Most observers think of the big multinational technology outsourcing firms - especially the ones based in India - as a reliable source of relatively inexpensive technology expertise for routine IT projects. Not surprisingly, those firms desperately want to move up the food chain and become known for innovation as well.

A conversation with Dr. Gautam Shroff, Vice President at Tata Consultancy Services (TCS) and head of the TCS Technology Innovation Lab in Delhi, reveals that they’re making progress, but that they still have a ways to go.

Tata, of course, is a huge collection of more than 100 companies across 6 continents, including everything from car makers to consultants, chemicals and consumer products. And this year, TCS opened a facility in Silicon Valley.

Innovation is complicated

Shroff acknowledged that firms like TCS are not known for innovation, but said the picture was more complicated than that. There are two sides of innovation, Shroff said, creating ideas, and getting those ideas out into the world to create solutions out of them. TCS, he said, has done a lot of work on the latter side.

The company has been investing in research since 1981, he said, and now has the largest academic computer science effort in India. Those efforts have contributed to significant businesses, but mostly for Tata itself. Shroff said that in the 1990s, TCS research created software development tools that led to the company’s entire financial product business, as well as the only end-to-end cloud business in India, with hundreds of small and midsize business customers.

Most of Tata’s R&D isn’t productized, though, Shroff said. Instead of producing “great science,” it’s used for practical, incremental business improvements within Tata’s activities for its customers. “We also innovate for our customers where we have replicable [innovations]," Shroff said. “We just don’t call them products.”

That’s useful, certainly, but not exactly what most observers think of when they hear the word “innovation.” So, how exactly is Tata moving toward more innovation in its offerings?

Trying to get smart about business intelligence

The key areas Tata is focusing on include social media, cloud computing, mobility and big data. And for Shroff, those all come together in business intelligence, which he sees reaching an important inflection point that requires major changes - fusing deep analysis of big data from both inside and outside the enterprise, and looking for new patterns and correlations.

As an example, he cited companies that are monitoring Twitter streams to identify “adverse events” that might not reach news outlets but could still impact business operations. “If that matters to you, it’s better to know now, so you can alert people in the field on how it’s likely to affect their business,” Shroff explained.

“People are looking at it with great curiosity in the business world,” Shroff said, “exploring how more data can improve the business. What was traditionally a niche market can now be a force … something the CEO needs to know about. And we are right in the middle of that.” While Shroff wouldn’t name individual BI customers, he said Tata is working with firms in the retail, consumer packaged goods and financial services markets on the consumer and supply sides of their businesses.

Finally, Shroff said opening a facility in Silicon Valley has given Tata access to a new talent pool. “We’re now able to get people who work in startups who don’t want to leave the valley.” The company also uses the outpost to work with academics at Stanford University and UC Berkeley and partner with startups that are developing useful technologies.