TCS doubles down on its cloud business, splits it into five strategic units

​​India's largest software services exporter has focussed on growing its Cloud practice for the last seven years, but it has now assumed higher revenue priority than ever, said Krishnan Ramanujam, president of business and technology services.

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The move, it hopes, will lead to “exponential growth” in the coming years.
Tata Consultancy Services (TCS) is doubling down on its Cloud services business, streamlining the practice into five strategic units to generate more revenue. The move, it hopes, will lead to “exponential growth” in the coming years.

India’s largest software services exporter has focussed on growing its Cloud practice for the last seven years, but it has now assumed higher revenue priority than ever, said Krishnan Ramanujam, president of business and technology services, who oversees the practice.

In terms of organisational changes, the Cloud practice has been split into five units — Amazon Web Services, Google, Azure, TCS’ own private cloud arm and a cloud consulting unit. Individual vice presidents will head each of the five units and be responsible for their revenue performance. “All these four individual business units will have their own shadow P&L…We are also launching a consulting offering, which is about cloud strategy and transformation,” Ramanujam told ET.


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TCS is looking to generate significant revenue growth from Cloud, he said. “If you look at very important goals that we can touch and feel, we obviously are looking for a very solid scaling and exponential growth in each one of the platforms, whether it is AWS, Google or Azure, or IBM,” Ramanujam said.

The Cloud consulting unit will look at cross-functional and hybrid cloud business opportunities where TCS will apply its “contextual knowledge” in working with companies across various industries to build products and services for clients, according to him.

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The company is looking to not only generate more business for itself but also for its Cloud partners through the practice.

The leaders of the five different units will report directly to Ramanujam, a first for the Cloud business.

“While we have always had this Cloud focus for at least seven years now...I made each one of these units directly report to me. It was one level below, and now it has come as a direct report to me... which is an indicator of the level of importance that we are giving these Cloud units,” he said.

Each Cloud services unit could generate a few billion dollars in revenue over the next five years, according to analysts.

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“Dedicated business units around each of these vendors is a very smart move and will help TCS increase profitability and margins. TCS has a good track record in smart account mining and has a very large client base across different regions; this move could help the company find new opportunities with existing businesses,” said Mrinal Rai, principal analyst at technology consulting firm ISG.

The private Cloud business, Ramanujam said, would not compete with its three public Cloud partners. It is predominantly a functional unit for ease of customer operations, he said.

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Due to the Covid-19 virus outbreak, most organisations have been moving to the Cloud from on-premise technology infrastructure and this has resulted in a big opportunity for IT services providers.

TCS’ competitors such as Infosys, Wipro and HCL Technologies have also made Cloud a strategic priority, with sizeable percentage of overall revenues coming from the practice and more tie-ups with the large Cloud companies.

Infosys acquired a few Cloud-based companies in the last few months -- Simplus, GuideVision and Blue Acorn -- to improve its capabilities.

TCS could also look at Cloud-based acquisitions to bolster its capabilities in the practice, Ramanujam said without elaborating.
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