Oct. 03--MUMBAI -- India's largest software services exporter Tata Consultancy Services Ltd (TCS) has set up a digital enterprise unit in Silicon Valley to club its social, mobility, analytics and cloud (SMAC) computing technology services under a single roof -- a move that may help it become the first Indian company to exceed $100 billion in market capitalization, analysts say.
TCS has been working on the concept of setting up the digital business as a separate unit since January 2012, and now has "a few thousand employees in this unit that we set up in June", Satya Ramaswamy, vice-president and global head of TCS Digital Enterprise, said in a phone interview on Tuesday from Santa Clara, California.
Ramaswamy, who joined TCS in 2010 after the company acquired Brightfon Inc., a mobile solutions firm he founded in July 2008, said SMAC had evolved over the last five years.
Mobility, he explained, is evolving into pervasive computing with connected-ness and the so-called -- and much-hyped -- Internet of Things gradually becoming a reality, while analytics and Big Data are providing tools to transform business processes.
"Social media, too, is evolving into community networks and influencing product design," said Ramaswamy.
M for Mobility in the SMAC acronym has become important for companies with the proliferation of mobile devices such as notebooks, tablets and smartphones. S for Social has become critical with the success of social networking sites such as Facebook, Google Hangouts, Twitter and LinkedIn.
A strategy built around A for Analytics, which also covers the phenomenon of Big Data, helps companies to make sense of the vast quantities of data that individuals and companies generate -- to find patterns and take better decisions.
Last, but not the least, comes C for Cloud computing, which is about delivering technology services over a network and comes in three models -- public (the Internet), private (servers that the client controls) and hybrid (mix of public and private cloud technologies).
A TCS global trend report released on Tuesday indicated that while social media is "being taken seriously by most enterprises -- more than two-thirds (companies) have at least one FTE (full-time equivalent) committed to social media, and the average company will spend $19 million on it and employ 56 people -- significant benefits are not being achieved most commonly due to information not reaching the right functions".
Analysts believe the focus on SMAC services will not only help TCS expand its non-core business, but also help the information technology (IT) services provider become the first Indian company to cross the $100 billion mark in market value. TCS's current market cap is close to $61 billion.
On 20 August, Viju K. George, an analyst at JPMorgan Chase and Co., wrote that TCS could achieve the feat if it "grows revenues at a CAGR (compounded annual growth rate) of 15% over four to five years, holding margins/ROE (return on equity) constant at current multiples".
Since things don't work in a linear fashion in the business world, this will demand "vision, strategy and execution" from the TCS management and the company will have to move beyond just traditional IT services to an SMAC framework, George wrote.
"Seeing the cloud as a friend, rather than a foe, would enable TCS to open up new markets/segments and create new, non-competitive demand brought upon by the cloud and more generally, the SMAC," wrote George. "The SMAC framework helps create an accretive ecosystem that has a positive rub-off on IT services (including offshore IT services). TCS will have to create more evidence of creating and building up material, proprietary revenue streams (revolving around SMAC or otherwise)."
On 30 August, brokerage CLSA came up with a similar report. "TCS has the potential to be India's first firm to reach $100 billion in market cap... It may not be at the forefront of technology changes that could hurt its traditional business, but it is catching up fast," wrote Nimish Joshi and Rohit Kadam, the authors of th