At the recent TCS Innovation Day held in New York, NelsonHall had an opportunity to talk to TCS about how it approaches its research and innovation function, balancing longer-term open-ended research and more immediately applicable innovations to evolve how it delivers services. (For more on the event itself, see the blog by Andy Efstathiou here).

TCS has developed an overall approach that balances research into cutting edge areas, innovations to its services, and applying learnings from its innovation network of academics and start-ups.

Research: Focusing on Broad Themes & Long Term

TCS has been conducting its own internal research for ~38 years. However, over time, its focus has evolved. Initially, the research was primarily focused on technologies directly applicable to the delivery of application services, for example, code generation; TCS used its research capabilities to play an advisory role to the application development and testing tool maker Rational throughout the ’90s.

Today, however, the focus of TCS research has broadened into nine areas that impact both its business but also the core businesses of its clients. These research areas are:

• Physical sciences
• Software systems and services
• Life sciences
• Embedded systems & robotics
• Cybersecurity & privacy computing systems
• Behavioral, social & business sciences
• Data & decision sciences
• Deep learning & AI
• Media & advertising, computing foundations.

This work is conducted by a dedicated research team of ~1k employees, including 200 employees with PhDs and 400 with advanced degrees. This research is funded through a dedicated annual spend of ~1.5% of revenues. In 2019, that totaled ~$300m.

As an example of one of these areas of research, TCS has a dedicated team of ~100 employees working on genomics across several labs in India. The primary focus of this team is currently next generation diagnostic techniques. Areas of focus recently have been identifying early indicators for babies at risk of premature birth (which kills 1 baby every 30 seconds globally), as well as early screening for other rare genetic disorders.

These research areas may not have a direct impact on TCS offerings, but they could be applicable to client offerings; genomics is not only applicable for the pharmaceutical, life sciences and healthcare provider sectors, but even insurance. TCS is developing non-invasive diagnostic procedures for diseases such as diabetes, Parkinson’s and certain cancers as well as measures for wellness to enable early risk detection and better alignment of premiums with individual lifestyles.

In addition to being applicable to client business, this type of research helps position TCS as a thought leader in these industries, and NelsonHall research shows that 78% of IT service buyers globally place high importance on industry knowledge when selecting a vendor to work with.

For this research, TCS takes a three to four-year time horizon on research projects and prioritizes outputs such as patents and published research rather than the monetization of outputs. Any monetization is accomplished when research is moved into the innovation pipeline.

Innovation: Focusing on Short-Term Service Evolution

Whereas research takes the long-term view, TCS’s innovation practice seeks to convert research into innovations that can be applied directly to the services offered to its clients.

To identify the opportunities with the highest value potential, TCS has focused on building out a governance process to provide a detailed structure for determining which research can be converted into innovation programs. The innovation governance process comprises nine stages to develop, review, and approve new innovations. Within this process, there are three separate review stage gates to determine whether an innovation initiative should continue. This review process includes a stage in which new innovations are pitched to senior corporate leadership, including a roadmap to production readiness and a projected ROI.

TCS estimates that on an annual basis, of ~200 innovation ideas which begin the funnel process, 10-20% of them will make it through all nine stages. TCS is focusing its innovation on assets to support the delivery of services rather than products to be sold to clients, such as its BaNCS line of banking products. Given the amount of ongoing maintenance and handling required to keep software products relevant, the return on these is viewed as lower.

Assets that have been produced by TCS innovation programs include ignio, its cognitive platform, and Mastercraft, its delivery automation platform supporting agile development, DevOps, data quality, and application modernization.

COIN: Tapping External Innovation

In addition to its internal research and innovation efforts, TCS taps into its Co-Innovation Network (COIN), consisting of academics, venture capitalists and start-ups, to identify new opportunities. Academic institutions with which TCS partners include:

• University of California, Berkeley
• MIT Media Lab
• University of Toronto
• Carnegie Mellon
• Cornell Tech     
• The University of Tokyo
• Indian Institute of Science.

To facilitate collaboration, TCS is even co-locating portions of its research within academic spaces. As an example, the soon to be opened PACE Port Innovation center in New York is located in Cornell Tech space on Roosevelt Island.

TCS has a dedicated team working with venture capitalists and start-ups to identify new capabilities, though it doesn’t take equity positions in the start-ups with which it partners. TCS maintains the objective of always working with best-of-breed partners, so it doesn’t want to be invested in one company if it feels another product is superior.

TCS works with start-ups in three ways. It supports start-ups developing a broader path to the market – partnering on engagements and helping with go to market. It also uses start-ups within the delivery of its services, filling gaps, or expanding its own capabilities. Finally, it uses start-ups to build out its own offerings. TCS is identifying sector-specific processes for which to build offerings and then acting as an orchestrator, stitching together individual start-up products into a cohesive end-to-end offering.

As an example, TCS was engaged by a client to build a mobile banking process in 12 weeks. It took four weeks to identify the component start-up products and eight weeks to integrate them into a cohesive, end-to-end offering.

Summary

TCS places significant priority on research and innovation with a dedicated budget and a team of specialists looking at possibilities in both long-term research and innovation directly applicable to its services.

Understanding that a research function can be applied to both its own offerings and client situations provides TCS with a broader perspective and positions it with clients as thought leaders in their industries in addition to evolving its services.

In late 2018, TCS launched its TCS Pace brand as a way to differentiate its innovative offerings and capabilities from some of its legacy core offerings for which it has long been known (such as application and infrastructure management). TCS has long focused internally on building a research and innovation engine, and now Pace gives those innovations a name.