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Last Updated : Nov 02, 2018 09:04 PM IST | Source: Moneycontrol.com

W12 acquisition to help TCS compete better in digital design space

The focus on design thinking is a significant move away from traditional outsourcing deals and models that focus only on infrastructure projects or application led deals.

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Tata Consultancy Services announced its first digital acquisition, a move experts say will help it get more teeth as compared to larger rivals Accenture and Cognizant in the growing design consulting space.

The largest technology services company in India on November 1,  announced it bought W12, a London-based digital design studio, for an undisclosed amount.

Calling digital acquisitions the "flavour of the season," CEO and founder of Greyhoud Research Sanchit Vir Gogia said there was a "strategic reason" for IT firms to be making such acquisitions.

"According to our research, 50 percent of the IT budget will lie with a non CIO (chief information officer) role by 2020. So you're (most likely) talking to a CMO (chief marketing officer), or CHRO (chief human resources officer) or CFO (chief financial officer) for business. If you have to speak to a CMO you need to be able to speak experience and immersion, not just IT," he added.

TCS's smaller peers Infosys, Wipro and HCL Technologies have also acquired companies in the design and marketing space.

However, its the larger, US-based rivals Accenture and Cognizant who are upping the ante in the space by setting up separate divisions to handle design and interactive experiences.

Accenture has bought several companies in the space. Its digital business accounted for nearly $8 billion in revenue last year.

The new acquisition by TCS will be part of its Interactive division, which was set up by the company to develop and work on digital design systems.

The company describes it as a "leader in addressing challenging business problems through design thinking, creativity, contextual knowledge and the innovative use of technology."

The focus on design thinking is a significant move away from traditional outsourcing deals and models that focus only on infrastructure projects or application led deals.

"Accenture, IBM and Cognizant have built practices around design thinking, an area where Indian companies have been seen as laggards.

TCS is also building capabilities around deep learning and natural language processing. This acquisition puts them in a seat next to Accenture or IBM. This gives them an edge in consultative sales, instead of infrastructure sales or business," said Gogia.

However, what remains to be seen is how TCS will integrate this acquisition with its current business.

"Unless it becomes clearer what capabilities TCS is acquiring through the acquisition, it will be difficult to asses the impact of the deal. Its smaller rivals have been acquiring similar firms over the last two years, but TCS is known for its execution," said an industry expert who did not wish to be named.

 

 
First Published on Nov 2, 2018 09:04 pm
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