Tata Communications: Building a Global-Local

Operating Model
By Stphane J.G. Girod, Joshua B. Bellin and Robert J. Thomas
November 2009

Case Study

Tata Communications: Building a Global-Local Operating Model

A Mumbai-based global startup in the rapidly

changing communication-services industry must
decide how to manage its global footprint and surmount
new industry challengesall while honoring the Indian
cultural values it was founded on. Its solution? Build
a global-local operating model in which hard
components like business processes and performance
metrics support the soft component of leadership
and peopleand manage the challenges that come
with the model.
Tata Communications fast
international growth
Tata Communications has changed
shape frequently and steadily extended
its global reach since its inception in

Operating models in a multipolar world: Accentures case

study series
The term multinational used to
designate companies that operated
primarily from company headquarters,
usually based in the United States,
Western Europe or Japan. Multinationals
often sold their first-world goods in
other markets, and managed operations in the developing world in order
to take advantage of cheaper labor.
Talent often meant, first and foremost, expatriate employees from the
home market.
But in a multi-polar world, where
economic power is diffused around the
globe, much has changed. The

1986 as a state monopoly in India for

fixed-line international calls. At the
time, the company was called Videsh
Sanchar Nigam Ltd. (VSNL). (See
Table 1: Tata Communications at a
Glance.) In 2002, the Indian government
corporate centers role, though as
important as ever, is shifting from
managing foreign units dependence
to managing foreign units interdependence. Emerging-market powerhouses now sell to customers
not only in other emerging markets,
but also in developed markets.
Multinationals source talent at all
levels without regard to country.
innovation is no longer the sole preserve
of the developed world. Technology
advances facilitate cross-border
integration, but consumer pressures
and regulations vary widely from
market to market and force multinationals to craft local strategies.
In this environment, multinationals
need a more sophisticated global
and local operating model to manage

2 | Accenture Institute for High Performance | Copyright 2009 Accenture. All rights reserved.

privatized VSNL as part of a deregulation plan, and the Tata Group acquired
a 45% stake in it. VSNLs market capitalization by the close of that year
stood at $1.2 billion.
Two months later, India ended VSNLs
monopoly status, and the company
saw its domestic market share begin
to erode. As a result, the company
initiated a globalization drive fueled
by acquisitions and diversification into
value-added services (such as data).
Its goal? To step up its presence and
leverage its expertise in emerging
markets while also consolidating its
leadership in India. Tata Communications
executives see the company as a
global startup because of its rebirth
as an international organization soon
after loss of its monopoly.

the complex operations that span

continents and cultures. To learn more
about how some multinationals are
creating these new models, we undertook a series of case studies, with a
particular focus on emerging-market
multinationals in the telecom and
energy industries. This is the second
case in the series.

Tata Communications: Building a Global-Local Operating Model

In 2003, the company set up an international division in Singapore and

established offices in the United States,
United Kingdom and Sri Lanka. In 2005,
VSNL acquired Tyco Global Network
for $130 million and began providing
data services for global customers.
With this move, VSNL joined the
ranks of the worlds largest providers
of submarine cable bandwidth.
In 2006, VSNL acquired Teleglobe
International Holdings Limited for
$238 million. It now counted among
the worlds top five voice and data
service providers (in market share).
The year 2007 saw additional expansion
and change: VSNL, its international
division and Teleglobe united under
the name Tata Communications.

The company then reorganized itself

setting up global business units based
in Singapore (data services), in Montreal
(voice services) and in India (Internet
broadband). (See Table 2: Tata
Communications Business Units.)
The companys sales revenues doubled
between 2006 and 2007.
But it was 2008 that saw the biggest
expansion of Tata Communications
global footprint. Foreign sales made up
57.3% of total sales, and the company
became the worlds VoIP (voice over
the internet protocol) leader. With its
200,000 kilometers of cables connecting 200 countries, it also became the
worlds largest submarine cable operator.
Its market capitalization climbed to
$5 billion, and it ranked seventh in
earnings-per-share growth among
3,000 U.S.-listed peers.

