand, the solution and the customer. The customer, in other words, would only know TCS, even though TCS may be using other companies’ software, technology or platforms to put the solution together, though licensing. The client would only ink the deal with TCS.
Chandrasekharan also confessed that TCS’s non-SMB Cloud offerings are still in their infancy. In this sphere, TCS has products in Human Resource management, accounting, life and pension management, analytics and procurement. “There is no great scale yet,” he said, according to the audio transcript of his press interaction.