TCS expects iON to be $1-bn biz in five years

Tata Consultancy Services (TCS) expects to make its fully-integrated information technology (IT) solution for small and medium enterprises (SME), iON, a $1-billion (Rs 4,500-crore) business in five years. The country’s largest IT service provider today launched the cloud computing technology-based solution.

TCS has already signed up over 130 clients for iON and plans to take the customer base to 1,000 in a year. “This is an important milestone for TCS. Though the revenue contribution of this is negligible at present, we think it has the potential to become a $1-billion unit in revenue in the next five years,” said N Chandrasekaran, CEO and MD, TCS, and chief architect, iON.

The offering will be pay-per-use model. The company did not disclose the pricing model. IT-as-a-service (ITaaS) is one of the offerings of TCS’ non-linear strategy, which is expected to be 10 per cent of the company’s incremental revenues by the fourth quarter of 2011-12.

“We certainly have a pricing model in place since we have over 100 clients, but we think there is room for it to be tweaked. We have two to three models and will soon come out with a final pricing model,” said Chandrasekaran. With this, TCS is one of the early movers to come out with an end-to-end solution for the SME segment that incorporates hardware, networks, software and business applications on a cloud platform and allows customers to access these on a subscription basis.

TCS is targeting SMEs with revenue from Rs 10 crore to Rs 500 crore. To get a major pie of this market, TCS has used the channel approach. It has tied up with 80 partners that are trained and certified by TCS, to take its SME solution to the market. Though at present the offering is only for the Indian market, TCS will take it to other emerging markets in future. The global SME market is a $1-trillion opportunity, while the domestic SME market is pegged at $12 billion, expected to touch $48.5 billion by 2015.

“The Indian SME market is highly untapped, with about 60 per cent of SMEs having no IT infrastructure,” said V Ramaswamy, global head, iON, TCS.

While TCS has introduced solutions on its own intellectual property, it has tied up with data centre providers to host these services.