Today, Tata Communications senior

leaders are transforming the company
into more than just a utility provider:
they are committed to challenging
other multinational market leaders.
As Vinod Kumar, Tata Communications
chief operating officer, explained:
We want to be a meaningful challenger to the likes of AT&T and Verizon
and other business services, because
we believe that their fairly large
monolithic organizations will have
silos with a lot of organizational and
technology legacies. But as a new
operator, we are fueled by growth
from emerging markets, so we have
[new] capabilities.
To that end, Tata Communications
has maintained its growth drive. For
example, in 2009 it expanded into

Table 1: Tata Communications at a glance

Industry

communication services

Year founded

1986

Headquarters

Mumbai, India

Parent company

Tata Group

Workforce (2008-2009)

5,800 (82 percent in India)

Revenues (2008-2009)

INR. 99.63 billion (US$ 2.1 billion)

Major business units

Voice services (Montral, Canada)

Data services (Singapore)
Internet broadband (Mumbai, India)

Service portfolio and customers

provides transmission, IP, converged voice, mobility, managed network connectivity,

hosted data center, communications solutions and business transformation
services to global and Indian enterprises and service providers; also provides
broadband and content services to Indian consumers

Geographic reach

offices in 80 cities in 40 countries; 22 data centers in developed countries,

12 in Asian emerging countries

Vision

To deliver a new world of communications to advance the reach and leadership

of our customers

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Tata Communications: Building a Global-Local Operating Model

South Africa by acquiring Neotel. The

move gave its broadband business
international reach. And the company
is continuing to set up new data centers
in emerging markets (including South
Africa). In 2008-2009, the companys
internationalization continued progressing as international sales reached
60% of total revenues.

A global startup facing new

operating model challenges
As Tata Communications grew in size
and expanded internationally and
as industry changes were driving new
sorts of competitive pressures, the
companys operating model came
under increasing pressure. (See Whats
an operating model?) Specifically, the
company had to make difficult choices

about how to integrate its operations

more effectively globally while
maintaining a high level of local
responsiveness. Tata Communications
senior executives had to build an
operating model that would:
Navigate different regulatory
environments in different countries.
Executives realized the need for savvy
political networking and partnering
towards this end. They therefore asked,
What global capabilities do we need to
forge local partnerships so we can navigate varied regulatory environments?
Integrate acquisitions across
markets characterized by varying
consumer trends and technological
realities. Realizing the benefits of
acting as an integrated corporation,
yet worried about diminishing the

companys flexibility in customizing

local approaches, executives asked
themselves, How do we integrate
our international acquisitions?
Attract, retain and extract the most
value from talent locally. Executives
realized that they needed to explore
ways of organizing global talent
networks to compensate for industrywide shortage of skilled technology
workers. Broadly, they asked themselves,
How do we create and leverage local
talent globally?
Address new competitors and technological convergence. Since many
companies were increasingly under
pressure to go from being a one-service
voice provider to being an end-to-end
information and communication
technologies (ICT) player, executives

Table 2: Tata Communications business units

Unit

% Total revenues
(2007-2008)

% Total revenues
(2008-2009)

Services

Global voice solutions

61

58

Provides wholesale domestic and

international long distance calling
services; serves carriers, mobile
operators, Internet Service providers
and content companies

Global Data Solutions

34

40

Provides connectivity and IT infrastructure management (including

managed hosting, storage, security
and applications such as TelePresence)
services to corporate customers and
other telecom service providers

Retail Broadband Services

Provides Broadband and dial-up

connectivity and a wide variety of
content services to retail and small
business customers

Sources: companys annual reports 2008 and 2009.

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Tata Communications: Building a Global-Local Operating Model

wondered, How do we scale up our

innovation processes while remaining
locally responsive?
Enhance customers experience
while also reducing costs across
international operations. Senior executives realized that the requirements of
customers vary from country to country,
which led them to ask themselves,
How do we enhance our customers
experience locally while controlling costs
and achieving efficiencies globally?
In addition to these challenges, business
at home began looking less rosy following deregulation of the industry in
India in 2002. Voice services rapidly
became commoditized, and Tata
Communications saw its gross revenue
per minute shrink from INR. 2.75 in
2006 to INR. 1.80 in 2008. Though the
company still claimed 36% of the
Indian market for international fixedline calls, it faced an increasing threat
from Bharti, a major domestic rival.
Senior executives knew that to stay
competitive, Tata Communications had
to make some tough choices about
how it would manage its international
operations in the context of a fastchanging industry. But its one thing
for a multinational enterprise to
recognize it needs a new operating
model. Its quite another to construct
one. The process isnt easy, in part
because senior executives must wrestle with thorny questions such as:
Are we properly organized and
aligned to execute our strategy
across geographic borders?
Do we have the right mix of global
scale and local responsiveness?
What should be global, regional
and local? Who decides, and on
what basis?

