Software products are booming: TCS COO

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Already pulling in revenues of over a billion dollar, says Subramaniam

TCS, India’s largest IT services company, is charting a new course for itself that could lead to its becoming the country’s largest software product company, with revenues already surpassing the billion-dollar-mark.

Three years back, TCS created a new unit Digitate, a pure-play software products company, with its own HR rules, start-up culture, and different pay scales. Even as Digitate is on its way to touching the $100-million revenue mark, TCS’ other software products already generate over a billion dollars in revenues, TCS’ Chief Operating Officer, NG Subramaniam, told BusinessLine.

According to Subramaniam, TCS’ overall products business is way above billion dollars already, and the company could, one day, even list some of these product units on the stock exchange as independent firms.

“We have multiple products companies and our intent is to keep them within TCS. If an opportunity comes to list them separately, we will. But right now we are building products and services to be a strong services company that also has products,” said Subramaniam.

Apart from Digitate which, according to Subramaniam, is one of the fastest growing pure-play software products company in the world, the chunk of revenues come from TCS BaNCS.

“Our BFSI platforms is big business right now… TCS BanCs today has close to 500 clients that run their day-to-day core operations on our platform,” said Subramaniam. For the past few years, TCS has been investing heavily in three Ps — products, platforms and patents. While all three help the company future-proof its services business, it also allows TCS to create new capabilities that can be sold at much higher margins.

Applies for patents

As on September 30, the company has applied for 4,874 patents, including 192 during the quarter. It has been granted 1,121 patents, with most of it deployed for software products. Subramaniam acknowledged that the benchmark set for the products businesses is much higher when it comes to margins. So while it may not reflect in the overall company profitability, the high investments being poured into it are aimed at bringing in higher margins and an ability to offer unique capabilities.

“Digitate is a strategic unit; TCS Financial Services that runs TCS BanCS is a separate business unit, and TCS BFSI platform is a separate business unit. We call them strategic growth businesses. We have kept them separate because fundamentally they work differently from services. Pure-play services business remains separate,” said Subramaniam.

So far, Digitate has only one commercial product — Ignio, a cognitive automation tool that competes with the likes of IBM Watson. Other software products from TCS include digital learning tool TCS iON; TCS Algo Retail, a product for retailers; and the largest being TCS BaNCS, a core banking software product suite. To accelerate the growth of the products business, TCS is also using other channel partners now, starting with selling Ignio.

“So far we had been selling Digitate through our own internal sales team and integrated Ignio into our solutions.

“Now we have taken a conscious decision to appoint channel partners to accelerate sales. We have started onboarding partners in the last two quarters. In this quarter, we onboarded three more partners,” said Subramaniam.

To avoid any conflict of interest with clients, TCS is keeping the software products divisions completely away from the services unit. “Opportunity for us is to make, for example, TCS Financial Services a pure products company and outsource implementation to the services team (within TCS) as a systems integrator,” said Subramaniam.