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From his 11th floor office in downtown Bombay the head of India’s largest outsourcing group has sight of what was a prized trading route for Europeans doing business in India. Now, traders are not using boats but broadband. And they are not trading spices, but backoffice services and IT skills.
Mr Ramadorai, as chief executive of Tata Consultancy Services (TCS), has been at the forefront of moves to encourage companies in the West to outsource work to India. BT, British Airways and the NHS are among his customers.
He runs a firm worth $14 billion (£7.3 billion) that last year notched up sales of 70 billion rupees (£835 million) and profits of 17 billion rupees. Until the company’s flotation in India last year both he and TCS had kept low profiles, allowing US-listed rivals Infosys and Wipro to steal the limelight.
The group was a part of Tata Group, India’s largest company, spanning car making to steel manufacturing.
The summer listing raised $1.2 billion (£620 million) in fresh funds — “currency for growth” — and put the company on course for expansion. Mr Ramadorai, who joined TCS in 1972 as an engineer, makes no secret of his desire to expand overseas and has the UK in his sights. “We want to scale it up in the UK,” he says. “We have a very strong M&A (mergers and acquisitions) team and we’re always looking at deals.”
The company already has a site in Guildford where it works on radio frequency ID tags — the next generation of electronic labelling.
When TCS was founded in 1968 the IT industry was in its infancy. Ticker tapes full of punched holes would be transported to India and transformed into digital format.
With the evolution of the computer, it has progressed to more profitable software development and IT consultancy. But these high-margin services require face-to-face contact.
TCS could use UK acquisitions to boost its consultancy business and develop its technology development function, strengthening its hand against competitors such as Accenture, IBM and LogicaCMG.
“(Higher margins) cannot be achieved without getting closer to the customer. That is what our global footprint is about,” Mr Ramadorai says.
As I’m led into his office I pass a number of investment bankers heading for the exit. As one of his fellow executives puts it: “We are being courted and we are doing the courting.”
The company has developed bases in Hungary, China and Latin America, providing a closer geographic link with customers and ensuring that it does not miss out if other regions spring up as outsourcing centres. As part of its expansion the company is planning to create a back-office processing business in Eastern Europe.
Mr Ramadorai won’t put a price tag on the deals he’s looking at, but with the funds raised last year the company could potentially buy a plc.
Analysts speculate that the company might have shown an interest in Marlborough Sterling, the financial services outsourcing group sold to United Utilities in a £95 million deal earlier this month.
“We are willing to invest in companies. And we look at the cultural integration. We are not a company which will immediately axe X number of people,” he says.
TCS hires about 1,000 people every month, adding to its 45,000-strong workforce. This year it is poised to become India’s largest private sector employer, with the goal of becoming one of the ten largest IT services groups by 2010. Last year it ranked 27th by sales.
Financial services makes up the company’s biggest market, but Mr Ramadorai is clear that growth in healthcare and government spending will be key.
Although it has ambitions to grow in Europe TCS does most of its business in the US: Microsoft, American Express and General Motors are customers.
Mr Ramadorai is open about the idea of taking a second listing outside India. “We keep looking at the challenges of a US listing.”
A US listing would have obvious advantages, and put it alongside its nearest rivals. But Mr Ramadorai insists a European listing hasn’t been ruled out. “We had people from the London Stock Exchange and Deutsche Börse come and see us. The journey is never ending.”
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