Which business processes, technologies, organizational structures

and performance measurements
should we standardize? And
to what degree should we standardize them?
How do we stay true to what made
us successful in each foreign country
in the first place?
Even long-established multinational
enterprises based in developed economies
find these questions difficult to answer.
In fact, one recent Accenture survey
revealed that 95% of senior executives
in multinationals headquartered in
developed markets are worried that
their companies dont have the right
recipe for managing (or extending)
their global footprint.

Tata Communications global

and local operating model:
four principles
In response to these pressures and
to achieve its new operating model
objectives, Tata Communications
started a complete operating model
overhaul in 2007, with the goal of
constructing a global-local model. Four
principles underpin the configuration
that is currently taking shape:
Maintaining the Tata soft touch
approach
Harmonization of processes and technology rather than standardization
Global-local talent management
Distributed leadership
Below, we take a close look at these
principles. We examine how the
company has applied them and what
changes executives have had to make
to surmount the potential pitfalls
associated with these principles.

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Principle 1: Maintaining the

Tata soft touch
In thinking about how to configure
the companys operating model, Tata
Communications senior executives
have chosen to capitalize on the Tata
soft touch legacy that has given the
company strong leadership and people
capabilities and to support these
capabilities with new or changed management processes, management technologies, organization structure and
performance measures. According to
Alan Rosling, former Tata Groups
International President, Tata companies
can succeed better in todays business
arena by favoring the traditional Tata
approach. This approach emphasizes
entrepreneurial leadership, a networking
culture and empowered talentsupported by relevant processes rather than
the rigid hierarchies and standardization
that characterizes many big Western
multinationals.
Puneet Chopra, industry expert at
Accenture, described the uniqueness
of the companys Indian heritage and
its basis in operating flexibility and
customer-centricity:
Typically, Indian managers or leaders
are quite flexible in their approach.
Thats the way business is run in India
. [They are] accommodating, flexible,
very caring about customer needs
[and] about others needs. They go
the extra mile to meet the business
demands or the customers demands.
To deliver on this customer-driven
principle, the Tata soft touch is also
characterized by a desire to develop

Tata Communications: Building a Global-Local Operating Model

The core elements of an operating model

A multinational enterprises operating model represents
the sum total of the choices it makes regarding how to
execute on its international strategy.
A core requirement of an operating model is that it enables
multinational executives to (1) coordinate operations
between the corporate center and the geographic business
units and (2) to form an end-to-end strategic value chain.
Four organizational elements underpin these capabilities.
One element (leadership and people) is more intangible
or soft. The other three elements (processes, technologies,
and organizational structure) are more formalor hard.
Performance measures formally tie all aspects of the
operating model together.

Organizational structure. Within this element is the way in

which responsibility, reporting and accountabilities are defined.
It includes the structural and control mechanisms used
both to integrate and to differentiate units and businesses.
Taken together, the content and the relative importance
given to each organizational element characterise the
operating model configuration. Each element may be
thought of as a dial that can be set at different levels; the
configuration is the unique combination of these dial
settings. To achieve high performance, the organizational
elements need to work together in a good internal fit.

Operating model according to Accenture

Discontinuities

Leadership and people. Leadership consists of the senior

team that substantially influences the organization, and
serves as an example for how it should operate. Of particular importance to an operating model are an organizations
leadership style, its degree of diversity and the way leaders
make decisions. As for people, the key aspects are the
companys approach to talent management, its emphasis
on employee engagement and the way it fosters networking.
Also included is the cultural dimension of the organization
the beliefs and shared values that bind its members together.

Value
Levers

Earnings

Product

Route-to-Market

Abroad

Operating Model
Strategic Capability Map

Enterprise Direction
Organizational Influences

Technologies. This includes the physical equipment, software

and tools that underpin the processes. For example, enterpriseresource-planning software and intranet portals can help
effect financial control, knowledge management and
innovation processes.

Customer

Home

Processes. This element consists of the clusters of activities

that produce measurable outputs. It includes all the management processes that help coordinate input-output
activities in the value chain across geographic units. Some
examples of processes are strategic planning, resource
allocation, knowledge management, innovation management,
customer relationship management and supply chain
management.

