TCS looks to scale interactive business organically

TCS-agencies
TCS bought W12, a 50-person digital studio, in London.
Tata Consultancy ServicesNSE 2.21 % will focus on growing its interactive business organically and making India a talent hub for the business, after making its first acquisition in the space last week.

Indian IT companies are taking aim at the lucrative market of offering services to chief marketing officers. Accenture pulls in about $8 billion in revenue a year from the business, after making a slew of acquisitions.

TCS bought W12, a 50-person digital studio, in London. “We are focusing on scaling the business organically. One of the reasons we bought W12 is that they are also open to the idea of location-independent delivery and scaling,” Krishnan Ramanujam, president, business and technology services at TCS, told ET in an interview. Ramanujam said the company was looking at making the interactive services business a significant revenue channel in the next few years. TCS has been betting that it will be able to retool its model to offer location-independent agile services, a move the company says will give it a significant competitive advantage. The Mumbai-headquartered firm is certain that it will be able to offer interactive services in the same manner. Ramanujam said India was just at the beginning of being able to deliver even creative services offshore.

“We believe interactive services is in a situation similar to where IT services was in the early 90s. Customer experience and product/ service design are key differentiating themes across practically every industry, thanks to digital technologies. We believe this will drive the growth of interactive services as a line of business for TCS and we are confident of nurturing and scaling this capability,” he said. He said India had a great deal of creative talent and that the company had begun hiring from design institutes to build its offering.

But while analysts believe that part of it digital marketing business can be off-shored, they are less certain about the ability to offshore the creative aspects of the business.

“It seems reasonable that much of the support of the technology can be delivered from an off-shore model, what is less clear is if the creative aspects are best delivered from a remote location. However, given that the technology and technology support is growing in importance, it makes sense that the TCS distributed model will work well for this part of the equation,” Peter Bendor-Samuel , CEO of IT consultancy Everest Research, said.

Bendor-Samuel said all the Indian players were lagging Accenture and that the companies would continue to need to invest heavily and grow inorganically to catch up. InfosysNSE 0.07 %, Cognizant and WiproNSE 0.25 % have already made acquisitions in this space. But TCS does not believe that the market share gains would necessarily have to come from displacing a rival. “The market for these services is growing, so all the providers can grow. There is plenty of growth headroom in the business,” Ramanujam said. He added that TCS would start disclosing revenue from the individual lines of its digital business soon.

[“source=forbes]