Room to grow in UK for Tata Consultancy Services after half a century

Customer context

Partnerships with long relationships appear more common in the sector today, with cyclical changes in supplier to drive down cost less important than having a supplier that understands the business.

Kapur said, for an IT services company, an understanding of the “customers context” is as important as knowing the latest digital technologies: “A contextual understanding of a customer is gold.”

This deep understanding of a businesses IT needs is built up over years of work by service providers working across all technologies with customers. There’s currently an increase in long-term outsourcing deals and more partnerships between IT services companies and their customers, said Kapur.

Even businesses that prefer a multi-sourced environment are scaling back and consolidation of IT suppliers at large businesses. “With firms that are mature with their multi-sourcing, there is a move towards using a small subset of suppliers,” said Kapur.

In the UK, TCS serves the biggest banks and retailers, and delivers huge number of pensions, including The National Employment Savings Trust (Nest) and the Teachers’ Pension Scheme.

As well as its 23,000 UK-based workforce, 70,000 staff in India and other parts of the world are serving UK customers.

UK growth

While finance, pensions and retail are examples of large mature markets for TCS, the UK public sector is a growing opportunity which is relatively untapped.

Kapur admitted that accessing the UK public sector has not been easy, but said it is changing. “Having work delivered from India was always the UK goverment’s worry, but we have good engagement now.”

Public sector work in the UK still represents only single digits as a percentage of UK business for TCS, but this is growing. TCS already provides services to the Department of Work and Pensions, public sector organisation pension provider Nest, the Department for Education, the BBC, and Cardiff City Council in local government.

“It has grown a lot recently, and given the names of customers in the sector, it has the potential for further growth within existing and new customers,” said Kapur.

Human and robot coexistence

While the UK public sector is a vertical growth strategy for TCS, artificial intelligence (AI) is increasingly underpinning everything it does, demanding a global plan.

Kapur said the company is reshaping its skills base to take advantage of the business opportunities AI is creating. It is offering training and certifications on AI to its staff. Kapur said that out of 600,000 people, it has already trained more than 200,000 in AI and will soon get close to 300,000.

Generative AI (GenAI) is one of the biggest drivers. “It has caught attention in the past nine to 12 months and has really accelerated,” said Kapur.

All of TCS’s customers are either using or testing AI, according to Kapur: “There is nobody who wants to be left behind. GenAI represents an opportunity, and people also see it as a threat. So, the option of not doing anything doesn’t exist in anyone’s notion.”

Cloud changed the market

GenAI is the emerging tech today, but it wasn’t long ago that the same could be said for cloud computing. Today, cloud is the norm and, like GenAI, it was something all businesses knew they had to adopt and were at some stage or another in the process.

Not only are most businesses using the cloud, it’s the first port of call for many seeking new IT capabilities. “Today, we hardly see customers now that are not cloud first,” said Kapur.

A significant part of TCS’s business today is supporting customers in moving to cloud. “We do the whole lifecycle, right from envisioning to architecting, to business case, to provisioning, to maintaining,” added Kapur.

He currently sees application re-platforming and remodeling as a major focus as businesses make cloud work. “If you put the same applications onto the cloud you won’t gain much,” said Kapur. “Companies that have invested in legacy applications for a long time, such as banks, insurers and telcos, face a particular challenge.”

He noted that banks have coped better than insurers and telcos: “As an industry, banking has gone through enormous change, but you don’t yet see that for telcos and insurers.” 

As well as having money to spend, he said banks have good exposure to consumers, which encouraged them to modernise quicker. “Whatever is said and done, the pandemic has expedited this many, many fold – the ability to engage on a digital channel.”

It was another threat to businesses that saw the rise of TCS globally in the second half of its life. Although established in 1975, the company has grown at a remarkable pace since 2000, when suppliers from India were in demand to fix the Millenium Bug amid fears in the business sector.