Business Model

Design, Sell
and Market

Buy, Make
and Distribute

Transact, Service
and Collect

Support Services
Execution Elements

Leadership
& People

Processes

Technologies

Performance Measurements

Soft Element

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Hard Element

Structure

Tata Communications: Building a Global-Local Operating Model

a learning organization. Executives want

to get knowledge flowing in multiple
directionsnot just from India to
other parts of the world but in reverse
directions as well. This priority is
particularly visible in the companys
recent acquisitions. As Michel Guyot,
brought to Tata Communications with
the Teleglobe acquisition and now
leading the Global Voice Solutions
division, explained:
Tata Communications was really
listening to what [Teleglobe] thought
was good and not good. I was a
little amazed [by] that because it was
the first time I had a direct relation
with the Indian culture. Many people
didnt know the Indian culture, but it
was quite refreshing seeing that they
were really listening and letting the
people do their own integration.
Executives desire to honor the Tata
soft touch reveals the importance they
assign to the quality of the companys
leadership and its peoplea key global
operating model element. Indeed,
Michel Guyot lauded the commitment
of Tata Communications executives
to maintaining a visible presence in
each of the companys diverse geographic markets:
You want to be present in all your
markets and set key directions. You
want to show you are there, that
youre supporting each of your overseas
markets in the same way you do in your
own home-country market. Its very
demanding for the leadership team.

Principle 2: Harmonization
Harmonization is Tata Communications
distinct way of integrating its operation
globally while remaining locally
responsive. It is characterized by a small
number of rules that help determine
which processes, technologies, structures and performance measurements
should be made standard across Tata
Communications geographic locations
and acquired companiesand which
should be allowed to vary locally.
Harmonization reflects the companys
desire to avoid not only excessive
standardization but also insufficient
standardization. Consequently, harmonization implies that corporate senior
executives avoid hasty top-down
standardizing decisions. As Harish
Abhichandani, vice president of
finance, explained, I wouldnt use the
word standardize; I would use the
word harmonize.Its not a question
of force fitting and saying: This is
what youve got to do. Period.
Harmonization doesnt necessarily
mean that the retained rules or standards are based on home-country
practices and dictated to the business
units and acquired companies by
corporate leaders. These rules about
processes, technologies and performance measurements standards can
also emerge from Tatas network of
international operations and from
its acquired companies. Indeed, the
companys senior executives consider
this the best way to create common
knowledge, extend employees networks and engage foreign operations
in defining and achieving common
strategic objectives.

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Tata Communications actively consolidates management processes, structure

and technologies across its global
operations with harmonization.
According to R. Nanda, senior vice
president of human resources:
Whatever can be harmonized, we will
harmonize. But whatever is best left
with certain modifications required at
the regional level and that is more
effective for the organization, we
would prefer to leave it that way.
So, for example, while the company
has a standardized framework for its
credit policy, within that framework,
different regions or countries or newly
acquired companies can develop local
processes related to debt and financing,
provided these processes are approved
by the global comptroller.
Big rules of harmonization
One intent underpinning harmonization
at Tata Communications is to balance
economic efficiency with customer
proximity and responsiveness. Thus,
when deciding which processes will
be global and which local, executives
distinguish between back-office
processes and customer-facing
processes. Back-office processes are
often associated with shared functions
or with standard processes based at
a global centerin India, where the
company can benefit from Indias
competitive cost base. Customer-facing
processes, by contrast, are customized
according to customers needs at specific geographic locations. As Srinivasa
Addepalli, senior vice president of
corporate strategy, explained:

Tata Communications: Building a Global-Local Operating Model

The broad philosophy is that infrastructure or capabilities that are

common to or that can be leveraged
across business units should be shared
and are centralized. But whichever
activities or decisions are closer to the
customerthey could be commercial
functions, direct customer service
functions, or sales and marketingthey
should be closer to the business units.
When the company is forced to weigh
cost advantages against customer
proximity, the company prioritizes
the latter: leaders have decided that
if India does not guarantee the best
customer service, the company will
relocate the function elsewhereeven
if the new location is more expensive.
According to Srinivasa Addepalli:
We also make sure that we have
enough people closer to the customer.
And therefore its not that back-office
or all functions have to be done out of
India. And if we need to locate some
operations people or customer service
[people] in a high-cost location close
to the customer, we will put them
there We will put enough [of our]
people in the markets where the
customers are, and therefore get the
ability to speak to customers faster,
sell [to] them faster, sell [to] them
locally in the languages locally. That
also creates agility in [our] response
to customers.

