Inside TCS's cloud strategy: How the IT giant is consolidating its hyperscaler alliances to tap an 'unbounded opportunity'

TCS, Synergy Park campus in Hyderabad, India.
Image: Namas Bhojani/Bloomberg via Getty Images

Maersk, the world’s largest shipping company, has a cloud-based Internet of Things (IoT) solution that helps it maintain the ambient temperature inside its refrigerated containers at the levels required by its customers, who use it to ship everything from fruits to medicines.

One of the world’s biggest medical devices companies uses a cloud-based application that can keep doctors and hospitals apprised of data on their patients' vital signs collected from wearable sensors. It can also update the software on the devices on the go, adding new features, fixing bugs and so on.

These are some of the kinds of work that Tata Consultancy Services (TCS) is delivering on the cloud, CEO and MD Rajesh Gopinathan told analysts on January 12, after India’s biggest IT company reported strong fiscal third quarter earnings. Gopinathan also pointed to these examples as representative of a growing opportunity—which is, what happens after a move to the cloud.

Today, getting to the cloud by shifting some workloads (code and databases) is only the basic first step. “What we’re really excited about is that once enterprises are on the cloud, it opens up opportunities to do everything from improving business processes to even finding new revenue streams; and eventually becoming significantly more relevant to the end customers by using the cloud to pull together an ecosystem that could benefit them in ways that were not possible earlier.”

TCS talks about this in terms of three ‘Horizons’—the first is about getting to the cloud; the second is about building on that presence to improve processes, break down organisational silos, collaborate better and so on; and the third is about going beyond the organisation to build a network of partners, or an ecosystem, to provide something that is much more than just the sum of the parts.

At that point, “the ecosystem play becomes a very important driver for what we see as the industry structure of the future”, Gopinathan said.

A decade ago, cloud computing was about renting processing power and storage off of the internet cheaply for non-critical projects. Amazon Web Services (AWS), which invented this model at scale, was less than a billion dollars in size, by revenue. Since then, advances in cloud software such as containers—self-contained software packages—various open source data management platforms, analytics, artificial intelligence (AI), machine learning and IoT have together changed the paradigm.

And as 5G rolls out, it opens up the possibility of private cellular networks for enterprises that can, in turn, be connected to their cloud-based systems and a whole new set of industries will become digitalised.

AWS has now become a $60 billion business, with data centres around the world. Microsoft, with its Azure cloud and Office 365 and Dynamics 365 cloud software, is the next biggest. And Google is making rapid strides in winning enterprise customers on to the Google Cloud Platform. Outside China, these three companies are the de facto cloud environments for any large business to consider. And the scale at which they operate has earned them the name ‘hyperscalers’.

From a chief information officer's point of view—traditionally the custodian of any large company’s IT—“today, you can just write an op-ex cheque” and have everything taken care of to the best standards, Krishnan Ramanujam, president and head of business and technology services at TCS, tells Forbes India.

However, it’s at the next level that things become really interesting, from a business user’s point of view.

“Today, the cloud model can be absolutely borderless. It transcends not just the enterprise boundaries, but also industry boundaries,” Ramanujam says. By that he means, the cloud allows a company to look at innovations even in completely unrelated industries and adopt them to its own purposes to make itself ever more relevant to its end customer.

This is the ecosystem play that is extremely attractive even to CEOs of businesses, because it helps grow the business, he points out.

A bit of history: Fifteen years ago, infrastructure outsourcing became a hot area of growth for India’s IT companies. That became one of the fastest growing and biggest service lines in the history of TCS.

Five or six years ago, cloud computing began to make inroads into IT, but there were still many naysayers, as Ramanujam puts it. TCS’s two biggest verticals are financial services and retail—financial clients had concerns about security and retailers didn’t want to move to a service provided by their biggest rival, because back then, AWS was the biggest cloud play in town.

Things started to change about three years ago, with TCS in the thick of it, delivering one of the world’s largest cloud migrations onto AWS at that time. Then Covid happened.

“If ever anybody had any doubts about the importance of digital, as an overarching set of capabilities, but more importantly cloud as the key to essential survival and resilience in the face of adversity, Covid put those to rest like nothing else,” Ramanujam says.

“Cloud providers, hyperscalers, or companies like TCS, we couldn’t have done it better if we’d planned for it. Covid had that impact. It unleashed a tsunami of demand for cloud, and now there is no going back.”

