Strategic CIO // Executive Insights & Innovation
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2/13/2009
07:50 AM
Bob Evans
Bob Evans
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Tata Tells CIOs: Show Me The Money!

After the recent Satyam scandal, most outsourcing clients rushed to assess the financial health of their software and BPO partners. But as the global rececession deepens, Tata Consultancy Services is shifting the burden of proof of viability from outsourcer to customers as Tata, burned by bankrupt client Nortel, looks to ensure its clients can pay their bills.

After the recent Satyam scandal, most outsourcing clients rushed to assess the financial health of their software and BPO partners. But as the global rececession deepens, Tata Consultancy Services is shifting the burden of proof of viability from outsourcer to customers as Tata, burned by bankrupt client Nortel, looks to ensure its clients can pay their bills.Tata Consultancy Services "will qualify the deal pipeline much more to see the clients' ability to pay back," TCS chief executive S Ramadorai said last week as reported by the Economic Times of India. Ramadorai also said his company will attempt to shorten payment cycles to 15-30 days versus the current 30-60 days.

Good luck with that because while clients also will be eager to alter the current timetable for payments, they'll be seeking an adjustment in the opposite direction, more along the lines of 60-90 days. And with global demand for IT and BPO services slowing and clients desperately looking to conserve cash wherever possible, a more likely scenario is that while TCS will push for payments in 15-30 days, they'll quietly be happy to see clients continue to meet the current 30-60 day cycle rather than pushing payments out even further.

Ramadorai also said that with growth slowing for the traditional services offered by TCS, the company is looking to move more aggressively into some market segments that are likely to show some growth such as health care IT, green technologies, and SaaS.

The Economic Times also reported that TCS, India's largest software services company, is planning to expand into vertical markets in specific countries where growth is likely, such as aerospace and manufacturing in France and Germany, as well as banking, telecom, and government services in the Asia Pacific region.

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