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IT Industry & TCS Strategic Analysis Business Strategy This report is submitted as part of industry analysis project of the course

‘Busin ess Strategy’, under the guidance of Prof. Rushi Anandan, in Post Graduate Program me In Management at SPJIMR, Mumbai Group 7: Sameer | Sohail | Sankar | Himanshu | Arun V M PGPM508 7/10/2009

Table of Contents INDIAN IT INDUSTRY OVERVIEW .................................................... .............................................. 3 INTRODUCTION .................. ................................................................................ .............. 3 EXTERNAL ANALYSIS ............................................. ............................................................ 4 PORTER’S FIVE FORCE S MODEL (INDIAN IT INDUSTRY) ................................................... ........ 7 SWOT ANALYSIS - IT & ITES INDUSTRY .................................. ............................................ 8 TATA CONSULTANCY SERVICES ....... ................................................................................ ............. 9 INTRODUCTION ................................................... ............................................................. 9 SWOT ANALYSIS .. ................................................................................ ......................... 10 TCS’ RESOURCES & CAPABILITIES ....................... .............................................................. 11 TCS’ STRATEGY AN ALYSIS ......................................................................... ...................... 12 RECOMMENDATIONS ...................................... ........................................................................ 19 REFE RENCES ......................................................................... ................................................. 21 Disclaimer: This report should be treated strictly for academic purpose and shou ld not be used elsewhere. Users of this report are required to take permission f rom authors before reproducing or publishing this material anywhere else. PGPM508-Group 07 Page 2

If India maintains its current share of the global offshore IT -ITES market. The Indian economy has also been impacted by the recessionary trends. growing at current trends. Indian IT & ITES is expected to grow at 10. resulting in net overall momentum. IT-ITES exports from India will exceed US$ 60 bn by FY10 and US$ 8 6 bn by FY12. significant complexity and uncertainty is getting attached to the unprecedented economic crisis.5 billion and has a projection of more than US$ 86 billion by 2012. India is now the leading country in providing IT Enabled Services in the world.IN DI AN IT IN DU S T R Y O VER VI EW Introduction In an increasingly flat world. cont ributing substantially to increases in the GDP. Yet. While the effects of the economic crisis are expected to linger in the near term future. PGPM508-Group 07 Page 3 . and adaptation in the service offerings portfolio. estimated that the revenue of the IT Enabled Services will cross the revenues of IT industry by 2010.5 60 FY08 FY09 FY10 FY12 FY20 Source: NASSCOM McKinsey Research India holds a dominant share of the global off shore IT-ITES sector (65% of the global market in offshore IT and 46% of the ITE S market). Indian IT-ITES exports are pro jected to reach nearly US$ 330 bn by FY20 (nearly 14% of the projected worldwide spend).6 FY06 37. urban employment and exports. This growth has been fuelled by increasing diversification in the geographic base and industry vertic als. The export revenue generated from ITES is about US$ 47. During the year.76 million employees. According to a recent study. the lowest in the last five years.3 bn in FY07.9% to touch revenue of $110 bi llion. due to the current global melt down. But the Indian IT companies will have to move up in the value chain and concentrate more on high value added services. the sector ma intained its double digit growth rate and was a net hirer. with a slowdown in GDP growth to seven per cent. India has retained its leadership position in the global sourci ng market.9 86. it would grow at 13. The IT-ITeS industry in India has today become a growth engine for the economy. But in next four years. Software and services exports (including BPO) are expected to account f or over 99 per cent of total exports. the Indian IT-B PO industry has displayed resilience and tenacity in countering the unpredictabl e conditions and reiterating the viability of India’s fundamental value propositio n. The focus and exponential growth in the domestic market has partially off set this fall and insulated the country.7%) IT-ITeS Exports . Indian IT-ITES exports accounted for les s than 3% of the global spend on IT-ITES. to achieve the vision of a “young and resilient” India.8% in 2009. the premier institute which manages all the IT and ITES companies in India. at US$ 31. (CAG R – 20. Further. This clearly indicates significant hea droom for growth. Consequently.6 23.USD bn 400 300 200 100 0 328.6 47. NASCOM. employing over 1.

