X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
“The intellectual asset that you have created is going to be a key differentiator.” - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Nov 8, 2000

    “The intellectual asset that you have created is going to be a key differentiator.”

    F C Kohli is associated with the country’s biggest and most profitable software service company, Tata Consultancy Services (TCS). From humble beginning in 1969, he has built a software giant over 30 years. Mr. Kohli, an electrical engineer from MIT and a double doctorate was with Tata Electric Company during the period 1951-69 when he was entrusted with the job of building TCS. Mr. Kohli is still at the helm as Deputy Chairman of TCS, shaping the future, laying foundations and directing new IT practitioners towards a better future. Kohli is determined to add to the intellectual capital base of India. He is also lovingly called ‘the grand old man of the Indian Infotech industry'.

    In an interview with Equitymaster.com Mr. Kohli spoke about the software industry and what lies ahead. We also learnt of his fondness for paintings by B. Prabha.

    EQM: Which domain areas do you see as important for Indian companies? Where do you see most of the growth coming from?

    Mr. Kohli: If you look at the industry and the growth segments on a global basis, very clearly banking, financial services and insurance are adopting technology at a faster pace. The requirements in these segments are high and they will only be increasing in future. Utilities and energy sector is another area where we are going to see growth.

    EQM: Do you think the Indian companies will be able to build products on their own?

    Mr. Kohli: Indian software industry will remain service-oriented atleast for the next 2 to 3 years. There is no risk for software product development also, but you need to have knowledge in the particular field. If I am trying to build a product on international banking, I should have enough experience in that field and technology. I should also have domain knowledge. You need to have knowledge before you come out with a product. So far, the Indian companies are not actually developing any products. They are just doing improvisation and providing components to the existing products.

    We at TCS have a banking product called E.X., which has been launched recently. Our retail-banking product is a very successful product. We have launched a wholesale banking product in Switzerland called Quartz. Then we have other retail industry products, healthcare products and global custody products on the international scene.

    EQM: Currently revenues from the US constitute a higher proportion to total software revenues. Is there any risk in this excessive exposure to the US markets? Which other part of the world presents good opportunities to grow?

    Mr. Kohli: Although US markets contribute more than 60% of software revenues, I do not see any risk in the US markets. In fact if the US economy slows down companies will spend more on IT to cut down the costs and improve efficiencies by using technology. Apart from the US, I believe China, Europe and the Middle East markets offer good opportunity for the software industry.

    EQM: How will the manpower cost difference (in India and abroad) impact the domestic software sector and its prospects?

    Mr. Kohli: The manpower cost difference is diminishing, very correctly. The training, continuing education and expertise are all going to make a clear difference. Also the intellectual asset that you have created is going to be a key differentiator. The key focus area however, is productivity per employee.

    EQM: In the IT sector, which are the new areas that will spur growth, domestically as well as internationally?

    Mr. Kohli: For the next few years the software sector will continue to grow at the current rate. There will be some products coming under software and engineering segment. There will be no domain type of products like ERP because that needs a basic experience in domain. But I am sure after 2 or 3 years we would start building products in the financial sector because demand for finance products is growing rapidly.

    EQM: There is a recent trend wherein global giants like GE and Nortel are setting up R&D centres in India. Also Visa quotas are increasing to countries like Germany, USA and China. Will there be any intellectual capital left for India to become a global software giant?

    Mr. Kohli: Very clearly, India is the destination to hire high skilled labour. As you know recently Nortel, GE and Cisco announced the setting up of their research and development centres in India. These international companies are coming here not only due to lower costs but also because of the value proposition. People work better in their own environment. And from this point of view it is better that companies set up their bases in India. There is no need to be skeptical of this development. Global companies are now creating value in India and the people skills are remaining in the country.

    EQM: You have been able to retain people without being listed. But in the software industry it is very essential to have stock options to retain intellectual capital. How have you been able to do that?

    Mr. Kohli: With regard to the retention of employees, it is a continuous process. We need to understand a couple of fundamentals. We need to understand that there is a demand-supply in-equilibrium. It's a global phenomenon. Therefore, for talent there is a worldwide search. Here the key challenge is how you motivate your people in addition to the compensation. The motivation of people comes in the form of inputs you give as professionals to them - the continuous upgradation of their skills and their ability to relate to very challenging work. At the end of the day, the computer professional looks for very challenging work. Where an environment is provided for them to do some of these things they are going to stay with the organisation to build on their intellectual capabilities to full potential.

    Although, we (TCS) do not have any stock options we have made cash payment of approximately Rs 400 m, which I feel is good enough to motivate the employee. Here again you do not have a lock in period of 3 to 5 years. We are in fact making outright cash payment, called as performance incentives.

    EQM: Which 3 persons have influenced you the most?

    Mr. Kohli: It is an unfair question. In my life there are innumerable persons who have made an impressions through brief meetings. So it is not fair to name only 3 persons. If you ask me for a list of 100 then I could respond!

     

     

    Equitymaster requests your view! Post a comment on "“The intellectual asset that you have created is going to be a key differentiator.”". Click here!

      
     

    More Views on News

    Infosys: A Decent Start to FY18 (Quarterly Results Update - Detailed)

    Jul 14, 2017

    Infosys starts FY18 on an encouraging note with a stable performance.

    Infosys: A Flat End to FY17 (Quarterly Results Update - Detailed)

    Apr 13, 2017

    Infosys ends FY17 with a 7% QoQ fall in net profit for the March quarter.

    Infosys: A Decent Quarter (Quarterly Results Update - Detailed)

    Jan 13, 2017

    Infosys has reported a 0.2% QoQ decrease in the topline and an increase of 4.6% QoQ in the bottomline for the quarter ended December 2016.

    Tech Mahindra: Our Revised View (Quarterly Results Update - Detailed)

    Aug 2, 2017

    A better than expected turnaround in performance results in a change in view.

    Wipro: A Decent Start to the Year (Quarterly Results Update - Detailed)

    Jul 27, 2017

    Digital services drive growth for Wipro in 1QFY18.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    INFOSYS LTD SHARE PRICE


    Aug 22, 2017 (Close)

    TRACK INFOSYS LTD

    • Track your investment in INFOSYS LTD with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    INFOSYS LTD 5-YR ANALYSIS

    Detailed Financial Information With Charts

    COMPARE INFOSYS LTD WITH

    MARKET STATS