Resolving harmonization pitfalls

Harmonization can create global
efficiencies through standardization
while also allowing for local responsiveness. But deciding what to standardize and what to leave local can
also consume more time than senior
executives may want to spend. Yet Tata
Communications senior executives are
willing to be patient; they dont wish
to impose standard processes too
hastily, because doing so could backfire
if the quick solution turns out not
to be the best. It would also backfire
if the actual users resist standards
unilaterally imposed on them. Such
resistance would increase costs by
raising the need for centralized control. This in turn would contradict the
companys empowerment policy. Thus,
as Harish Abhichandani also put it,
[Harmonization] takes time. And
maybe it has a little extra cost to it.
But in the end, the result is far more
sustainable.
There are limits to how much time it
takes to integrate foreign operations and
acquisitions, however. Harmonization
also hinges on easy, speedy communication across employees and borders,
as senior executives are finding out.
With an eye toward ease and speed,
the company is creating a common
intranet for all its employees around
the world, so they can readily exchange
best practices.
Tata Communications is also consolidating its two ERP planning systems
(SAP and Oracle) into one platform.
Fragmentation of these platforms
often resulting from acquisitionshas
made it difficult for shared services
to coordinate their work, has created
costly inefficiencies and has eroded

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the companys flexibility. This consolidation will address these problems

as well as enable the company to
accelerate integration of its financial
and non-financial performance measurements across borders. Eventually,
the company will also rationalize the
number of metrics it uses.
Thus, paradoxically, one way to avoid
over-standardization is to heavily
standardize information and communication technologies. The sooner a
multinational manages this trade-off,
the sooner harmonization will deliver
its positive effects towards the integration of acquisitions.

Principle 3: Global-local talent

management
Tata Communications global-local
talent management principle follows
directly from its harmonization principle. Through this principle, the company
is working to create a global network
of local talent. It is standardizing a set
of common values and the structure
of talent management by establishing
corresponding processes, technologies,
structures and measurements. But it
leaves the content of talent management for example, specific hiring
guidelines and compensation decisions
to local leaders.
Standardizing values to create unity
and empower people
With the help of Tata Communications
central human resource function in
India, senior executives have begun
disseminating globally a common set

Tata Communications: Building a Global-Local Operating Model

of values to bind organizational members

across business units and geographic
locations. Inherited from the Tata
Group, these values promote a professional, global and competitive culture
which contrasts sharply with the
bureaucratic and nonmerit-based
culture that had characterized VSNL
before the Tata Group became its parent.
According to Srinivasa Addepalli:
The Tata Group value system [is
about] respect for individuals, respect
for business, respect for society, doing
things in an ethical and a moral manner
[and] not placing results over our
responsibility. I think the Tata Group
value system and the culture of the
parent organization lends itself to
people wanting to work closely. I think
the respect that the Tata brand and
culture bring to an organization and
the respect that [the company] offers
to people helps in attracting good
people and then making them bond
very well.
According to Vinod Kumar, new talent
is recruited on the basis of these common values. Executives view the values
as essential for executing Tata
Communications ambitious strategy
to become an emerging-market
multinational that can compete with
big Western players. The promotion of
future leaders is also based on these
values, which perpetuate the Tata
soft touch. Leaders know that when
employees share common values,
they trust one another to do the right

thing. Trust in turn makes a commandand-control leadership style unnecessary. And when executives steer clear
of command-and-control, autonomy
and empowerment emerge at lower
levels of the hierarchy.
Standardizing talent management
processes and policies
Tata Communications standardizes
certain international human resource
processes and policies. First, to
enhance employee engagement across
its many locations, it has created a
new global policy of employee rotation
across locations (provided this satisfies
the customer-proximity rule) and across
business units. This rotation policy
creates new career tracks for employees
and is open to all employees, not
just to few Indian expatriates. It aims
to facilitate leadership and expertise
development and to reward talent.
Potential leaders can be rotated to
improve their skills; more generally,
rotated employees develop new
task-related and cross-cultural skills.
This process also expands employees
formal and informal networks, further
reducing the risk of silos. As Vinod
Kumar put it, Weve been an organization that leverages talent where
it is found.
Second, to further enhance engagement, the company links the variable
pay of its top 50 leaders to two performance measurements: their own
level of engagement, and their
employees satisfaction. This practice
enhances leaders visibility in the
organization and encourages them to
strengthen their communication skills.
To measure engagement and satisfaction, the company uses the Gallup
engagement index.