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and maintains its leadership position. to en sure that India realizes its potential. money and energy on their core competencies instead of wasting valuable resour ces trying to gain Understanding of areas that are somebody else s expertise". with a number of countries creating enabling business environments aimed at replicating India’s success in the IT-BPO industry. so that they can focus their time . C hallenges While the industry has significant headroom for growth. concentrated e fforts are required by all stakeholders to address the current challenges. Hence. External Analysis Current position of IT/ITeS sector in India PGPM508-Group 07 Page 4   . competition is increasing.Why Outsourcing? “Outsourcing system allows companies to contract for services tha t are not within the scope of their expertise.

PESTLE Analysis PGPM508-Group 07 Page 5 .Environmental Scanning Figure: Financial Attractiveness of Top 5 Global service locations Figure: Number of IT graduates in India External Environment .

related to security of data in transmission and storage. energy utilization. which is not legally required. Mildly Positive Environment •Energy Efficient processes and equipments: Companies are focusing on reducing the carbon footprints.Legal •IT SEZ requirement: IT companies can set up SEZ with minimum area of 10 hectares and enjoy a host of tax benefits and fiscal benefits. et c. Positive •Companies operating in Software Technology Park (STPI) scheme will co ntinue to get tax-benefit till 2010. water consumption. Negative •IT Act: Indian government is strengthening the IT act. etc. Positive •Contract / Bond re quirements: Huge debates surrounding the bonds under which the employees are req uired to work. 2000 to provide a sound legal environment for compa nies to operate esp. Positive National Revenues: IT & ITES Industry in India PGPM508-Group 07 Page 6 .

Porter’s Five Forces Model (Indian IT Industry) Medium Shift from High to Low Very High Low PGPM508-Group 07 Page 7 .

Threats Global economic slowdown may continue for several years – hence low IT spe nding globally US Govt. Page 8 . Infrastruc ture. English speaking IT – ITES professionals growing at a g ood pace Quality and Maturity of process – many players have quality standards suc h as CMM to differentiate from other low cost advantage countries Global and 24/ 7 Delivery capability – excellent internet backbone and telecommunications facilit ies enabling companies to develop 24/7 delivery capabilities from India itself O pportunities Greater scope for product innovation Increased focus on high end wo rk like consulting and KPO Domestic demand for IT services is to grow at 20% Gre ater scope to service domains other than BFSI such as Transportation. and winning new business from new client s PGPM508-Group 07 Weaknesses Excessive dependence on USA for revenues – US Compan ies are cutting down IT budget hence revenues to be hit hard of Indian IT firms Excessive dependence on BFSI sector for revenues – Banking sector is facing a cris is globally and is going to spend less on IT High rates of attrition – Although sl owdown in global economy has lowered attrition rate but the industry still faces high attrition rates as compared to other sectors Decreasing competitive advant age – rising salary expenses is taking away the cost advantage enjoyed by India. possibility of shifting of business. Increased competition from low-wage countries like China. Indonesia etc. etc. against outsourcing Shrinking margins due to rising wage inflation Rupee-dollar movement affects revenue and hence margins Increased com petition from foreign firms like Accenture. IBM etc.Market Share: Sources of Revenue: SWOT Analysis .IT & ITES Industry Considering industry and any IT firm in general Strength Cost advantage – most fin ancially attractive country in a study by A T Kearney on global IT destinations Breadth of service offering – end to end solutions including high end services lik e IT consultancy and KPO Ease of Scalability – more than half of India’s population is less than 25 years old. Satyam fiasco – Likely to have positive impact on business considering corporate governance. getting higher increm ental business from overlapped clients.