Independent business units

With the writing on the wall, or in the cloud, TCS moved to consolidate its preparations to meet this demand. After Covid, “the adoption just skyrocketed”, Krishna Mohan, TCS’s global head of AWS business unit, says. Therefore “the first decision was, ‘we need a full-stack cloud unit’, and the second decision was ‘how do we structure it?’”

Through the pandemic, TCS pulled together its tens of thousands of engineers working on AWS, Microsoft and Google Cloud Platform into three independent business units. With its partnership with Microsoft predating the cloud era, from the 90s, the Microsoft cloud business unit is the oldest, at about two years young, and the largest.

The units that partner AWS and Google are about a year old each. Industry estimates put TCS’s Microsoft and AWS units at over a billion dollars each, in terms of revenue to TCS. The Google unit is smaller, which also reflects the current hierarchy of the hyperscalers.

“We support everything, soup to nuts in terms of sales, pre-sales and delivery—it is a full-stack unit,” says Nidhi Srivastava, vice president and global head of Google Cloud business. Srivastava, based in Chicago, is responsible for strengthening TCS’s partnership with Google, taking Google Cloud to more customers, and building TCS’s solutions that customers can use in that environment.

Google recognised that effort last year naming TCS a ‘breakthrough partner’.

“Today it’s a talent war, as much as it’s a cloud war,” Srivastava says. And TCS added the most number of GCP (Google Cloud Platform)-certified engineers among all of Google’s system integrator partners, she says. In addition to building solutions around Google Cloud, TCS has also established what it calls the Google Garage.

It has also developed ‘solution accelerators’, which are simple tools that can be used in a repeatable manner by different customers to reach their cloud objectives faster.

“Everyone’s on the cloud journey today… that migration is common, but the question is, where?” Srivastava says. And depending on where a company is, it could have certain requirements that are often similar to what many other companies are looking for as well, in moving some of their IT and business applications on to the cloud.

The solution accelerators are tools that have codified some of the processes involved in figuring out where a company is, on its cloud journey, what might be its next steps, what information it needs to capture for its next steps and so on.

For example, one of the basic requirements of moving to the cloud is a foundation to begin to move data and software application workloads and so on. TCS calls these foundations ‘landing zones’ and has specialist teams highly skilled in creating them in “record time”, she says—bringing down the creation of the landing zone from months to weeks.

Google also has the concept of a ‘badge’ as a mark of a system integrator partner’s delivery capability in a particular area. A system integrator is the company that does the actual work of setting up a customer’s IT systems on its environment of choice—increasingly, cloud environments.

So, for example, there could be a badge for data analytics or one for cloud migration. With the setting up of a formal Google business unit, TCS is among those that have earned the highest number of badges, she says. And these are awarded only after an independent third-party audit of the capability and on presentation of a minimum of three customer case studies in the relevant area.

“Google is making very rapid strides to capture market share, and I have first-hand experienced that agility of decision-making and the focus on getting new logos,” Srivastava says. “And Thomas Kurien (Google Cloud’s CEO) is really executing a strong strategy for growth, be it in terms of investments, acquiring absolutely top-notch talent, rolling out new product releases, or strengthening the partner ecosystem.”

A recent example of the type of work TCS’s Google business unit is doing involves a large telecom operator customer of the IT company. The telco had decided on GCP, and TCS proposed that it would move their data workloads from multiple disparate sources onto Google’s BigQuery—a data- and analytics-as-a-service platform that helps companies to create self-service business models. This was a move proactively proposed by TCS’s Google business unit.

For a North American home-improvement chain of some 2,000 physical stores with over 500,000 products in its inventory, its on-premises IT systems just weren’t able to keep pace with the business’s rapid growth. TCS’s Google unit moved the chain’s data to BigQuery from Teradata, which the company was using previously.

And in the process TCS also built a solution accelerator for the Teradata-to-BigQuery migration that can now be used by any business wanting to do that. Since doing this a couple of years back, TCS has implemented “several” such migrations for various customers, Srivastava says.

Google’s work in AI has also given TCS a chance to build some solutions, using the Google Garage.

“Cloud journeys are both complex and nuanced,” Srivastava says. There are ambiguities because it’s impossible to nail down everything from the start. Some of that gets easier by doing proofs-of-concepts, which the Google Garage enables. So, TCS has built a few solutions around using AI and machine learning as well, in the area of claims processing, for example, available on Google cloud.

