India's largest IT services company Tata Consultancy Services said on Tuesday it is eyeing $1 billion in revenue over five years from its new cloud-based business solution targeted at small and medium businesses (SMBs).
The company today formally unveiled iON, the cloud computing platform-based solution for SMBs, although it did not divulge the product pricing.
“We have already run a pilot and have over 130 clients today...we want to increase the number of clients in India to 1,000, preferably in one year,” Mr N Chandrasekaran, Chief Executive Officer and Managing Director of TCS, said in a conference call.
iON, TCS expects, will address the entire spectrum of an SMB's technology needs ranging from business solutions such as HR, finance, inventory, domain-based ERP solutions to basic applications – e-mail, document management and Web site services. The solution is pre-configured with hardware, network and software and backed by business, technical and consulting services, the company added.
iON runs on pay-per-use model and since it is a cloud-based business solution, it also removes the need for SMBs to invest in IT assets or retain scarce IT talent.
“It is an exciting offering and an important milestone for us. With this new solution stack, we look forward to making a difference in the way IT services are offered to the SMB segment. For us, the revenue from SMB space is almost negligible today. But we are targeting $1 billion over five years from this offering…We do not have yearly projections,” Mr Chandrasekaran added.
According to industry estimates, the small and medium companies will spend close to $48.5 billion on information technology by 2015. They spent $12 billion in 2010. Globally, the ICT spend in SMB market segment is growing nearly three times that of large companies. TCS sees SMB as a large untapped market, given that nearly 60 per cent of companies in this segment still do not have any ICT infrastructure.
Seamless device
To provide SMB customers with seamless service, iON has created an eco-system of 85 cloud service partners across India. iON's industry solutions are currently available for manufacturing, textiles education, retail, quick service restaurants, wellness and professional services. The anchor clients of iON belong to these diverse industries.
“These SMB customers are experiencing the benefits of increased efficiencies; faster go to market, predictability of technology, talent on call and an expanded customer base as a result of iONs integrated suite of cloud-based business solutions,” a TCS statement said.
The new product falls under non-linear business category, essentially meaning that the revenue growth here will be de-linked from pure headcount growth. TCS has earlier said it is targeting 10 per cent of incremental revenues from non-linear initiatives by the last quarter of FY12.
The company declined to comment on the pricing for the new solution but said that it was able to deliver 35-40 per cent lower cost (in terms of total cost of ownership) compared to traditional licence model.
After India, the company would also look at other markets. Asked about the margins for the new product, Mr Chandrasekaran said, “When revenue stream (from the solution) becomes material, the margins will be comparable to our current business.”
moumita@thehindu.co.in