diversification. Business Solutions and Outsourcing with revenues of USD 6B durin g FY08-09. Excellence. turning the challenges of globalization into a competitive e dge for clients. processes and technology. (Founded in 1968. TCS helps some of the world’s largest companies adopt the right t Optimize business performance Facili echnology-enabled solution that helps them: tate alignment of business with technology Connect their extended supply chains Reduce product development time Improve product differentiation Provide real-tim e business insight Lower operational costs Profile Tata Consultancy Services Ltd . TCS envisioned and pioneered the adoption of the flexible global busi ness practices that today enable companies to operate more efficiently and produ ce more value. More than 95 percent of TCS customers reward the company’s reliabil ity. Values: Integrity. enterprise solutions and infra structure services. passion. TCS has 143. business knowledge requirements. with certainty o f cost. These delivery centers operate at the same quality (TCS is the on ly company in the world to be assessed at CMMi Level 5 through a single assessme nt across all its delivery centers). We shall make it a joy for a ll stakeholders to work with us. high value services known as Global Net work Delivery Model (GNDM™). Being a pioneer in the IT industry. GNDM provide s the fastest turnaround time from concept to service delivery. 2004) Vision: Top 10 by 2010 Mission: To help our customers achieve their business objectives by providing innovative . the strategic services delivery concept that has resh aped the IT services industry. creativity. tailored for its customers based on the type of wo rk. Leading change. security and skill levels. quality and schedule. Corporations have to increase agil ity in a way in which their business units across geographies operate and collab orate seamlessly across people.TAT A CO N S ULT AN CY SERV ICES Introduction Rapid globalization. risk mitigation needs. IT solutions & services. GNDM™ is a unique network of 79 Delivery Centers in 16 countries. TCS have a good apprec iation of trends and challenges faced by industries TCS choose to focus. geographic spread. PGPM508-Group 07 Pa ge 9 . The sol utions TCS build are powered by domain expertise. and unique ability to handle the broadest range of the ir IT needs. Continuous learning and sharing. TCS achieved this by creating and perfecting a unique method of global deployment and delivery of high quality. s cale of delivery etc. best-inclass Consulting. Tata Consultancy Services Limited (TCS) is a leading and India’s largest provider of IT Services. Respect for the individual. giving customers the same experience of certainty across the organization globally.000+ world’s best trained IT consultants located in 50 co untries. went public in August. and intense competition have resulted in a more dynamic and complex world.

which provides a diverse revenue base.the TATA Group. Headquarters TCS is headquartered out of Mumb ai. TCS has 50+ delivery centers in Indi a across 15 cities. Location TCS is operating in 47. 15+ development centers outside India. How ever. with annual r evenue of more than USD 72. spans across diversified indu stry segments such as consumer package goods (CPG). engineering & materials. chemicals. Turnover Tata Consultancy Services Limited (TCS) is a leading and India’s largest provider of IT Services. PGPM508-Group 07 Page 10     . financial services. Th e company has extensive global reach. TCS’ employees are spre ad across countries.5 billion+ (Feb. energy. Business Solutions and Outsou rcing with revenues of USD 6 Billion during FY08-09. IT services and systems i ntegrator with a 40-year track record and world class processes and methodologie s. The TATA Group. business process outsourcing. a symbol of trust in India. having literally coined the te rm “Offshore Development”. Thus. TCS deputes the associates on long term and short term basis to the local countries for specific engagements. Global presence helps in country availability of comp etencies for any technical assistance mission or application project.000 of the world s best trained IT consultants and an acknowledged pione er. 6 out of Top 10 US Fortune companies are TCS clients. and engineering. 2009). innovator and thought leader in the IT space.Leadership in IT Outsourcing: TCS is the largest IT consulting company in Asia w ith 143. infrastructure. Number of customers Over 98 5 active clients. telecommunications. India. informati on technology. is known for its pioneering spirit and the brand stands for business excellence and integrity. Also. Customer revenue contributions are presented below: SWOT Analysis Tata Consultancy services (TCS) is one of the major IT service providers. It is also a global consulting. The co mpany provides a wide range of services including business consulting. increasing competition threatens to erode its market share. TCS has won many accolades for its significant contribution to the maturity a nd visibility of the Indian IT services worldwide Trusted Partner: TCS is part o f one of Asia s largest conglomerates . The group.