Another AI-related example is with Google’s contact centre AI software, around which TCS has built solutions for some of its call centre clients. More specifically, TCS is focusing on contact centres in the health care sector. This is a joint effort and investment with Google to develop these solutions within TCS’s Google Garage and take them to prospective customers in the health care sector.

AWS factory

One of the largest pre-Covid cloud projects that TCS delivered was on the AWS cloud. TCS has been working with AWS for seven years now. At a large staffing or professional services company in Europe, TCS moved some 900 software applications to AWS—the largest AWS migration at that time.

For a multinational financial services company, TCS moved applications on to the AWS cloud that overhauled the company’s loan processing business. In some of these projects, the legacy code would reside on old mainframe computers with the folks who first wrote the code retired and gone. TCS automated a lot of the processes involved in extracting the logic of the original programs. Its software engineers then implemented a modern version on the cloud.



“This helped the customer to go from a physical location-based retail operation to an almost-fully digital model,” Mohan says. TCS also helped the company expand its partnerships, which allowed it to sell more financial products.

For a large airline group, based in Europe, TCS moved a large number of software applications to AWS. It also implemented a cloud software that used machine learning to improve checking in and tracking luggage for some 27 million customers.

Over the last five years, say, new software has replaced the old, and cloud-native tech has replaced third-party applications, but “those are (just) the technical changes”, Mohan says.

What is significant, and less known, is “the degree of portability, virtualisation and automation that comes naturally with a cloud environment like AWS that accelerates your transformation significantly”, he says. “The speed, the richness of these tools, is less spoken about, but the value is here.”

For example, with AWS SageMaker, data scientists and developers get an automated way of making machine learning models without the headache of having to manage computer servers and so on, and in a scalable, pay-as-you-go fashion.

In the case of the financial services customer, what took about two years on AWS cloud, would have taken twice as long in the traditional way of writing software applications and implementing it on the company’s own servers and slowly expanding its use across the organisation.

And the rise of modern fintech startups—which are all born in the cloud and to the cloud—is showing that the established financial companies just don’t have that luxury.

“Today, we support 400 large customers on AWS,” Mohan says. What started out as an infrastructure-level service has grown to become an operation that supports complex business operations related to software development on the cloud.

In November 2021, TCS announced an Assessment and Migration Factory, a set of tools, accelerators, and services for customers to shift their old mainframe workloads to the new AWS Mainframe Modernisation platform.

TCS has trained some 25,000 of its engineers on AWS technologies with about 10,000 certified professionals in 13 AWS competencies. The company has also several partnership credentials, and awards, from AWS that recognise TCS as a top global system integrator for AWS technologies—which puts TCS among the 30 biggest global system integrators for AWS.

TCS is also building its solutions in a manner that customers can just straightaway use them off-the-shelf from the AWS marketplace. TCS’s AI solution, ignio, is an example of one solution that will soon be available in that form.

The magic after

At the Microsoft business unit, which is the oldest and the biggest of the three, what’s interesting is that TCS and Microsoft are large customers of each other as well. During Covid, TCS rolled out a company-wide implementation of Microsoft’s Outlook 365 in a gamified manner that has since become a case study on Microsoft’s website, says Sivaraman Ganesan, global head of TCS’s Microsoft business unit. TCS is also a large user of Microsoft’s Teams collaboration software.

The IT company’s Microsoft unit has in excess of 50,000 people, and is still rapidly growing, he says. And about a year ago, TCS launched an initiative called ‘Get set Azure’ to streamline the training of its Microsoft army.

TCS is taking Microsoft’s cloud technologies to global customers on three fronts. The first comprises Teams, Office 365 and “everything at the edge”. Then there is Microsoft’s Dynamics 365 for various facets of an ERP such as CRM, field service management, HR, financial systems—all on the cloud. And there is the Azure cloud itself, for infrastructure, applications, security, data, IoT and so on.

“The magic begins after you’ve landed in the cloud,” Ganesan says. And the transformation of a large company’s business processes to a digital-tech-led operation involves “being frugal in consuming cloud-based compute and storage, and clever in building micro-services (think apps)” that can be available on-demand and at a very large scale. (Peak season in retail sales for example).

