TCS America is the services division of the Indian IT industry giant, Tata Consultancy Services. Present in sectors such as manufacture, automotive, services, energy, and chemical, Tata reported a global billing of over USD $13 million for the fiscal year ending March 2014, representing a 16% increase. While in Mexico, KITE Invest spoke with Ankur Prakash, TCS America’s Executive Vice President in order to delve into the Mexican IT sector and get an understanding of the sector from a multinational company’s perspective.
KITE Invest: Please comment on the reforms that have been undertaken by the Peña Nieto Administration and their ability to boost productivity for the Mexican economy.
Ankur Prakash: If you look back at the last two years you will see a very clear demarcation that the country is going towards a growth trajectory. In 2013, GDP growth was around 1.7%, in 2014 around 2.6%, and the GDP growth for 2015 is forecasted to be around 3.5%. To this I would say, Mexico is on the right track as a country and that it has the ware with all to continue on this growth trajectory to reach 6% by 2018. However, to reach this we cannot rest on our laurels and we have to continue working and attracting investors, because if we miss the bus right now it will be impossible to hit the 6% growth target.
It also has to be taken into account that the entire country has to grow and not just certain pockets. Therefore, Mexicans and the Mexican Government have to make sure that no economic areas or population groups are left behind.
KITE: In this regard, which areas to do your see as the key driving forces in the Mexican economy and what challenges remain to raise productivity?
AP: Upon President Peña Nieto’s entrance into government he set out and clearly addressed the energy, education and telecom sectors in his reform agenda. These reforms were a good start, because there are also so many other sectors that are directly or indirectly related to these industries. For example, any of the reforms mentioned are directly going to affect the services industry, whether it is tourism, hotels or information technology.
It is due to these interconnections of sectors that will serve as the engine and bring Mexico to 6% growth.
KITE: A strong IT sector is an expression of an expanding economy. What are your views on the strategic importance of the IT sector in Mexico’s economy?
AP: The IT sector is a service sector; it is a sector that is a direct variable of business. Therefore, the IT sector for Mexico and for any country is very important, because it creates jobs, improves the services industry of a country, and is able to create indirect jobs as well.
Moreover, IT is an industry that is not cyclical; whereas, there are a lot of other industries that are cyclical and they have their ups and downs. On the other hand, IT is a sustainable business and will continue to grow over a long period of time.
KITE: After a decade in the region, how would you evaluate TCS’s track record in creating value for stakeholders?
AP: TCS has had a presence across Latin America for 12 to 13 years, and as of today we have more than 30 thousand people across the region. Mexico is the number one location in terms of the number of employees and revenues being generated.
The objective with which we came into the region with in 2002 was very clear: to add value to local market, add local jobs, and create a sustainable business. Across the region TCS employees are 95% local.
KITE: Further to this point, with over five thousand employees in Mexico, what is the strategic importance of the Mexican market for TCS, what is the volume of the Mexican market for the region and what was last year’s growth like in Mexico?
AP: Our number of employees is growing in each country across the Latin American regions, to which we are growing coupled with the growth of the customer and coupled with the growth of their market. While some countries where we operate are growing faster or growing slower, but nonetheless, they are all growing.
KITE: In terms of Mexico specifically, TCS wants to reach seven thousand employees this year. How is TCS planning to achieve this goal?
AP: We would like to double our number of employees in the next three to four years depending on the how market continues to grow, and we think we will be able to achieve this because we have a strong pipeline.
KITE: In your opinion what are the future technology trends and the future of the Mexican IT market?
AP: Whether it is mobile, cloud, java or whatever type of technology, the future technology trends are going to be managed and governed by a business. This means that the technology trends are coming will be businesses that are providing convenience.
Technology never drives the market. What drives the market are the users and the businesses. This is why I think Mexico is going in the right direction because it is now taking the reins and trying to drive growth through business.
KITE: This year is being called the Dual Year of Mexico in the UK, the UK in Mexico. With commitments to try to increase trade and cultural exchanges, what is your opinion towards these efforts to renew and strengthen relations?
AP: I think it is an excellent initiative that is presenting a lot of opportunities that can be leveraged by the UK in Mexico and visa versa. However, there will be a lot of unlearning that is going to have to take place. For instance, in the past Mexico’s growth has been driven by the manufacturing sector. While the manufacturing sector will continue to grow, the driver is no longer going to be the manufacturing sector, but rather more services related.
All the necessary reforms give empowerment to the services sector and as soon as the reforms are all taken to closure it will ensure that fruits will be enjoyed by both nations. Moreover, it has to be ensured that the initiative trickles down to the very lowest level it could go.
KITE: As an expert on Mexico and the region, what markets provide opportunities for the UK in the region and what important factors do foreign investors need to know in order to successfully penetrate the market?
AP: Companies will have to hit the shores, investigate, learn and spend time.
In terms of industries the first three that come to my mind are energy, mining and services and I also see a lot of potential in the hotel and banking industries.
In terms of being successful, a company has to have a long-term plan, because it takes time to understand the market and the people. Once this has been done, then the company can succeed.