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Third, Tata Communications has

also recently launched a mentoring
program designed to systematically
fill its global leadership pipeline.
As Michel Guyot explained:
Through the mentoring program,
[we want to] identify future leaders.
One of the most important qualities
of a leader is to prepare employees
to take over the company eventually
[to grow] into the company.
This mentoring program is supplemented by an individual growth and
development management process.
According to Milind Kulkarni, General
Manager IT:
We have a strong performance
management system wherein we try
to capture the strengths and development areas for each individual and
take into account how they want to
act, where they want to grow. And
that is one of the strong processes,
which is reviewed every six months.
Last, the company has created a common induction platform for new hires
that emphasizes Tata Communications
core values, internal communication
systems and the common appraisal
process from which performance
evaluation and rewards can be customized locally.

Tata Communications: Building a Global-Local Operating Model

Localizing specific talent management content

While Tata Communications has standardized some talent management
processes and policies, it allows local
leaders to determine the content
of their talent management. This is
consistent with the harmonization
principle.
For example, Tata Communications
has standardized the performance
appraisal process. But it allows local
leaders to set performance goals for
their people and to determine what
various incentives and rewards will
consist of.
Resolving global-local talent
management pitfalls
Applying global-local talent management has proved challenging. For
example, its taking time for the global
mindset the company is striving to
cultivate to become a reality at lower
levels of the corporate hierarchy.
Sandeep Mathur, President of
Corporate Affairs, describes the
situation as follows:
If you ask any person in the organization how his or her activities relate
to the companys goals and objectives,
some [but not all] would be able to do
that today. How do we make sure that
everyone is aligned toward working
for the company goals? I think most
senior level leaders are aligned to the
company strategy. But for us to be a
world-class company, weve got to have
everyone pulling in the same direction.

In addition, many employees at the

middle management level are finding
it difficult to work in global virtual
teams, often owing to lack of experience with this kind of work. For Vinod
Kumar, a recurrent question for middle
managers is: How do you manage a
person who youve never seen and
who you only talk to on the phone or
on e-mail?
Executives have begun putting solutions in place. With the new coaching
and mentoring program, senior leaders
spend a lot of time showing lower-level
employees how their work makes a
difference to the company overall
that is, how their work helps the company achieve its mission and strategic
objectives. To help middle managers
gain experience and comfort with
overseeing virtual teams, senior executives also involve them in do-or die
initiatives. By participating in such
initiatives, middle managers can
observe how senior managers operate
within the global organization, and
can learn from those observations.

Principle 4: Distributed leadership

The fourth principle of Tata
Communications operating model
results from the companys effort
to distribute its leadership across
hierarchical levels, geographies and
functions. To support this principle,
Tata Communications defined a new
organizational structure in 2007, in
which no distinction is made between
the companys Indian and non-Indian
parts. Rather, the company is structured
around global business units. Many
of our customers are global in nature,
Srinivasa Addepalli said, therefore our
structure is global in nature.

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Distributed leadership supports both

global integration and local responsivenesskey elements of the companys strategy. Its defining characteristics
include being geographically agnostic
and de-emphasizing corporate
headquarters.
Being geographically agnostic
In the companys new structure, leaders
of key shared-service functions are
based in India, where the bulk of the
back-office workforce is located. But
the heads of the two main SBUs and
their teams are based in Singapore
and Montral, and they have global
responsibilities. The global teams they
coordinate are spread throughout
most regions of the world and work
virtually. So, the heads of the various
offering lines are distributed around
the world and have authority over
local decision-makers. Thus, distributed
leadership requires both broad
empowerment and extensive crossgeographic team work.
As a result of this configuration, a
perception has developed in Tata
Communications that leaders do not
have to be physically present in India.
In Alan Roslings words:
Both key businesses are international,
and the people who operate them are
internationally organized. Both are
backed up by as much legal and core
services as we can [provide] in India.
I think telecommunications is a good
example of a business which is geographically agnostic.