000+ (Apr-2009) World Class Professionals. TCS employees are fr om across 67 nationalities. or supporting partner. TCS’ Resources & Capabilities TCS has over 143. or prim e/lead partner. China. Non Indian nationals comprise 8. Japan. TCS appreciates the need for flexibility to work with multiple stakeholders fr om customers. giving customers the same experience of certainty across the organi zation globally with a lower total cost of ownership. TCS has established himself as the industry leade r. Being part of the trusted Tata group is also a big differentiator for TCS giv ing it a strong brand strength. testing and support. Hungary. Australia. from engi neering services to BPO. Uruguay. IBM etc. Global Network Delivery Model Unique netw ork of 79 Delivery Centers in Brazil. Collaboration wi th multiple stakeholders Having worked on large global scale enterprise projects . Integrated full-services player Portfolio of off erings extends from consulting to implementation. academ ia and alliance partners to continuously develop innovative solutions for their customers. 30% of workforce is women. Singapore and India that operate at the same quality. partners. Chile. Indonesia et c. security and s kill levels. Security (BS 7799-2:2002) & Services (BS 15000-1:2002) Innov ation Network TCS has established 19 labs with strong links to start-ups. TCS have developed innovati ve engagement models that have proven TCS’ ability to deliver significant value to its customers in managing their projects as the sole solution provider. TCS was awarded enterprise-wide triple certification for: Quali ty (ISO 9001:2000).Strength Extensive global reach Strong financial performance Employee management skills Innovation labs Opportunities Focus on SMB segment Growth in worldwide I T services Focus on high end business and IT consulting Expanding operations in countries like China Weaknesses Significant exposure to financial services market Lack of scale in co nsulting operations Threats Increasing employee costs Intense competition from f oreign firms like Accenture.3% of TCS workforce. from products to end-to-end solutions. PGPM508-Group 07 Page 11 . High Quality and Maximum s ecurity In 2005. Key Differentiators of TCS Pioneer in the industry & Brand Having started in 1968. Consolidation in the end markets Rupee app reciation Increased competition from low-wage countries like China. and other service providers. UK.

G SS Partner Business Continuity TCS follows a well defined and mutually agreed (w ith customer) business continuity and disaster recovery plan.System Integrator Partner.Global Syst em Integrator Partner SAP .Global System Integrator and Global Certified Advantage Partner Microsoft . flexible global delivery model and deep indus try insights with the technological expertise and capabilities of its renowned a lliance partners to offer competitive advantage to its customers.TCS is BEA’ Strategic Partner SUN . Preferred Offsh ore Partner BEA .Global Consulting Partner Growth Engine Partners Sie bel . PGPM508-Group 07 Page 12 . and Microsoft among ot hers.Consulting Partner Web Methods .Global System Integrator Partner Oracle .TCS Technology Partnerships and Relationships Tata Consultancy Services combines its system integration expertise. Oracle. TCS’ Strategy Analysis TCS’ organization restructuring in April 2008 was one of the major moves in last d ecade to adapt to external environments.Global System Integrator. The BCP is tested on a pre determined frequency. This was recently invoked during the under-sea ca ble fault leading to disruptions in the voice/internet connectivity. TCS did it little late but just in time. The alliances enable TCS to deliver cutting edge technological solutions and enhanced services to help customers integrate their business applications effectively while impro ving the operational efficiencies and ROI. The traffic was diverted through alternate routes as per the plan. IBM. Having an organization structure that w ould respond to customer demands is most efficient way to lay down your business strategies. Strategic Partners IBM . Strategic partner relationships of TC S include leading industry players like SAP.

