Cybersecurity, AI & sustainability to drive TCS growth in Europe



March 6, 2024

/ By / Davos, Switzerland

Cybersecurity, AI & sustainability to drive TCS growth in Europe

Cybersecurity and Artificial intelligence could be the motors driving growth across Europe in 2024

Europe has been a key market for Tata Consultancy Services for several decades and the picture is no different in 2024. In an interview, Sapthagiri Chapalapalli, Head, TCS Europe, tells Media India Group that sustainability, cybersecurity, and artificial intelligence could be the motors driving growth across Europe in 2024, though the growth would vary by country due to local factors.

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What is the outlook for TCS Europe in 2024?

As far as TCS is concerned, we operate in multiple countries in Europe and the dynamics are slightly different across different regions. Nordics, which has some unique opportunities and challenges, then we operate in Belgium, Netherlands, Luxembourg and then Germany, France and Switzerland and Southern Europe. From a tech perspective, there is an overwhelming majority of our customers across industries that believes in investing in various technologies that are going to shape their future, it could be cybersecurity, which is one of the big topics that we need to address. It could be sustainability, it could be transforming their technology landscapes using its SAP S4 and so on. And finally, they don’t want to be left behind on AI. Therefore, from a tech perspective, there is a lot of potential. But everybody is operating with the background of a bit of uncertainty across the world, with the kind of geopolitical environment. And that obviously makes them a little cautious on making decisions. From an economic perspective, it is a mixed bag. As you know, Germany is going through a bit of a slowdown in the economy. Some economies are doing relatively better. Even though the challenge that we had with inflation has moderated, but we still have high interest rates, which again has a different challenge for various sectors because investment is going to be much more difficult. So this is the context in which people are operating. While there is a good opportunity, the uncertainty is making it difficult for decision making. But tech is not something that we can hold back for too long. And that is what makes it very positive for us in terms of growth.

How was 2023 for you?

Barring a couple of exceptions, it has been much better than what we expected and we have a good pipeline which is also reflecting the sentiment that there is a lot of opportunity. We have also done a lot of new work, especially in cybersecurity, sustainability, in digital transformation and initial work on AI. So, 2023 has been the year when we started on many of these areas and quite a few transformation programmes. There was a lot of focus on efficiency in 2023  because of uncertainty, everybody wanted to tighten their belts and use technology to get more efficient. And that was the focus of 2023 and in 2024, I hope that there will be a little more openness to start spending. It is just a matter of making decisions. In 2023, we also had a couple of very large programmes that we executed over three years and then they came to an end. So, we need to find something to replace them.

Which was the brightest spot for TCS in Europe?

Last year, I would say our operations in Benelux have done very well, France has done well, Nordics has been moderate. Germany had been one of the fastest growing ones for us and that is where we had a couple of big programmes which came to an end and that is why it was not as good as in the past. Switzerland also has been moderate. The outperformance is mainly in Benelux. This year it will continue on the same pattern. I expect Benelux to continue like that. Germany should be doing better. Overall, I would say it is expected to be better. But with the current environment, things change very fast.

What about the AI ?

AI itself has been used by TCS for several years in various parts of business, especially in achieving efficiencies in operations and so on. And it it came out of research from many years ago. So this is not anything new. But the concept of generative AI, which has come of age in the last year has created new possibilities. That is the one that we are focused on, and that also has opened up broader possibilities of applying AI across enterprises, industries, and therefore TCS very quickly created reference architectures or models by which companies can define their AI strategy and adopt it in a more structured and responsible manner.

We have also started working on early cases of adoption of AI in specific industries. We are now taking a more industry focus view on what would be the application of the AI in each specific industry and those use cases are getting built. Then those use cases will have to be contextualised to each specific company. That is an exercise that we need to do by ensuring that the data within the company is structured and we create the capability so that the models that are going to learn are going to learn using enterprise data augmented with external data, and then it can specific purposeful agents. So that is the space, a lot of work has been done. I think, that if not ahead, we are very much in tune with the pace at which AI is getting adopted.

At a global level, China, US, EU are leaders in AI, but not India?

 If you are referring to companies that have created large language modules, it could be. But if you look at the kind of tools that have come out of AI with specific capabilities and in this case TCS itself is a good example. One of the tools that we have created, Ignio, it is one of the leading tools in the space where it solves specific, critical infrastructure, management and troubleshooting. It may not have captured the imagination of the general population, but when it comes to specific applications, we are there. But, of course, not as large as the, the generative AI tools that have come out. Of course, that may not be a comparable thing. But I am sure we will have a very important role to play in the adoption of AI in the industry, because the adoption requires a strong knowledge of the industry and the knowledge of the business that we have to support. And that is when we can create the differentiation and that is the space where we have been playing. And of course we believe in partnerships and ecosystems. It’s not that we would be able to do everything, so we partner with all the leading AI companies and all the cloud hyperscale’s and we bring those capabilities together so that our customers can get the best of it. And our job is to kind of make it happen.

What about AI leading to job losses?

As far as AI and jobs go, I think that all the surveys that have been done, their data points indicate that there is going to be a net increase in the jobs. There may be some jobs which may be reimagined and maybe some jobs there that would be done probably differently or done in collaboration with the AI. But on the whole, AI would lead to more jobs than any potential losses. That is what the surveys that have come out of the World Economic Forum or the IMF or other sources say. But the way we look at it and our own perspective is that the AI and human capabilities are going to work in close collaboration in the sense that AI will assist humans, can augment humans and can also enhance the human capabilities, both in terms of productivity, in terms of quality and also the experience. So that is how it is potentially going to evolve. And as we see more and more use cases, you want to see how that is going to be reflected in the world.

Coming to Europe again, what is your feel on EU’s AI Act?

I think it is a pioneering move, which is important because more or less everyone believes that there needs to be a regulation and guardrails and rules for AI. And EU was the first one to create an Act, which is great. And now the key question is how can we achieve a level playing field across the world because companies work globally and that is number one. The second is how do we ensure that people don’t curtail their innovation because of the regulation, instead innovate and see how to comply with the law rather than use compliance and then define a solution. So that is the second dimension of regulation. On top of that, how companies can also define their own rules apart from what’s in the act. So the key is the implementation. How can we make it in a way that doesn’t stifle innovation, while at the same time it meets the objectives that it has been intended for.

What about mobility for Indian tech workers in Europe?

It varies from country to country because this is a country specific topic. Overall, I don’t see significant hurdles, especially for our kind of talent. In fact, recently Germany has announced relaxation of the immigration rules, and actually  promotion of mobility of talent, not just in high tech, which is what we come in, but even in other sectors. So if any, I do see that it has been a positive move, especially for countries like India.

Are you looking at inorganic growth in Europe?

We have done inorganic growth, especially our France operation was enhanced on the acquisition we did the Alti a few years ago, three years ago, we took over Postbank Systems from Deutsche Bank in Germany. And we continue to look at what makes sense and take and integrate them because we obviously see if it’s going to create value and growth platform in that market. That is an ongoing process. So when we find the right one, we do that.



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