Today, TCS has the deep partnership with Microsoft to be able to deliver this combination.

For Swiss Re, one of the world’s biggest re-insurers, TCS is building a modern digital workplace that will allow some 18,000 users to collaborate better in the post Covid world. For a large pharmacy chain in the US, TCS implemented a cloud migration that improved fulfilment rates during Covid.

For an Australian energy utilities regulator, TCS has implemented a solution that significantly reduced the time taken for settlement of energy credits—another example of the shift towards business outcomes versus IT outcomes.

Business outcomes shaped by the fusion of engineering, industry knowledge and different Microsoft cloud technologies will become the core of the future of this business unit, Ganesan expects. An important part of that will be building “edge-to-cloud” use cases with all the data that will be available.

TCS is a Microsoft Gold Partner with over 1,000 successful ‘modern workplace’ and Azure engagements for more than 225 global customers, the company said in a press release in November 2021. The same year, TCS won the Microsoft Partner of the Year award for Azure Intelligent Cloud in France and Dynamics 365 Field Service in the US. It is all a designated Microsoft Azure expert managed service partner, according to the release.

Ganesan points out that industry context knowledge is another important reason that TCS’s cloud units are relevant to customers. Today’s TCSers are able to take supply chain knowhow from their manufacturing practice and help a retailer or a medical devices company.

Further, TCS has been building its own intellectual property via digital solutions like Optumera for retail business, HOBS for telecom operators and ignio for autonomous IT operations, part of the company’s Digitate software venture, that can all run on the Microsoft cloud.

“We are the number one partner,” Ganesan says, meaning TCS migrates more work to the Microsoft cloud than any other partner.

Only the beginning

Despite all this, Ramanujam and his band of cloud evangelists are grounded in their outlook. The cloud model “is still in its infancy”, he says. This is because today’s workloads on the cloud represent 20 to 30 percent of what the end state could be. And this isn’t even 20 to 30 percent of all on-premises IT because there is a plethora of software and data that isn’t standardised and therefore can’t be moved to the cloud easily.  

“We’re a decade away,” he says, from when the cloud model will really be about rich ecosystems.

And there are other areas that cloud could touch. For example, what role can cloud play in making mergers and acquisitions more successful? In the case of the European professional services company that TCS helped to move to AWS, the company had gone through 80 acquisitions in the previous five or six years.

Mass personalisation and customer experience with segment of one being the holy grail of retail and direct-to-consumer options will also see big changes via the cloud. R&D in general, and in health care in particular, is being overhauled by cloud computing—as the Covid vaccines showed. If pharma companies can halve the time it takes to bring out new drugs, it could be a game changer.

It’s also early days in terms of the size of contracts and how companies like TCS are compensated for their work. The infrastructure work of getting to the cloud is still on the basis of traditional pricing models. This is also where currently the bulk of volume of work is coming in and contracts can range from $5 million to $50 million in size.

Beyond that, “there are some green shoots” that point to the future—where TCS might be able to make more money for higher value delivered in terms of business outcomes, Ramanujam says.

That will also be enabled by this sharpened focus on joint go-to-market with the hyperscalers. In the past, the partnerships were “somewhat underutilised” Ramanujam admits. That is no longer the case, and the sense of urgency is palpable. “We will invest big time in co-innovation and co-creation with customers,” he says.

Opportunities unbound

Maersk uses real-time data from the reefers to give visibility of the ambient conditions to the end-customers—shippers, making quick decision-making possible, TCS COO and Executive Director NG Subramaniam said on the an analyst call.

Other capabilities include automated alarm detection, corrections and closure, a workflow system, a vessel-based solution to on-board reefer technicians, integration of predictive algorithms to help detect issues before they turn into problems; and support the implementation of a mobility solution for Maersk equipment maintenance and repair vendors.

The solution monitors a fleet of over 385,000 reefers and provides monitoring capabilities for over 450 vessels, on which Maersk can carry cargo in the exact ambient conditions inside each connected container as desired by their customers.

At the specialty health care company, “the approach is to actually act as an anchor to an ecosystem”, Gopinathan said. That would include doctors and other specialists as needed, but basically the entire chain of people involved—diagnostics, pharmacies, insurers and so on. “The cloud significantly increases the ability to adopt this kind of an ecosystem play. And we believe that these are all unbounded opportunities.”