Tata Communications: Building a Global-Local Operating Model

Distributed leadership also means that

high-level leaders do not all originate
from India. As Vinod Kumar explained:
If you take the top 50 people in the
business, theyre distributed across
twelve cities so we can be as close to
our customers and markets as possible.
When we look at the top 50 people
again, less than one-third of them are
Indian. Its not necessarily a practice
that even some of the other telecommunication companies have managed
to pull off. We hold onto this passionately because we believe that the mix
of the people and the location of the
people need to reflect our thinking.
Being geographically agnostic does
not mean that geography is absent
from the organizational structure.
Customer-facing employees are organized by geography for the purpose
of achieving local responsiveness and
customer intimacy on a global scale.
As Michel Guyot described it, geography is contained within each global
business unit:
We are also structured by region in
the sense that we have some regional
managing directors in each continent
or region. Europe, Asia/PAC and India
(being one region itself because its
so important for us). [Other regions
include] Latin America, North America
and Middle East and Africa. Regional
managing directors meet on a regular
basis to set objectives on a regional
basis, and [to] measure and monitor
the results on a regional basis.

De-emphasizing corporate headquarters

In traditionally structured companies,
headquarters are principally in charge
of the home country and secondarily
in charge of international operations
an arrangement that typically limits
lateral exchanges between business
units. This isnt the case at Tata
Communications. The company
believes that the traditional role of
headquarters does not support its distributed leadership principle, that it
contradicts the view of the company
as a global startup and that it constrains networking among far-flung
managers and employees. We dont
want a headquarters, Vinod Kumar
said. We want to have twelve locations,
twelve centers of gravity. So we shun
the word headquarters.
Consequently, the global management
committeewhich often meets virtually owing to the physical distance
between its membersis considered
more important than the corporate
headquarters. This committee is also
renowned for its agility and speed.
As Michel Guyot observed:
Even though we are a large company
with people around the globe, the
leadership team acts very fast. [It is] a
small team that can get together with
ten minutes notice, can get on the
phone wherever we are, and we are
there to take decisions.
Resolving distributed leadership
pitfalls
Distributed leadership can succeed only
if empowerment becomes a widespread
reality within the companywith
decision-making confidence and
authority extending down through
all employee levels. But changing
the entrenched hierarchical structure
of the former VSNL has turned

11 | Accenture Institute for High Performance | Copyright 2009 Accenture. All rights reserved.

out to be difficult for the new

Tata Communications. For example,
employees still sometimes feel compelled to report small decisions to top
management, and the threshold for
capital-expenditure approvals remains
low. Sandeep Mathur, for example,
explained:
We perhaps need a little more flexibility in our organization And its
probably also got to do a little bit
with our culture. I dont think we
empower enough yet. Its much better
than what it was four years ago, but
its still not enough. So a person who
is closest to the customer perhaps
doesnt have the requisite authority
to take decisions which he ought to.
And if [decisions] get pushed up, particularly [if] theyve got to go to another
continent for a decision, we dont
have good flexibility.
Owing to this constrained empowerment, tactical and operational decisions
take more time than they might
otherwise. Delays could jeopardize
customer intimacy, since lower-level
employees are not able to make the
quick decisions customers are expecting. Lack of generalized empowerment
can also put off entrepreneurial
employees, depriving the company of
the fresh thinking and innovations
such employees bring.
Aware of these drawbacks, senior
managers are working to define roles
and responsibilities more clearly at the
lower levels of the hierarchy, so people
will feel more confident about making
judgment calls themselves. For example,
executives have begun specifying

Tata Communications: Building a Global-Local Operating Model

whom a global shared-services process

owner should deal with at the local
level and whether a particular process
is a business units responsibility, a
regional managing directors responsibility or a shared-service teams
responsibility.
While the new structure has only
been put in place for eighteen months,
a key learning for senior executives
is the urgency of removing any ambiguity in the new structure.

