Welcome to this podcast on business dynamics in the energy sectors, particularly with the current pandemic. We will be talking with Manish Sharma, a business Head of America's for Energy and Resources with Tata Consultancy Services. Thank you for participating in this podcast, but before we get into the Q&A, just like to give Manish a little bit of a chance to talk about his role at TCS. Thank you Ralph. Excited to be with you here today and a pleasure always in my career. For over 2 decades with TCS, I've worked with many verticals like manufacturing, life sciences, insurance and of course energy and resources. So I'm looking after energy and resources vertical for the Americas. It's been interesting to see how energy companies have evolved in the new digital era and how with this global pandemic acting as a catalyst, additional transition, they are leading the way through innovation to discover the known and unknowns of the industry. So I see it as a. Very interesting times. yeah Certainly is interesting. Few people have commented about how we've done more digital transformation in the past three months than we hadn't previous five years. Absolutely. So let me ask you more about the oil and gas industry in particular, which always has been dynamic, but now we're in really unprecedented times. What is your outlook for the industry? Thanks for the question, Ralph. First of all, while the industry is evaluating the impact of these unprecedented times, it's important to remember that the situation did not emerge with the global pandemic. You know, we survived a significant downturn in 2016, the price war over crude oil and the sorting of global supply chains. It was all underway, you know, much before the outbreak started. It's just that the outbreak gave a significant headwind. Of the current crisis supply chain imbalance for any economic growth, industry restructuring now for energy transition, I think they've all put added pressure on this industry. But much more than grappling with a slowdown scenario, I described this period as a super accelerant to one of the industry's most transformative periods. I think it has started the race for energy transition and net carbon 0 like never before. Shareholder activism on environmental health is making an impact and you would have seen some recent announcements from especially BP and then followed by Shell, Total, Equinor, Repsol. They have all announced a huge carbon reduction targets. And I think it's just a matter of time when it would reach large U.S. companies as well. By the way, given the uncertainty around the duration of this pandemic, there is widespread confusion in terms of understanding and. Addressing future plans, this will likely be very different from those imagined earlier. But despite the tough conditions, the skepticism and the pressure, we believe that this industry is too important to fail. The question is only around creating a niche and value for the industry in this new norm. Wow, that's a lot to be said about a dynamic industry. Certainly the oil and gas companies are responding to the various industry dynamics, including Net Carbon 0. It just thinking about how they get to success, what do you see as the characteristics for them to be successful? That's a great question, Rob. When it comes to the SO let me address it starting from the current response to the crisis. So when it comes to the first level of response, most of the industry has been successful in running with their operations with whatever technology they have in hand, right, I mean, for the end consumers, we have not seen any energy crisis. I mean, they have had everything that they need when it comes to electricity, when it comes to, you know, pumping up fuel in their cars, it's all there. We now know what the word essential means through this pandemic and that virtual can run a majority of our businesses right And TCS has partnered with most of its customers to help them adopt to the secure borderless workspace model, which allows organizations to take full advantage of their talent. Ecosystem addresses a wide range of human functions such as infrastructure, talent management, employee engagement, process. Those governance, most importantly, collaboration and engagement practices. So I think that's been taken care of. The second wave of the response is now adapting and reimagining 3 dimensions of the businesses, which is workforce, workplace and the work itself. I think a strong driver of how companies are adapting themselves. It's the way they look at their core purpose and we just talked about it when you know mention about carbon neutral for example. Organizations are looking beyond the products that they make and sell to the very purpose behind their existence. This in turn often defines the blueprint for their transformation journey. As the industry redefines its purpose to provide cleaner and sustainable energy solutions, there is a great deal of focus on aligning employee community and the corporate purpose. This pandemic has just accelerated the drive to redefine that purpose and created a transition pathway for these organizations. In many, many cases, it's going to be a very painful choice as this industry is facing, to an extent, an existential crisis. But this trend of organizing businesses around purpose is a very, very strong driver of transformation. We believe this will only accelerate in the coming months as firms seek to think about what is most critical for them. We talked about that. They have all learned what the word essential means. So they will learn what their true