After China, TCS is looking to expand elsewhere in the region

One of India's leading software companies, Tata Consultancy Services (TCS), has joined the fray in Thailand's software industry with the aim of becoming a leading player and catering to other parts of the region from the Bangkok-based office.

"This is a market that we have been looking at for a very long time and have finally got the approval from the Board of Investment (BoI)," Grija Pande, the chief executive for Asia Pacific, said in a recent interview.

"Our hope is to be able to add value to the various industries that we have our strengths in, be it financial services, telecommunications services or the government."

Although the move by TCS into the Thai market comes after some of its rivals have already made their presence felt, Mr Pande says that competition in the market would only help drive the overall industry's growth.

Pande: Banking, telecoms to be focus

TCS, which caters to some of the world's largest clients including GE, says that the presence of the multinationals in Thailand would be the driving factor for TCS.

TCS, which has a presence in key Asean markets, such as the Philippines, Indonesia and now Thailand, wants to use these offices as its centres for the region, although there are times when the company believes that countries such as Vietnam may be of interest in the future.

"The region has always been of great interest to us but we had to delay the plans because we were focusing on the major expansion in China," Mr Pande said, adding that currently there were 1,200 staff in its Chinese operations.

"We have a philosophy that unless we do not have a strong business, we do not like to go to that market," he said, noting that Thailand was the 45th country where TCS had a presence.

With the rising cost of doing business in India, Mr Pande said there had been been talk of shifting the industry to cheaper countries, which he believes is a wrong notion.

The only activities that should be shifted, in his view, are call centres that rely on low costs, but programming and other complex activities need to remain in India, where technological know-how is still stronger than in most parts of the world.

India's cost structure is rising at "unsustainable" levels of more than 15% annually, he says, Despite this, TCS has shown a strong performance by posting a 50% cumulative average revenue growth rate over the past five years and this year, despite the global gloom and doom. The key, he says, is to diversify the exposure.

"We have taken a conscious decision for five years to diversify our exposure to the United States and now the US accounts for less than 50% of our revenue," Mr Pande said.

He added that Europe now accounted for 20% of TCS's business and the rest of the world or the emerging markets 20%.

The emerging markets have the biggest potential, with growth rates of more than 40% that could help offset the slowdown in the United States.

Mr Pande said that in Thailand TCS would focus on banking, telecommunications and the government sector. Lately, TCS has entered into a joint-venture agreement with Thai Reinsurance to set up a company to provide IT outsourcing for medium-sized and small insurers. The company holds 20% of the new venture and the first customer is Falcon Insurance which has a five-year application service provider agreement.

TCS has set up a company in Thailand to provide three main services: IT services, business-solution services and outsourcing. It focuses on banks, telecoms and the government sector, the areas where the company has gained experience from serving worldwide customers.

This year, banking customers will invest more in IT, especially core banking systems. In the past, TCS developed software packages for the core banking system and bought other software companies that provide the core banking system to add to its current services.

Furthermore, it has experience installing core systems for large banks worldwide such as Bank of China, which has 22,000 branches and 380 million accounts, and State Bank of India. It is expected that within 12 to 18 months, TCS will have more customers, five or six of which are Thai and foreign banks.

The telecoms business is expected to grow as well and the proposed solutions for target telecommunication customers are the billing system and operating system for service and support.

The company also has built up experience providing billing solutions to service providers in Asia such as SingTel, Indosat and Telekom Malaysia.

Last week, the company had a chance to propose its own technology for government agencies to Deputy Prime Minister Suwit Khunkitti.

The proposed solution is a company registration system via the internet which helps foreigners set up companies within two days.