g. T hey are being more focused region wise and customer wise rather than being gener ic. 4. 7. These high-end skills and scale will help TCS to tackle larger projects aimed at transforming clients’ IT applicat ions and infrastructures.6%).8 2. Australia. and virtualization. Focus on the Centers of Excellence (CoE) to strengthen capability so as t o build state-of-the-art solutions in specific technologies such as service-orie nted architecture.5 BFSI Telecom Retail Manufacturing Hi-Tech 12 13 . 6 . TCS has been following a more focused strategy where they are going as per loca l needs of customer and their nature of business. TCS has been successful in getting the cost leadership in the industry. Focus on customer relationship ma nagement. Since last decade. No doubt. TCS has to re look its business strategy as the wo rld financial institutions are in a tremendous shock of subprime crisis and thin k of scaling up revenue from other verticals/industries. Du e to its strong knowledge management system and resource strength. 9.5 9.8 5. 5. customer retention (for repeat business revenue which is 95. Differentiation in high end services such as consulting in term of niche offerings. 8.7 2. 3. Protection from currency fluctuations with the help of currency hedging.8% of exposure to Banking Financial Services & Insurance sector.1 2. 2. PGPM508-Group 07 Page 13 . Diff erentiation in low end services in terms of cost.Business Strategy TCS calls its Business Units as Industry Service Practice. expertise. Ti mely delivery with the help of proven delivery & quality framework – iQMS. resources. Generic Business Strate gy: 1. Middle East.7 5. E. Low cost Global delivery 24X7 model. testing. TCS’ BU wise revenue di stribution is as shown below: TCS Industry Practice .Revenue Q4FY09 3.8 42.1 Life Sciences & Healthcare Travel & Hospitality Energy & Utilities Media & En tertainment Others This clearly shows that TCS has 42.

IT consulting.7 2.8 11.TCS’ Service Practice Revenue Distribution is as follows: TCS Service Practice Revenue Q4FY09 1. BPO. business consulting. TCS has traditionally a low cost outsourcing player which provides application development and maintenance services. Though TCS has managed to bring down this per centage significantly in last decade by entering into niche areas like. & Industrial Se rvices Infrastucture Services Global Consulting Asset Leverage Solutions Busines s Process Outsourcing This shows that TCS has a heavy exposure to IT Solutions – Application Development & Maintenance – 48.8 6.1 8. BCG Matrix for TCS LOW Business Growth Rate HIGH BPO Infrastructure Services Application Development & Maintenance Software produ cts Consulting Packaged Implementation KPO Engineering & Industrial Services None HIGH Relative Position (Market Share) LOW PGPM508-Group 07 Page 14 .8 11. which till date accou nt for almost half of its revenue.6%. BPO and infrastructure services. TCS sees a strong growth potential especially into consulting. asset leveraged soluti ons etc. inf rastructure services.8 3. Thus TCS is investing heavily into these areas to explo re new market segments.1 Application Development & Maintenance Bus iness Intelligence Enterprise Solutions Assurance Services Engg.3 48.6 5.

Global Strategy TCS’ GNDMTM is at the heart of TCS’ global strategy. TCS needs to be more aggressive on cost and quality front. manufacturing and retail) and softwa re products (financial products). KPO. consultancy services (in BFSI. TCS needs a paradigm shift in focus fr om US and EU markets to these markets. BPO. manufac turing and retail) and software products (financial products). PGPM508-Group 07 Page 15 . Recommendation: As most large clients in US an d Europe are cutting costs. Market Development Strategy New/Emerging Markets: India. Middle-east and Australia Current Product: ADM. Recommendation: S ince these are fast developing IT market. What is GNDMTM? Follow the sun strategy: Market Penetration Strategy Current Markets: USA and Europe Current Products: AD M. KPO. BPO. consultancy services (in BFSI.

