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IT Industry & TCS Strategic Analysis Business Strategy This report is submitted as part of
industry analysis project of the course Competitor, under the guidance of Prof. Vinay
Chirania, in Post Graduate Diploma In Management at IILM Graduate School of
Management, Greater Noida.
2. 2. Group 6 Submitted by: Abhigyan Dipandita Kar Himali Kulshrestha Mridul Tiwari
Priyanka Aggarwal Submitted to: Subhashree Roy Prof. Vinay Chirania Vaibhav Singh
3. 3. Indian IT Industry Overview The IT-ITeS industry in India has today become a growth
engine for the economy India is now the leading country in providing IT Enabled Services
in the world India holds a dominant share of the global offshore IT-ITES sector Indian ITITES exports accounted for less than 3% of the global spend on ITITES Software and
services exports (including BPO) are expected to grow
4. 4. IT-ITeS Exports USD bn
5. 5. Why Outsourcing? To focus on their core competency So that they cannot waste their
time, money, and energy Gain access to world class capabilities Share risks with a
partner company
6. 6. Challenges Recruitment planning Performance management Training and
development Compensation management HRM as whole
7. 7. External Analysis Current position of IT/ITeS sector in India
8. 8. Environmental Scanning BREAKUP OF TOTAL GLOBAL IT SPENDING total global
spending support and training out sourcing 869 2013 163 473 816 2012 157 438 763 2011
151 402 711 2010 144 368
9. 9. External Environment - PESTLE Analysis Political:1. Political stability: Indian political
structure is stable 2. Government owned companies and PSUs have decided to give more IT
projects to Indian IT companies Economic 1. Domestic market to grow by 30% and reach
approx. USD 30 billion in 201415 estimated by NASSCOM 2. Due to recession, the layoff
and job-cuts have resulted in low attrition rate 3. Economic attractiveness due to cost
advantage and other factors
10. 10. Cont Social 1. Education: A number of technical institutes and universities over the
country offer IT education 2. Working age population Technological 1. Internet backbone:
Due to IT revolution of 90s Indian cities and India is well connected with undersea optical
fiber cables 2. New IT technologies: Technologies like SOA, high definition content, grid
computing, etc and innovation in low cost technologies is presenting new challenges and
opportunities for Indian IT industry
11. 11. Cont. Legal: 1. IT companies can set up SEZ with minimum area of 10 hectares and
enjoy a host of tax and fiscal benefits 2. Indian government is strengthening the IT act 2000
to provide a sound legal environment Environment: 1. Companies are focusing on reducing
the carbon footprints, energy utilization, water consumption, etc.
12. 12. Porters Five Forces Model (Indian IT Industry) Threat of substitutes Bargaining power of
Supplier Rivalry among firms: High Barrier to Entry Bargaining power of Customers
13. 13. SWOT Analysis - IT & ITES Industry Strength:a) Cost advantage most financially
attractive country in a study by A T Kearney on global IT destinations b) Ease of Scalability
more than half of Indias population is less than 25 years old. English speaking IT ITES

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professionals growing at a good pace Weaknesses:a) Excessive dependence on USA for


revenues US Companies are cutting down IT budget hence revenues to be hit hard of
Indian IT firms b) Decreasing competitive advantage rising salary expenses is taking away
the cost advantage enjoyed by India
14. Cont. Opportunities:a) Greater scope for product innovation Increased focus on high
end work like consulting and KPO Domestic demand for IT services is to grow at 20% b)
Greater scope to service domains other than BFSI such as Transportation, Infrastructure,
etc. Threats:a) Global economic slowdown may continue for several years hence low IT
spending globally US Govt. against outsourcing b) Increased competition from foreign firms
like Accenture, IBM etc. c) Rupee-dollar movement affects revenue and hence margins
15. TATA CONSULTANCY SERVICES Tata Consultancy Services Ltd. (Founded in 1968,
went public in August, 2004) Mission: To help our customers achieve their business
objectives by providing innovative, best-in-class Consulting, IT solutions & services. We shall
make it a joy for all stakeholders to work with us Values: Integrity, Excellence, Respect for
the individual, Continuous learning and sharing, Leading change Leadership in IT
Outsourcing: TCS is the largest IT consulting company in Asia with 143,000 of the world's
best trained IT consultants Trusted Partner: TCS is part of one of Asia's largest
conglomerates - the TATA Group. The group, with annual revenue of more than USD 72.5
billion+
16. Cont. Headquarters:- TCS is headquartered out of Mumbai, India Location:- TCS is
operating in 47. TCS has 50+ delivery centers in India across 15 cities; 15+ development
centers outside India. TCS employees are spread across countries Turnover:- Tata
Consultancy Services Limited (TCS) is a leading and Indias largest provider of IT Services,
Business Solutions and Outsourcing with revenues of 62,989 crores(USD 11.57 billion),
showing a 6-fold increase in nine years, with a compounded annual growth rate (CAGR) of
26.27%
17. Overview of the financial results of TCS Limited (consolidated):
18. SWOT Analysis Tata Consultancy services (TCS) is one of the major IT service
providers. The company provides a wide range of services including business consulting,
information technology, business process outsourcing, infrastructure, and engineering. The
company has extensive global reach, which provides a diverse revenue base. However,
increasing competition threatens to erode its market share
19. TCS Resources & Capabilities TCS has over 2,76,196+ (March-13) World Class
Professionals. 32% of workforce is women. Non Indian nationals comprise 8.3% of TCS
workforce. TCS employees are from across 118 nationalities TCS has strong domain
expertise in banking, financial services & insurance, retail and consumer packaged goods,
telecom, media and entertainment, manufacturing and other verticals which include hi-tech,
life sciences & healthcare, energy resources & utilities and travel transportation & hospitality
20. Diversity Top 10 nationalities 15.40% 19.70% 3.30% 10.50% 10.00% 8.70% 18.90%
4.90% 4.40% 4.20% others filipino britishers urugayan colombian chileans ecuadorians
chinese mexicans americans