sources of value are. They will seek to get a higher order of productivity and growth by looking within their value streams to unearth and package consumable services that drive growth. I mean, you would have seen how some of these companies which have announced net Carbon 0 targets, they are packaging their products and services very differently than just selling oil. I believe BP, for example, has certain new debate in this industry and it's only going to get louder. Now, when we layer this purpose driven approach with the characteristics that enterprises need to adapt to this new normal. You have produced a resilient organization. Resilience calls for both the ability to withstand shocks to the system as well as the adaptability which is needed to quickly tweak business models, launch new offerings or target new markets, while at the same time you have to continue to provide superior customer experience. This I believe in turn calls for the industry to do a complete risk based evaluation of the ecosystem that the industry is operating with, which means your suppliers, both internal and external, you have to look at them through very different lenses. You need to be able to work with suppliers who possess a depth and breadth of services which align with the need of flexibility that you have, right I think. We need to think of this whole ecosystem as a living and breathing thing and not a traditional supply chain, and I think this thinking is imperative as the shocks are being transmitted sequentially in the network. You're raising a good point. We commonly think of an oil gas company as the refinery or what happens in the plant there. But obviously there's a supply chain and as you point, a much broader ecosystem that's involved in this. Very good points. And one of the root causes for the problems with the oil and gas industry is started before the pandemic, with slowing demand for oil. What initiatives have you seen companies take to recover? yeah I think the current supply demand gap, after discounting the OPEC agreement of cuts and also discounting all of the prior forecasts of new sources of crew is still pretty huge. Additionally, hopes of any breather remain a dream with, you know, some of the new plant projects in different countries, Norway, Australia, Brazil coming live this year and next. In fact, earlier this week when BP you know released its outlook and the three scenarios possible scenarios for the oil and gas industry, The future for oil doesn't look very good, very promising unless something substantially changes. So I think the industry traditionally has also observed hidden portfolio of inefficiencies such as lack of cohesive integration strategy diverse. Contracting base and lack of agility in the procurement process. So while companies have moved to work remotely, they're doing OK with the technology in hand with the minimal crew and high safety standards. I think there are some immediate actions and some mid term considerations that will definitely help restructure the business models as we get to the road of recovery. The oil and gas industry anyway has either already started or in the process of initiating some of the corrective actions like. Reducing workforce, writing down assets. You would have seen dwindling dividends, closing non performing assets, but I can talk about few segments that we feel will be transformed to address this impact of the pandemic going forward. If you have spent the last few months in remote working model, I think we know to a good extent about the slackness in the supply chain. There is a need to rebalance the priorities from low cost and efficient to nimble and agile in order to respond to the market changes. We see a big shift from just in time to just in case. Technology can help him immensely in setting up supply chain command Centers for end to end visibility, managing dynamic changes. Focusing on products that matter to your clients, in fact we are in most of the cases redefining these products as end to end services rather than just some of the components that we sell directly and indirectly building insights with advanced analytics to eliminate layers between the manufacturing and the final consumer. You would have seen as organizations are restructuring themselves, the whole concept of upstream, midstream and downstream is dwindling, which means we are discovering or redefining new value chains. Keeping in mind the alternate businesses that we have to go into or broader needs of energy transition. So there is a whole new shift of public private partnerships in local communities and cities for being a true energy partner of the community to provide those end to end services rather than just you know the traditional products. I think this shift is creating a new supply chain paradigm of producing and consuming locally and it's going to have a major impact on how these organizations. Going to restructure themselves. Also, enterprises are aiming to develop solutions that truly connect people, machines and data. So this is an era of connected ecosystem which is going to play a big role. So we talked about how we have to reevaluate our ecosystem and people who are playing a big part with you in that ecosystem. But at the same time, in order for that ecosystem to run efficiently, you need to make sure it's. Connected. So then the industry is now realizing that connecting their most important asset, the field workforce, with the rest of the ecosystem is key for maximizing their digital investments. And connected ecosystem can equip industrial field workers with real time context, specific and actionable information to make better informed decisions while staying safe. So these are some of the areas I believe you know companies are investing majorly. Wow you know. We often think of connecting the operators within a plant, but the you point out needing the connect the general field workforce beyond the individuals in the plant to the rest of the ecosystem is becoming increasingly important. Neat. Could. Those initiatives and strategies are very insightful. I was wondering if you could just add a little bit more color and specificity to the changes that are needed to make this real for the oil and gas companies. Absolutely. I mean, I mean, we talked about how these companies are redefining their purposes, how they're restructuring themselves, how they have carbon neutral targets till 2050. 