Dr . Major Markets (North America. The current three foreign directors are: Clayton M Christensen (HBS Professor. and KPO services. TCS wants to grow its businesses in global markets in cluding India. The c ompany’s operations are now divided into five units: Industry Solutions (for verti calspecific services).2% in t he second quarter (April. The firm’s operations in Latin America and Middle East have also seen considerable expansion. TCS’s diversification plan seems to have worked since the company has been gaining momentum in Europe and other emerging markets. South America and China. Clearly bullish with successes such as ABN Am ro in continental Europe.Product Development Strategy Current Market: USA and Europe New Product: Consult ancy and package implementation services in relatively growing sectors esp. aviation sector. Als o. May. TCS. Ron Sommer (former Chairman of the Board of Management of Deutsche Telekom AG. and almost 18% to 20% revenue fro m the Asia Pacific market. Corporate Strategy TCS is a firm believer in ‘organic growth’ and acquire only those companies which are in line with TCS’ strategic long term goals. the Indian market is becoming difficult to afford. Recent acquisitions in Ireland and Latin America demonstrate its ambition to create delivery centers of respectable size outside of India. The weakening European economy and its GDP decline of 0. life sciences & healthcare. TCS wa s the first one to set up a delivery centre in China. customer-centric approach. TCS has established delivery and offshore centers in countries like Brazil. Eastern Europe. Diversification Strategy In February 2008. Uru guay and Mexico. Qantas in Australia. June) might hinder TCS’s diversification plans. joined in 2006). TCS restructured its global operation s to adopt an integrated. which is evident in the company’s marked growth rate of 40% year to year in its FY08’s European operations.K) . as it is bound to have a direct impact on BFSI’s outsourcing services. SMB and Platform-based BPO) and Organizational Infrastructure.S. Middle East & Africa and In dia). Western Europe and the U. which dra ws 44% of its global revenue from the BFSI sector. economic collapse. leading to a wider gap bet ween the PGPM508-Group 07 Page 16 . Strategic Growth Business (TCS Financial Solutions. In order to deepen its penetration. joined in 2006) & Laura M Cha (member of the Executive Council of the Hong Kong Special Administrative Region (SAR) and Non-Executive Chairman of HSBC Investme nt Asia Holdings Limited) Look beyond US and UK for growth and beyond India for skills to emerge as a global firm. Getting big foreign names on board of directors is also one of the key strategies for TCS. Recommendation: Conce ntrate on building expertise in these domains by strategic acquisitions. which is expected to helpfu l in eliminating the risk factors arising from the U. is likely to be affected. New Growth Markets (Latin America. Other global strategies Since last few years TCS is successfully leveraging labo r cost in Eastern Europe.

0. The companies are engaging in a technology alliance model in which the two orga nizations collaborate on research and develop solution offerings to deliver cust omer-specific solutions to the marketplace. with the companies implementing a well-defi ned model for collaboration using a three-stage approach: Joint innovation engag ements defining new or improved solutions Joint go-to-market strategies for the solutions The companies have completed two significant virtualization and balanced compute research projects with these objectives: Virtualization: Demonstrate server con solidation through virtualization using multi-core Intel® Xeon® processors and Intel® Virtualization Technology on a real-life customer application to reduce total co st of ownership. Cloud Comp uting. Senior Res earch Scientists of SAP and TCS initiated this collaboration setting the objecti ves and defining the modus operandi for carrying out research in a collaborative manner. And they committed to cause by undertaking the responsibility to be Exe cutive Sponsors in the respective organizations. Identified areas include Model-driven Architecture and Integ ration of Enterprise-Data. Balanced Compute: Demonstrate and validate balanced compute mod el usages in real enduser scenarios. Collaboration with SAP Research was initiated after detailed discussions and exchange of research interests fro m both SAP and TCS. Service Provider. Web 2. Ext ending collaborative research to several global technology vendors has made rela tionships with them more holistic. Utility/Grid Computing. The intent is to define and develop solutions w ith associated services and offer the same as an integrated business model to cu stomers. Supplier. These relationships are in various di mensions such as Customer. Hewlett-Packard: HP and TCS have initiated discussions for joint research in t he areas of SaaS. and Alliance Partner. SAP: SAP as a leading technology and product vendor is one of the key partners o f TCS. Some of the strategic alliances are listed below. This can be traced to the fact that hired e mployees lack required skills or fail to deliver their expertise. Leveraging and extending this existing partnership to collaborate for joint research and innovation was a logical next step for both SAP and TCS. This alliance has matured over the l ast two years of collaborative work. The partnership with SAP has been a long-standing one and multi-dimension al. Strategic Alliances TCS has strategic relationshi ps with various global technology vendors. Internet of Services. Power Management & Cooling. Green IT and Next PGPM508-Group 07 Page 17 . TCS and these technology vendors collaborate on joint research leveraging each other’s strengths to research and to the develop ment of best-of-breed offerings.demand and supply of IT consultants. and Internet of Things . showcasing central manageability and client side computing using a combination of OS and application streaming technologies on Intel® vPro™ technologybased platforms. Intel: Intel and TCS provide information technology products and services that complement each other. but still seem to be demanding higher wages.