21. 21. TCS Generic Business Strategy Low cost Global delivery 24X7 model. Focus on
customer relationship management, customer retention (for repeat business revenue which
is 95.6%). Timely delivery with the help of proven delivery & quality framework iQMS.
Differentiation in low end services in terms of cost, resources. Differentiation in high end
services such as consulting in term of niche offerings, expertise. Protection from currency
fluctuations with the help of currency hedging
22. 22. TCS Service Practice Revenue revenue Application Development & maintanance
business intelligence enterprise solutions assurance services engg. & industrial services
infrastructure services global consulting asset leverage solution business process
outsourcing
23. 23. BCG Matrix for TCS
24. 24. Market Development Strategy New/Emerging Markets: India, Middle-east and Australia
Current Product: ADM, BPO, KPO, consultancy services (in BFSI, manufacturing and
retail) and software products (financial products) Recommendation: Since these are fast
developing IT market, TCS needs a paradigm shift in focus from US and EU markets to these
markets
25. 25. Other global strategies Since last few years TCS is successfully leveraging labor cost in
Eastern Europe, South America and China Recent acquisitions in Ireland and Latin
America demonstrate its ambition to create delivery centers of respectable size outside of
India TCS was the first one to set up a delivery centre in China
26. 26. Corporate Strategies Diversification Strategy: 1. In February 2008, TCS restructured its
global operations to adopt an integrated, customer-centric approach 2. The companys
operations are now divided into five units: Industry Solutions (for vertical-specific services),
Major Markets (North America, Western Europe and the U.K), New Growth Markets (Latin
America, Eastern Europe, Middle East & Africa and India), Strategic Growth Business (TCS
Financial Solutions, SMB and Platformbased BPO) and Organizational Infrastructure
27. 27. Cont. Strategic Alliances: 1. TCS has strategic relationships with various global
technology vendors. These relationships are in various dimensions such as Customer,
Service Provider, Supplier, and Alliance Partner 2. TCS and these technology vendors
collaborate on joint research leveraging each others strengths to research and to the
development of best-of-breed offerings Some of the strategic alliances are listed below: a)
Intel b) SAP c) Hewlett-Packard d) EMC2
28. 28. Cont. Acquisition Strategy: 1. Nov 2008: TCS Acquisition of Citigroup Services 2. Feb
2006: Tata InfoTech (TIL) Limited was merged into TCS Limited 3. March 2006: TCS, through
its subsidiary, Diligenta, acquired a basis in part of UKs Pearl Group. 4. Oct. 31, 2006:
Similar to the financial stakes made above, TCS again expanded its banking products and
consolidated its European operations after acquiring a 75% equity stake in its Switzerlandbased partner, TKSTeknosoft. TKS was the marketing agent for TCS in Europe
29. 29. Cont. TCS Joint ventures: 1. TCS went for a joint venture (JV) in Feb 2007 with three
Chinese partners 2. The TCS joint venture will thus be one of the largest software companies
in China once it reaches its 5,000-employee target 3. 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 financial services sector
30. 30. Recommendation The first and foremost recommendation for TCS is to change its
vision statement. In our humble opinion it is short sighted. TCS needs to have a vision that
will show its leadership qualities and long term thinking. Expect to see the landscape
continue to consolidate. Clients will seek to cut costs and focus on fewer provider
relationships as the economy worsens. TCS should take this opportunity to improve your
market positioning. Ensure marketing articulates your value proposition to all stakeholders
concerned. In a recession, marketing can work as a differentiator. Service providers like
TCS need to create specific value propositions aimed directly at the relevant stakeholders
and in the new tech ecosystem, these relevant stakeholders must include business
executives, not just IT personnel
31. 31. Cont. Provide more high-end services in value chain (3rd Wave in IT) There is a
move required from ADM (Application Development and maintenance) to value added
services, BPO to Consulting and Package Implementation, etc. TCS should shift focus
from Low cost advantage to high quality services commanding a premium being the pioneer
in the industry TCS (rather all Indian IT players) should focus more on increasing their IP
(Intellectual Property) assets.
32. 32. References Tata Consultancy Services www.tcs.com (Investors section) Forrester
reports www.forrester.com Gartner reports www.gartner.com IT-ITeS Market &
Opportunities IBEF (India Brand Equity Foundation) report Tata Consultancy Services
A Company Profile www.datamonitor.com Newspaper Mint www.livemint.com