45 be more tactical and translate this to some of the things which technology is addressing today. I think we need to reevaluate our investments in enterprise system integration and make sure that we enable the connected ecosystem robust communication network to provide on the ground connectivity in a very, very cost effective and sustainable fashion smart devices to map appropriate handheld or head mounted devices using prebuilt libraries. Because those are going to be crucial if you want to connect your field workers, cloud and IoT infrastructure. I think there is a significant change and upgrade of technology, I would say every month in cloud and IoT infrastructure. And you have to ensure that you provide that economies of scale, analytics and insights to harness the power of data and proactively recommend actionable insights. I mean we have had a lot of focus on data and reports and visualizations, but there is more focus on proactively recommending actionable insights. So we are looking at many clear outcomes of these investments, whether it's enhanced worker health and safety, superior productivity, insights, driven operations, remote monitoring and also improved compliance as part of digitized field operations. Wow. I mean, that is a great list of how a technology can be adopted to improve business processes and makes it more resilient and flexible. I really like that list that you went through. And then as you know, oil and gas companies are feeling pressure to cut, become more efficient and resilient, which can be viewed as conflicting goals, efficient, resilient. Can you talk about this for the oil and gas industries and its participants? yeah that's interesting, Rob. Efficiency and resilience are not necessarily enemies. If you approach the problem thoughtfully, we almost we see almost all of our customers evaluating their elasticity of infrastructure, technology, operations and people. We believe and we have experimented with it and we have been successful, very, very successful in last few years that being agile and being able to rescale the workforce continuously will make companies more resilient and better prepared for unpredictable change challenges. And last few years in TCS close to half a million workflows and we have been able to rescale almost 75% of that. Workforce continuously and especially on digital technologies. So this pandemic presents an opportunity to break silos in the organization. This is a essential opportunity to envision a boundary, less agile organization. Enterprises will have to upscale the experience of remote learning. I think mixed reality is set to play a greater role in digital learning and talent transformation. CFOs of today, for example, are faced with significant pressure to preserve cash and maintain liquidity, all the while when they have to keep running their operations remotely and profitably. So from budgeting, financial planning to handling revenue leakages, compliance and regulatory reporting to profitability. Industry is consolidating. So from extracting synergies from your consolidation, your mergers and acquisitions to shared service transformations, I think the influence of a CFO cuts across the entire organization and this far reaching influence also means that investing in digital finance for example, gives them the potential to transform the way they want to deliver the value to the enterprise. For example, at TCS have partnered with CFOs across the world in offering services around financial transformation, M&A advisory and execution, shared service transformation, among others. And I think we are helping a lot of these folks to drive their agenda of cultural change, digitizing for real time data and using technologies that help them in better forecasting and fast tracking their data view. You've raised a good point managed that the. The technology adoption that we talked about previously and the great examples you provide need to be translated into a business benefits that the CFO would appreciate. And you we're in a particular dynamic times and as they say crisis breeds innovation. What do you think will be the key challenges or changes to focus on for the technology leadership? Very interesting, Ralph. One of the biggest impacts that this pandemic has had all over the world is that it has simply accelerated the digital transition. Technology, all of us know is at the forefront. You would have seen in the last few months we are all talking about slowing economy and. Impact on GDP and inflation. But you know, look at the technology companies. I mean, they're all just pumping up. There's nothing to stop them. So TCS with its purpose driven business forward auto strategy in a machine first world is very, very deeply embedded in its digital