INSUBCONTINENT EXCLUSIVE:
(information technology + Indian talent = India tomorrow)
As if on cue, almost a year to the date of his statement, TCS became the first Indian IT company to breach the $100 billion market cap
This is a phenomenal achievement for a company listed only about 14 years ago
It has since given compound annual returns of more than 21 per cent
The market return in this period has only been around 12 per cent.
The Power of Compounding The growth of companies like TCS brings to the
fore the power of compounding, which Albert Einstein is said to have called the eighth wonder of the world
The magic of compounding is visible only over a sustained period of time
We are growing at a good pace that is expected to sustain over a considerable period
Add to that our current GDP of $2.5 trillion and we have a potent mix for a strong compounding effect, which could propel India to a GDP of
$5 trillion by 2025 and potentially $20 trillion by 2040.
In the case of TCS, the market cap has grown from around Rs 47,000 crore during
Among the companies that started in the 1970s and early 1980s, TCS, Infosys and Wipro are some examples that stand out in terms of their
scale and growth trajectory over the past two decades
Some of the other companies grew very fast in their initial stages but tapered off as quickly as they had grown
In such cases, while growth existed, sustainability was lacking.
Hence, there was no compounding
The big question then really is, what gives an organisation the power of compounding A lot of industries and businesses faces entry barriers
Truly harnessing the power of compounding would require an opportunity like that in the IT sector a few decades ago
A global market was available, entry barriers were limited as it was primarily a services game (compared with other capital-intensive
industries) and opportunities were still nascent
Such an opportunity affords you the ability to not only scale up rapidly but also make mistakes and recover from them
And the bellwethers of the industry have utilised the opportunity to the maximum.
The Secret Sauce However, an opportunity is just one side
The one attribute that has consistently separated good organisations from great ones has been quality of the management.
Being a good leader
that can see the larger opportunity and benchmarks itself with the best in the world will always be one step ahead.
I remember discussing
with Narayana Murthy in 1996 about the market opportunity for the IT industry
For him, the whole world was his playground
The market opportunity was limitless
It was this opportunity that he had envisioned capturing
Over the course of the next decade or so, he executed his vision to perfection.
At TCS, the quality of management has set a benchmark
astonishing achievement in itself.
From FC Kohli to S Ramadorai to N Chandrasekaran to Rajesh Gopinathan now, not only have the previous
three bosses served long enough to leave their stamp on the organisation, the transitions have been smooth, ensuring business
continuity.
Consistency is key in the power of compounding
Any disruption to the growth trajectory can take you back several years
industries go through a cycle of change every seven-eight years
This requires a refresh of the business model
In the IT industry, for instance, we saw various phases dominating the business model, starting from the body-shopping phase to a more
Today, the focus is on the SMACI (social, media, analytics, cloud and IoT) stack
Adaptability becomes the key when such massive changes dominate the industry every few years
Recalibration is more challenging when the company is larger
Credit is, therefore, due to TCS, which has consistently done this over several decades and at scales that are massive even by global
Ensuring a change in the core strategy percolates down to the lakhs of workers spread across the globe is a humongous achievement
And it is this adaptability that has brought TCS to where it is today.
The $100 billion dream TCS is now among the 100 most valued companies
To some, a $100 billion valuation might be the zenith but for a company that has dreamed big and achieved those aspirations, it might just
A growth rate of 33 per cent CAGR could actually propel TCS to a valuation of $1 trillion in the next eight years.
This would have been
dream.
(The author is Chairman and CEO of Edelweiss Group
Views expressed are his own)
