NelsonHall recently visited the TCS Pace Port innovation center in Amsterdam, the first Pace Port opened by TCS in Europe in May 2021 following a delay caused by the pandemic. 

TCS is not unique in having opened facilities designed to foster collaboration and innovation to address clients' business challenges and new requirements. In itself, the broad concept of the Pace Port can be seen in all the leading IT services majors that have opened innovation centers. But not all these facilities have been well designed. Furthermore, the extent to which some are able to support their company's underpinning capabilities or broader positioning can vary. At their very worst, some of the earlier innovation centers visited by NelsonHall have been reminiscent of lipstick on a pig.

TCS Pace Ports Used to Gain Commitment from Key CXO Stakeholders

For TCS, the Pace Port is a key asset. In an approach that is characteristic of the company, expansion of the network has been considered rather than hasty: a second Pace Port in Europe opened last year in Paris, and before the end of this year, TCS will be opening one in London: this will be the eighth globally.

TCS' latest annual report has the slogan ‘Innovate.Adapt.Thrive’, a clear response to the current volatile economic and political environment.

Where a few years ago, TCS was primarily targeting what it called 'Growth and Transformation' (G&T) initiatives by large enterprises (typically large scale and multi-service line opportunities including advisory services, application migration and modernization and data-driven analytics), today there is also a focus on being well positioned for securing work where the client's discretionary budgets are curtailed or uncertain, engagements where the focus is on shorter-term cost and optimization propositions, typically improving business efficiencies. Accordingly, while supporting its clients' growth and transformation initiatives remains very important to TCS, the company increasingly positions itself as an ‘all-weather’ partner, with Pace Ports supporting both types of opportunity.

Potentially more valuable to service providers for sustaining long-term and expanding relationships are short, discrete engagements where they can deliver a demonstrable value add to the client's business – transforming perhaps, but not a full-blown enterprise-wide G&T initiative. Being close to the client, having a detailed understanding of their business environment, possessing broad industry domain knowledge, and having access to stakeholders outside the CIO office are all critical to this. To be seen by your major clients as a full-service partner capable of supporting them in their digital transformation journeys requires both CIO and CXO access. And the TCS Pace Port is a key element in this. See our blog on the TCS Pace Port in New York: TCS Pace: Integrating Capabilities to Drive Innovation - NelsonHall (nelson-hall.com).

Amsterdam Pace Port Key to Driving Continental European Revenue Growth

TCS is today a significant player in Europe, generating nearly $4.2bn in revenues in the region in FY23, and its business in Europe is now roughly the size of its longer-established U.K. business. Perhaps surprisingly, TCS is only slightly larger than Infosys in Europe, although globally it generated nearly $10bn more in revenue in FY23 than Infosys. And recent CC growth in Europe has been trailing even the U.S., which is currently sluggish for everyone. Expect to see TCS Europe catch up over the next two years, getting closer to the strong growth the company has been enjoying in the U.K. And, in TCS fashion, this will not be achieved by acquisition activity, neither for scale nor for expertise, though captive carve-outs are always a possibility.

Within Europe, key regions for TCS are France, Germany, the Nordics, and more recently the Netherlands, where TCS aspires to be the largest systems integrator by revenue. The Amsterdam Pace Port is an important asset for this, as is TCS's role as the lead sponsor of the Amsterdam Marathon. In addition, its PACE Internship Program in Amsterdam has a batch of students pursuing Masters in Innovation & Digitalization.

TCS has ~300 clients in Europe, having doubled the number of new clients yearly since 2020. It has a nearshore presence in seven European countries, with major hubs in Hungary and Poland.

Key sectors in Europe for TCS include the obvious suspects of banking & financial services, insurance, and pharma/chemicals, also retail and postal services. TCS is also becoming more active in the transportation sector. Recent major deals include ones with Athora Netherlands, Bayer, Tryg, bPost, PostNord, and Versuni (formerly Philips Domestic Appliances). Recent new logo wins include Bane NOR, Outokumpu, Equans, Sandvik, SKF, TaP, and Airbus.