as well as the signif icant contracted revenue commitment. and an external partner committed to deliver (and probably to improve) the services – they have monetized their investment in setting up CGS (Citigroup Services). Acquisition Strategy TCS is looking at grow th from two ways –first through organic means and second through the inorganic way . with end-to-end banking BPO service offerings. TKS-Teknosoft. 31. Like for instance TCS acquisition of CMC is helping it taking a sharper look at the domes tic IT business. in which Microsoft took a 10 per cent stake. plann ed to employ over the next five year at least 5.000 people.Below are some of the acquisitions of TCS in the recent past: Nov 2008: TCS Acquisition of Citigroup Services. T   . Diligenta.000 staff has transferred with the deal. through its subsidiary. The acquisition was touted as providing TCS more ab ility to provide full-service to customers in affected markets. 2006: Similar to the financial stakes made above. EMC2 and TCS have co nceptualized IT solution architectures for specific industry-domains integrating products from E MC2 and software platforms from TCS. TKS was the market ing agent for TCS in Europe. Oc t. acquired a basis in part of UK’s Pearl Group. TCS Joint ventures TCS went for a joint venture (JV) in Feb 2007 with three Chin ese partners and is billed by the company as a "role model” for the Chinese IT ind ustry.000 employ more than 1. The TCS joint venture.S. The Chinese software industry remains fragmented and lacks scale. us ing products and solutions from HP. Only about 10 Chinese IT firms among some 8. They no longer have dir ect responsibility for managing an offshore delivery centre in a market becoming increasingly competitive. TCS picked up Comicron in Latin America to offer banking solutions in both IT and BP O services in that market.000 people that would represent a considerable scaling up from the company s then present strength of 800 employ ees in China.Generation Data Center. TCS gains a range of new capabi lities. EMC2: With TCS being an IT solutions and services provider. Experience gaine d here will again allow TCS to expand further into new markets with BPO offering s. March 2006: TCS. and Aust ralia among others. especially in the rather large and under-addressed Spanish-speaking world. U. The companies should add great value to TCS. sin ce both the companies are well known for doing work for the government. Both the companies have synergies in the government sector. TIL w as a software services company like TCS with operations in the UK. and now Spanish language capability. they get a cash payment. TCS again expanded its banking products and consolidated its European operations after acquiring a 75% equity stake in its Switzerland-based partner. TCS as p art of its strategy to look at growth options has set up an internal team which will focus only on acquisition strategies . Over 12. Pearl is the 2nd largest player in the UK’s life insurance and pension BPO industr y. The inorganic way of growth is through acquisitions of those companies that ma ke business sense to TCS. The merger gave TCS a broader customer base and deeper penet ration into key geographies. From the Citigroup side. Some of the potential research initiatives could also in volve development of market-specific offerings based on value-added services. and they have significantly reduced their overall hea dcount. Right after Pearl. Feb 2006: Tata InfoTech (TIL) Limited was merged into TCS Limited. giving TCS a new stake in BPO work for the UK market. and an opportunity to pro vide integrated IT and BPO services to the banking market.

The new venture PGPM508-Group 07 Pag e 18 .000-employee target.he TCS joint venture will thus be one of the largest software companies in China once it reaches its 5.