Key lessons
What key lessons can be drawn
from Tata Communications operating
model journey? In just a few years,
the company has achieved important
milestones in creating a global-local
operating model that fits the new
challenges arising in its industry. It
has pioneered several organizational
innovations based on this assumption:
hard components such as organizational structure, management processes,
and management technologies matter
when a company is integrating operations and businesses across borders
and increasing its global scale. As
Sunil Joshi, president, India, explained,
Focussing on people alone places a limit
to what you can achieve in terms of
growth and performance. Structure and
processes play an important role too.
But the hard elements in the companys
operating model support, rather than
take precedence over, leadership and

talent capabilities. Only then can the

enterprise achieve local responsiveness.
Sanjay Mathur, head of the Management
Assurance Group, expressed this line
of thought as follows:
I would say that even the best processes
in the world will not help you if your
management is not visionary.
In addition, Tata Communications has
honored but also scaled up the Tata
soft touch management philosophy.
This approach has enabled the company
to balance standardization of management processes and performance measurements through harmonization, to
begin leveraging talent globally and to
start balancing hierarchical reporting
structures with wide empowerment
through distributed leadership and
virtual headquarters.
The result? Tata Communications is
managed like a global startup. In
the words of Madhusudhan Mysore,
chief officer of Customer Services
and Operations,
Our global company is running like
a startup. That means the flexibility
and (to an extent) the communication
goes vertical as well as horizontal.
Coordination is much tighter and easier.
But Tata Communications experiences
so far in building a global-local operating demonstrate that the process isnt
easy. Balancing the five components
of an operating model takes careful
thought, and the choices made arent
always ideal. They inevitably present
frustrating trade-offs.

12 | Accenture Institute for High Performance | Copyright 2009 Accenture. All rights reserved.

For example, distributed leadership

can help executives and managers
forge close relationships with partners
and customers in far-flung locations.
But it can also make it harder for
them to present one face to partners
and customers. Distributed leadership
cannot work without clearly defined
roles and responsibilities. The interface
between global process owners and
implementers at the local level needs
to be sharply defined.
Harmonization can create global efficiencies through standardization while
also allowing for local responsiveness.
But deciding what to standardize and
what to leave local can also consume
more time than executives may want
to spend. To get the most value from
harmonization, a company must
standardize ICT that facilitate internal
networking. Paradoxically, standardization on this front reduces the risk of
deploying the other operating model
components in an over-standardized
or over-centralized way.
There is a final lesson. Being global
and local means being in flux. This
flux can take the form of big, radical
changes (such as Tata Communications
2007 complete operating model overhaul) that are required to execute new
strategies. And it can manifest itself
as continuous fine-tuning on a smaller
scale to resolve the tensions resulting
from the trade-offs to improve business
results. Thus, a global-local operating
model will always be a work in progress,
not a finished product that, once built,
stays in place indefinitely.

Tata Communications: Building a Global-Local Operating Model

References

About the authors

In addition to one-hour face-to-face

interviews with eleven Tata
Communications top executives, we
collected the following secondary
information:

Stphane J.G. Girod, Ph.D.

(stephane.girod@accenture.com) is a
research fellow with the Accenture
Institute for High Performance. He is
based in London. He was the study lead
in the telecom and energy industries.

Company annual reports and

corporate presentations

Joshua B. Bellin, MSc.

(joshua.b.bellin@accenture.com) is a
senior research associate with the
Accenture Institute for High
Performance. He is based in Boston.

Credit Suisse, Tata Communications,

29 January 2009
Columbine Capital Services, Tata
Communications Ltd , December 5,
2008
Datamonitor, Tata Communications
Ltd: Company Profile , September 8,
2008

Robert J. Thomas, Ph.D.

(robert.j.thomas@accenture.com) is
the executive director of the
Accenture Institute for High
Performance. He is based in Boston.

About Accenture
HSBC, Tata Communications,
September 4, 2008
Asit C. Mehta, Tata Communications
Ltd: Company report, August 26, 2008
Religare, Tata Communications,
June 23, 2008
HSBC, Tata Communications:
Company Report, May 2, 2008
BNP Paribas, Tata Communications,
April 22, 2008

Accenture is a global management

consulting, technology services and
outsourcing company. Combining
unparalleled experience, comprehensive capabilities across all industries
and business functions, and extensive
research on the worlds most successful companies, Accenture collaborates
with clients to help them become highperformance businesses and governments. With approximately 177,000
people serving clients in more than
120 countries, the company generated
net revenues of US$21.58 billion for
the fiscal year ended Aug. 31, 2009.
Its home page is www.accenture.com.

13 | Accenture Institute for High Performance | Copyright 2009 Accenture. All rights reserved.

About the Accenture Institute

for High Performance
The Accenture Institute for High
Performance creates strategic insights
into key management issues and
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Its management researchers combine
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