Outsourcing: Ankur Prakash, Vice President And COO, TCS Latin America (Part 5)

By Sramana Mitra and guest author Aditya Modi

Sramana Mitra: So, did I hear you right that the one program that India implemented incredibly successfully in the early days of outsourcing was to give the industry a tax breaks, which is not the Latin American strategy, from a development point of view?

Ankur Prakash: I don’t want to comment on whether it was a good program by India; that is not my area. What I can say is that in Latin America they do not have tax-free zones, but there is a lot of other support from the government, from physically finding an office to how to open a company to assistance with talent, resources, training, and capital expenditure.

SM: All right. So, in terms of your growth  if you look at 2010 to 2020, given that you have already been in the Latin American market for eight years, what do you think are the prospects for your business in Latin America? What kinds of growth rates do you see? What are the trends you foresee in the Latin American industry?

AP: In the next four to five years, to be very candid and honest with you, we want our head count to reach 25,000 across Latin America. That is the  potential we see; we have now mastered the model, we now have the necessary critical mass that will help us to grow and get to those numbers.

SM: When you look at Latin America, if you were to guide entrepreneurs who are starting a company, where would you ask them to go? Where would you ask them to look, and what are some of the open problems or niches where entrepreneurs can build successful companies?

AP: I think that is a tough question to answer, but one reason that we have presence across these countries is definitely the market; the other is definitely the ease of doing business. That is the reason we have chosen these countries. For example, Peru is the fastest-growing country in all Latin America at this point. Colombia has been growing significantly over the past three to five years. Brazil  is one of the largest economies, the largest in Latin America and one of the largest and the most important economies in the world. Mexico has proximity to the U.S. and a huge customer base.  I cannot tell you which country to choose,  but all of these countries offer different markets, and they also offer something that is common to all of them and that is opportunity. They have opportunities all over.

SM: My question is a bit more in-depth than just picking the country. Let’s talk not only about countries but also types of outsourcing, the kinds of outsourcing that are more niche and more specialized. I am also talking to entrepreneurs who are running $10 million and $20 million companies, scaling to more specialized, niche-type opportunities. Where are the $5 million opportunities or  $20 million opportunities that are perhaps under the radar of TCS or Infosys?

AP: To answer that question, if you analyze the spending of [businesses] in Latin America today, around 52%–55% of the budget is still spent on running the business. The remaining 45% is the budget that is spent on transforming the business or reinventing the business, and when I say transforming and reinventing I mean projects that are not support and maintenance kinds of projects, but projects where a new service is implemented, projects which create new markets for their customers, projects where they are acquiring companies, and so on. Approximately 45% of the total budget is still spent on these kind of transformations. Now, a company that is a $5 million or $10 million startup has to take the topography and understand the area in which they want to play. Do they want to play in the 55% management and support/maintenance kinds of projects, or do they would want to play in the transformation kinds of projects? What can they offer to customers? Based on that, based on the answer to that question, they can decide which way they want to go.

SM: That is a good framework. Now, what about size? Just by definition of the kinds of projects and the scale of projects you are pursuing, I have to belief that your focus is on the larger companies in Latin America as your customers. What about the mid market? Who is catering to the outsourcing needs of the mid market, and is that an opportunity for entrepreneurs to look at?

AP: It is not that there are no companies catering to that particular market, but definitely as you rightly mentioned, what we look for in all these outsourcing business is all about volume. The more volume we can have, the more useful we can be to our customers.  Companies like ours will go for the companies which are a bit larger. Not necessarily all the top companies in all the different industry sectors, but primarily larger companies. We definitely cater to some of the mid-sized companies, but that is on a one-on-one and need-to-need basis, so it is not a specific attention that we give or a specific focus that we have for mid-sized companies. Definitely that is an option for startups or for new companies that are coming up, or for the $5 million and $10 million kind of companies and also for small and medium enterprises.

SM: Great! Did I miss any topic in terms of your business that is a major issue that we should have talked about but did not?

AP: No, I think you covered quite a fair amount of it. I don’t think that you missed anything.

SM: Wonderful! You have shared some wonderful insights, and I am sure the readers will enjoy it.

AP: Thank you very much, Sramana. Thank you for your time. Bye!

This segment is part 5 in the series : Outsourcing: Ankur Prakash, Vice President And COO, TCS Latin America
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