In the U.K., TCS has 23K FTEs and works with 48 FTSE companies. The company is looking to develop greater presence in currently underserved sectors including general insurance, the public sector, education, wealth & asset management, and media.

Contextualization is a Key Pace Port Success Factor

TCS refers, like Accenture, to its Innovation Architecture, which comprises its:

• Foundational research, in areas such as deep learning & AI, robotics & autonomous systems, behavioral and social sciences, and data & decision sciences
• COIN (co-innovation network), includes 100+ academic partners and 2.5k start-ups
• TCS PACE philosophy and the Problem to Value (P2V) innovation value proposition
• The Pace Port facilities, which serve as physical manifestations of the PACE philosophy.

TCS Pace Port Amsterdam is a hub where TCS teams are able to co-innovate with European clients, guiding them through the discovery, definition, refinement, and delivery phases of innovation, leveraging rapid prototyping techniques. TCS describes its Pace Ports as ‘platforms to identify business triggers, drive innovation at speed and scale, and accelerate the problem-to-value journey’.

TCS works with the client to develop a portfolio of MVPs as demonstrable innovation examples that the client can use to harness wider commitment from within their organization, with MVPs delivered in 30/60/90 day cycles.

Models used by TCS in the Pace Ports include:

• The Agile Innovation Cloud (AIC), brings together consulting, design thinking, and TCS' ecosystem and technology capabilities. A team from the client organization and TCS work together in proceeding from business problem definition to ideation, taking a strong outcome/business value orientation and then selected agile development builds, using rapid sprints
• TCS and client teams periodically review AIC innovation outcomes to deliberate on and fund identified MVPs for production deployment. The model helps clients gain visibility and momentum
• The Clay Map, an innovation portfolio model based on thinking from Clayton Christensen (who was a board member of TCS). It serves as a guide for creating a balanced portfolio of innovation ideas.

Workshops at TCS Pace Ports always involve a senior business stakeholder who can influence the company's direction, not just the CIO. The aim is to help clients find consensus on common innovation objectives and harness attention from, and involvement by, senior execs to the innovation agenda. TCS recognizes that it needs to continue to do more to increase its levels of relationship with non-technical CXOs.

A key Pace Port success factor is contextualization, with TCS typically carrying out 6-7 weeks of preparation to prepare the ground with other members of the client organization prior to the session with the key stakeholders. Inclusion of cross-industry knowledge is important.

The TCS Pace Port in Amsterdam currently hosts ~2 clients per week.

Beginning to Use GenAI for Initial Idea Generation

Overall, there is a very clear focus on helping clients exploit emerging technologies like AI/ML, AR/VR, IoT, blockchain, and robotics in building rapid prototypes. At TCS Rapid Labs, niche technologies like AI/ML, AR/VR, IoT, blockchain, and robotics help build rapid prototypes, cutting down on the cost and time to innovate.

TCS provided sessions demonstrating its thinking and related IP in four areas: the future of retail, intelligent banking, railsense, and smart city. The future of retail demonstrated a vision for the creation of a retail store digital twin, done in aggregate across stores. At the same time, the rail demonstration provided a vision for an intelligent railway station, combining indoor and outdoor navigation, and an enhanced onboard traveler experience, including directing passengers to vacant seats.

TCS also demonstrated using GenAI for idea generation to stimulate discussions with executives. Senior executives can be reluctant to brainstorm in public. So GenAI is starting to be used to overcome any initial social difficulties, act as an alternative to the use of focus groups, and facilitate brainstorming conversations with stakeholders. TCS demonstrated the use of GenAI for idea generation for innovative approaches to chronic pain management. This used multiple personas to generate ideas for three scenarios: logical/low risk, creative, and disruptive/challenging the status quo.

Driving Client Innovation and Pace Usage with Innovation Funds

Innovation funds are a key mechanism for driving client innovation and Pace adoption, and TCS is now including these as addenda to MSAs, typically with a value of 1% of the overall contract. TCS typically contributes 2-5 personnel who create a backlog of ideas and create swim lines of projects.

TCS is also embedding TCS Pace into proposals to new clients.

However, TCS prefers to charge for every Pace project to ensure clients take these sessions seriously.