transition of this energy industry. This transformation is mainly driven by innovations which are coming about due to convergence of the ability to act, which is from runbook automation to neural automation, and the ability to reason, which is from descriptive analytics to more explainable AI. This is also an unprecedented time when various technologies on the site are becoming more and more viable and that will drive the energy transition on steroids. For example, the compute power of the Apple A 14 bionic chip on our consumer device is over 6 teraflops today. And I'm pretty sure it must have increased in the yesterday's announcement from Apple when they have launched some new devices and rapidly increasing at about 40% per, the cost of data storage is going down to half every 18 months. The number of sensing pixels 1 can put on a device per dollar double s every year, whereas the cost to transmit a bit across a network reduce it by reduces by almost 50% every nine months. The lithium ion battery cost is projected to be around $100 per kWh by 2023 and next week, for example, is a Tesla battery there. I suppose, and God knows what new revelation is going to come. So I believe that the convergence of these technologies is set to disrupt the way the world produces, stores, utilizes and renews its energy. And especially for those of us in the business of producing energy, the technology focus in this dynamic environment is clearly on adopting digital technologies at scale. Pretty much to drive efficiencies, enhance production, enable new integrated business models that will combine fossil fuels and power, for example, and also to drive business agility that will yield robustness to market fluctuation. Of this digital focus is exemplified by some of the companies, to name a few of them, for example BP Equinor which rebranded itself as additional energy company. I think 2 clear directions emerge for large scale digital adoption. While the big enterprises focus on diversification of their portfolio into areas such as unconventionals, utility renewables, EV charging, medium sized companies are focusing on driving agility. Via digital innovation in the core area of their businesses. So they're not necessarily expanding, but they are looking at their core businesses to transform the TCS model for innovation at scale, which is called Agile Sustainable Innovation Network or ASM focuses on 3 dimensions. First, the diverse global talent pool of TCS. Second, leveraging the global ecosystem of technology and business partners, academia, technology startups and 3rd leveraging thesis investments in digital solutions such as Ignio for automation or Teacup for IoT or Peacock and Treemap for digital twins. And we use our location independent agile model for driving innovation and scale at TCS. We do manage our customer portfolio of innovation with a very unique process. You might remember the late Professor Clayton Christenson who also served on the Board of Tcs for over a decade and he designed this process of managing the portfolio of innovations and how to balance it. So focus on establishing a minimum viable product for accelerated return on investment, get feedback, fail early, learn early and rinse and repeat. So we are actively managing balance innovation portfolios these days for most of our clients around reducing carbon footprint with decarbonized products and energy emissions. So you might have seen a partnership with tcs and Totan which is in public domain manufacturing excellence by driving asset performance, health and safety with connected ecosystem business resilience with self healing infrastructure and supply chain resilience productivity with well integrity management digital. Joins next generation operator rounds and also integrated operational command centers. Wow. So you went from how well the technology companies have done during the pandemic, and you're reinforced that by talking about how rapidly technology is changing, like becoming more cost effective is from the cost of a CPU to network bandwidth and the cost of sending bits. And then you backed that up with some great technologies. Being offered by TCS. Great thought process. Thank you. Now to the next question. So given all this, what if TCS's overall outlook for the oil and gas industry? yeah So I'll answer this in a very, very crisp fashion because there is so much clarity around this. I can say that this is the opportunity of a lifetime in our industry to do everything that we always wanted to do. This is the time when our individual purpose to provide better future for ourselves and our next generation with clean energy is also our organization's purpose. This is the time for circular economy and time to rethink and redesign the ecosystem that we operate in. This is the time to invest in technologies that will drive future operations. And this is the time when the leadership is more than eager to listen to you and get ideas for transformation. And none of this can be done without thinking innovation. So innovation will drive the oil and gas industry to become more resilient and an integrated energy partner. So. We are at the beginning of a very exciting journey. Wow, a Manish. Thank you for your insights and the thought provoking discussion. We've been talking with Manish Sharma of TCS. This broadcast was created by ARC Advisory Group. We advised manufacturers, industrial companies and their technology suppliers on market dynamics and technology trends that affect their business operations and competitiveness. Our website is arcweb.com. Thank you for listening.