Freshers’ agility is often mind-blowing: TCS CEO

BENGALURU: Technology demand is soaring worldwide. And TCS just concluded another great quarter. In an exclusive interaction with TOI, CEO Rajesh Gopinathan speaks about how cloud has dramatically changed the environment, and why freshers should no longer be seen as a homogenised group.
You are expecting to add over 70,000 freshers this year. That seems to be a record high.
That’s partly a reflection of the size of the firm today. As a percentage, it is higher because of the speed at which we are growing and the demand that we are seeing. The last time we saw this was in 2011-12, coming out of the financial crisis. We have been anticipating this for some time, so we redesigned the systems to scale to this level. The traditional system was a lot of campus visits. We had 700 institutes on our list, and each year, we would typically hire from about 300-400, even as we monitor the 700. A few years back, we experimented with the platform-based hiring called NQT (National Qualifier Test). This is allowing us to reach more than 2,000 institutes. We are no longer dependent on the institute as a surrogate for quality. We can focus on the individuals’ quality. If they can get through the test, it doesn’t matter where they came from.
But there’s been a lot of talk about automation reducing the need for people?
Any task that you do, a few years down the line it will get automated. But tomorrow, there will be many more tasks to do (needing more people). We have what we call a machine first delivery model (MFDM). It’s a structured framework to embed automation deep inside our service design. We have our new platform called Cognix which is gaining a lot of traction – it provides an integrated layer from an operations side with pre-built automation. So we are moving people to the higher levels of tasks and to greater insights and analytics-based activities, while the transaction side of the activity is handed out to the machine.
Attrition is rising, IT firms are facing higher backfilling costs, subcontracting expenses are higher. How long will it take for this large fresher hiring to normalise the pyramid structure?
Many of these terms are quite legacy – pyramid structure, cost of freshers. We are looking at a heterogeneous pool at the fresher level. Depending on what level they clear in the NQT, their compensation is very different from their batchmates, could be 100% more. Even the person who came in at the lower level has multiple opportunities to jump into the next career trajectory. Twenty years ago, most freshers would learn new things after coming to us. Today, our own people are blown away by the speed at which youngsters are able to react at these hackathons, etc.
In our industry, access to fresh campus skills is the critical lifeblood. The question is, how can we run it more efficiently than others? We have to manage the talent so that the skills are enhanced across the organisation, and we have to keep the supply chain efficient with the right inputs at different levels. And we are clear we need to do this better than others.
The pyramid is work specific. There are some areas where the pyramid is very flat. Today, the incoming youngsters are able to do quite a lot of things that traditionally would have required a steeper pyramid to do. There are other kinds of engagements that are more domain intensive, and require a narrower pyramid – these require contextual knowledge that comes through time. Keeping the right model for the right work is key.
You said in your press conference that the demand environment is robust, and provides you with a once-in-a-decade opportunity to position yourself as a preferred transformation partner.
The conviction in technology and the momentum in this is increasing. There is this whole cloud-based transformation, and we have spoken about this in the past, it has to be understood as an architecture change. An enterprise architecture change is a very big thing. It’s resulting in a bottom-up rethink as to what is the new architecture and what are the new things that we can do. Cloud is also enabling capex to be replaced by opex. So the risk and cash investment thresholds are being lowered. That’s resulting in a lot more experimentation and innovation. The total cost of ownership may not be significantly different. What it does is, in many cases it will be higher with higher consumption. There will be more experiments and people will invest further in what is working.
People are significantly looking at data. Like we have seen with e-commerce, now we see B2B firms, large distributors, they are saying, we are sitting on this data and they are creating customer personas, and therefore they can be in a trusted position with the customer in advising them on how their portfolio could be optimised. It’s helping them to become platform companies. Distributors are repositioning themselves as the people who have the power to transform. In some ways, iTunes did this in the consumer industry. iTunes had the content and had the consumer and what the consumer is consuming and its ability to match inventory to customer preference is where the power is. The ability to manage data is easy in a cloud environment and cross-link it with multiple other data sources. That’s one kind of transformation and we are excited. This will take a few years to play out and it will have far-reaching implications.
The banking & financial services segment has done well for you. Are banks investing to take on fintechs?
Banks have gone through this threat of disruption by fintech and they have risen above it. Rather than fight the fintechs, they have embraced them. There are fintechs that do underwriting as a service on a standalone basis, and they are creating an ecosystem with trusted banks. The banks are saying, why don’t we share information with these fintechs and create a sharper risk assessment platform! In reinsurance, large insurers may find that they can provide for a part of it, but there are fintechs that have solutions for other parts. So, they are coming together, sharing information, and trying to provide a single solution to customers.
For the financial inclusion activities in India, and we run 60-70% of that, we have taken the core banking systems of the bank and opened it up and linked it to smaller entities that are much more efficient to provide doorstep banking in villages. And they get the power and data quality of the core banking system, as it has been tightly integrated with the handheld device. The bank is liberating the ecosystem that is much better suited to deal with the customer universe, and they have the risk-taking capacity. So the overall risk of the system goes down, while the bank caters to the need of financial inclusion and improves its ability to expand the business.
This loosely coupling system is one big driver of growth for us. Other big areas of growth are payments, customer experience, the decoupling of services so that individual services can be monetised, payments services being embedded inside ecommerce engines, hybrid modes that combine payment by loyalty programme points and by card.

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