TCS str ategists can adapt their positioning and direction. but don’t ignore the new ecosystem In all likelihood. albeit not equally.is widely expected to enable TCS to finally break into the $30-billion domestic Chinese IT market. ‘Do no t put all eggs in one basket’ – TCS must provide diverse services to refrain from be ing over-dependent and increasing exposure to the vulnerabilities of few sectors (BFSI) /geographies (USA). et c. Those providers prepared for the new ecosystem will be the ones to flourish once the dark clouds of economic turmoil have lifted. Based on current situation. In our humble opinion it is short sighted. In a recession. an d has an authorized capital of Rs. paying particular focus to t he following issues to ensure long-term market success: Expect to see the landsc ape continue to consolidate. providers’ response at this critical time will se t the vendor landscape for the coming years. we hope the company creates niche services in the national and internationa l stage. Another JV is between TCS and SBI (State Bank of India) in Nov 2005 to cater advanced technology solutions and domain consulting for the banking and fi nancial services sector. BPO to Consulting and Package Implementation. 40 crore. a market that has in the past proved elusive for Indian IT co mpanies. The joint venture was to offer transformational capabilities to banks and financial institutions in India and other markets by helping them to use technology as a competitive tool in th e market place using bureau services and service platforms. TCS holds 51 per cent of the equity in C-Edge and SBI the balance with no asset transfer. Adapt to recession. Provide more high-end services in value chain (3rd W ave in IT) There is a move required from ADM (Application Development and mainte nance) to value added services. R ECO MMEN D ATIO N S The first and foremost recommendation for TCS is to change its vision statement. The recession is at the top of everyone’s agenda right now. We feel that a big wave of consolidation in IT industry has just started. Ramadorai. t hese relevant stakeholders must include business executives. said Mr. Ensure marketing articulates your value propo sition to all stakeholders concerned. "In three to five ye ars. but those providers that take a long-t erm view will use this time to prepare for the fundamental changes in industry d ynamics that will emerge. TCS needs to have a vision that will show its leadership qualities and long term thinking. TCS should shift focus from Low cost advantage to high quality services comma nding a premium being the pioneer in the industry Consolidation and strategic ac quisitions are essential for future growth of revenues. Service providers like TCS need to create specific value propositi ons aimed directly at the relevant stakeholders — and in the new tech ecosystem. TCS should take this opportunity t o improve your market positioning. not just IT personn el Don’t be influenced solely by short-term shareholder pressure. Clients will seek to cut costs and focus on fewer p rovider relationships as the economy worsens. All service providers wil l feel this. TCS should gear up f or such opportunities which are strategic fit for them – be prepared. Page 19 PGPM508-Group 07    . marketing can work as a di fferentiator. The joint venture is called C-Edge Technologies Ltd. The HP-EDS merger (one of the biggest ever merger in this industry) is testimony to this. the econ omy will worsen before it picks up again in late 2009.

TCS (rather all Indian IT players) should focus more on increasing their IP (Intellectual Property) assets. PGPM508-Group 07 Page 20 . In dian domestic market grew by more than 20%. Passport project etc. TC S has rightly placed SMB (Small and Medium Businesses) as a separate strategic u nit. but TCS revenue from India increased only by 6. Finally would like to conclude with a prediction/recommendation from Gartner: Th e role of an IT Organization is changing and will have a “service effect”. TCS should leverage its success stories (IRCTC success done by i ts subsidiary – CMC. which should be focused aggressively. They should also focus consulting pra ctice on the same radar.) to drive the growth in this market.Quickly adapt and gain customer confidence in high growth markets. In FY2009.46%.

5.com PGPM508-Group 07 Page 21 . 2.livemint. 6.tcs. Tata Consultancy Services www.gartner.com Newspaper Mint – www. 4.datamonitor.REFER EN CES 1.com Gartner reports www. 3.com IT-ITeS Market & Opportunities – IBEF (India Brand Equity Foundation) report Tata Consultancy Serv ices – A Company Profile – www.com (Investors section) Forr ester reports www.forrester.