TCS STRATEGY

Corporate Overview

TCS is an IT services, consulting and business solutions organization partnering many of the

world’s largest businesses in their transformational journeys for the last 50 years. It has a global

presence, deep domain expertise in multiple industry verticals and a complete portfolio of

offerings – grouped under consulting and service integration, digital transformation services,

cloud services, cognitive business operations, and products and platforms – targeting every C-

suite stakeholder.

The Company leverages all these and its deep contextual knowledge of its customers’ businesses

to craft unique, high quality, high impact solutions designed to deliver differentiated business

outcomes. These solutions are delivered using its Secure Borderless Workspaces™ (SBWS™)

operating model which enables a highly distributed, Location Independent Agile™ delivery.

TCS geographic footprint covers North America, Latin America, the United Kingdom,

Continental Europe, Asia-Pacific, India, and Middle-East and Africa.

TCS considers industry verticals as its go-to-market business segments. The five key vertical

clusters are: Banking, Financial Services and Insurance (BFSI), Retail and Consumer Business,

Communications, Media and Technology (CMT), Manufacturing and Others. The last category

includes Life Sciences and Healthcare, Energy, Resources and Utilities, Public Services and

others.

Integrated Business Model for Value Creation

  

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Value Creation Model

Talent and creativity, that is represented by human capital, is at the core of TCS’ value creation

engine.
TCS continually enhances its human capital by acquiring the best talent available in each of the

markets it operates in, providing a supportive and vibrant workplace to engage that talent,

investing in upskilling individuals with the latest technology skills, and giving them career paths

matching their aspirations.

A firm belief in organic talent development, and of investing in people, has helped TCS

successfully navigate through multiple technology cycles over the last five decades, pivoting and

adapting each time to build relevant new capabilities through reskilling of the workforce at scale

and helping customers realize the benefits of emerging technologies.

The company’s industry-aligned, customer-centric organization structure has resulted in each

business unit acquiring tremendous domain depth, and the account teams within those units

building up immense customer-specific contextual knowledge. This domain expertise, contextual

knowledge, project management experience and technology expertise gained on the job

represents a conversion of human capital into intellectual capital.

TCS applies some of its intellectual capital towards investments in research and innovation

(R&I), exploring the creative use of newer technologies to solve business problems across

different industry verticals. In addition to its own intellectual capital, TCS also partners with

leading technology providers, start-ups and academic researchers to leverage their intellectual

capital and build solutions.

Some of the innovative software solutions piloted by R&I, that are assessed to have a material

market potential are productized, adding to TCS’ large portfolio of products and platforms.

These expand the organization’s intellectual capital; create new revenue streams, adding to

the financial capital; and enhance its brand positioning i.e. relationship capital.

Customer Engagement
TCS uses its intellectual capital and human capital to build impactful, customized technology

and business solutions that address the customer’s business problems. Further, its ability to stitch

together complex, holistic solutions that address the needs of all stakeholders in the enterprise,

along with the high levels of trust engendered in customer relationships, helps it win large

transformation deals. These deals bring in high quality revenues, powering industry-leading

organic growth and margins, boosting the company’s financial capital.

These solutions create immense value for our customers by helping them embrace new business

models, pursue new revenue streams, deliver superior customer experiences or build resilience

and efficiency into their operations, and gain competitive differentiation.

The company’s strong service orientation, willingness to invest in the relationship, commitment

to deliver impactful outcomes and track record of execution excellence have resulted in

consistently high customer satisfaction levels and long, enduring customer relationships. The

resultant expansion in relationship capital translates into a very high level of repeat business that

lends greater visibility and predictability to the business model.

TCS constantly invests in building newer capabilities and expanding its offerings. By cross-

selling and up-selling these new offerings, customer engagements continually expand over the

years, covering newer and newer areas of the enterprise’s operations. This further broadens and

deepens the contextual knowledge of customers’ business and IT landscapes, further enhancing

TCS’ intellectual capital.

Over time, this combination of business knowledge, contextual knowledge, technology depth,

and intellectual property has become a steadily deepening moat around the company’s business

model and sharpened its differentiated positioning.

Value Sharing
Best in class profitability, reduced cost of capital due to a more predictable and resilient

business, and high cash conversion on account of superior execution have resulted in a high

return on equity. All this and a shareholder-friendly capital allocation policy have boosted the

company’s relationship capital with shareholders.

The investments in people, research and innovation, and intellectual property creation are all

charged off and not capitalized. The company’s capital expenditure to support its growth

– manufacturing capital – towards building campuses, Agile workspaces, innovation centers,

and Pace Ports is modest relative to its size.

TCS’ physical operations consume social capital in the form of license to operate in each of the

communities, and natural capital in terms of its environmental footprint. TCS enhances

its social capital with local communities across the world by investing in areas such as

education, skill development, employability, health and wellness, and the environment, mapped

to UN Development Goals. On the environmental front, TCS has a systematic program to reduce

its carbon and resource consumption footprint – including the use of green IT, green buildings,

intelligent energy management using its own IoT-based solution and water and waste recycling.

TCS’ business model and strategy have resulted in deep and enduring customer relationships, a

vibrant and engaged workforce, a steady expansion of its addressable market, a strong reputation

as a responsible corporate citizen and a proven track record in delivering longer term stakeholder

value. All of this has significantly enhanced the company’s brand value, which is a quantifiable

measure of its social and relationship capital with stakeholders.

Strategy for Sustainable Growth

Customer-centricity is at the heart of TCS’ strategy, organization structure and investment

decisions. TCS’ customer-centric worldview helps spot trends early, embrace business
opportunities by making the right investments and mitigating risks while discharging its social

and environmental responsibilities.

TCS invests in broadening and deepening customer relationships by continually looking for new

areas in their value chain where it can add value, proactively investing in building newer

capabilities, reskilling its workforce and launching newer services, solutions, products and

platforms. In addition to the IT budgets, TCS is now benefiting from the departmental budgets of

other stakeholders within the customers’ organizations – business heads, CMOs, CROs, COOs,

CFOs and even CEOs. This has not only embedded TCS deeper into their businesses but has also

resulted in higher quality revenues, stronger revenue growth and enhanced share of wallet, as

evidenced by the client metrics reported every quarter and every year.

The products and platforms, coupled with business model innovations, represent new, high

quality revenue streams that are growing very fast. At an aggregate level, this strategy has

resulted in deep and enduring customer relationships, and a steady expansion of the addressable

market.
  

WIPRO AND ITS STRATEGY

The services industry – technology services and business process services – is going through unprecedented
disruption. Customer needs have changed significantly – hyper personalization of products, rapid product
innovation, digitization of core platforms, compliance with rapidly evolving regulatory standards, and open
ecosystems are some of the key trends in the marketplace. Service providers have added and strengthened
capabilities – from consulting to design to Intellectual Property (IP) – to offer end-to-end solutions to clients.
Customer needs of greater efficiency and speed have compelled service providers to add IP assets as part of
their overall solution offerings. For Run services, the focus is on simplification and process automation to
drive efficiency while forChange services, IP assets are helping support rapid turnaround times for product
testing and launches. Solutions which leverage IP assets have also helped service providers respond to the
pricing and margin pressures from customers.
As the line continues to blur between traditional product and service providers, the expectations of-linear
growth are increasingly being applied to the service industry as well. Though the decoupling of revenue
growth from a commensurate growth in number of resources has been discussed for several years, the Indian
IT industry has shown signs of this non-linearity only very recently.
According to NASSCOM, the industry hired 9,470 employees against $1 billion revenue earned in IT& BPM
in FY17-18, which is the lowest in 5 years1. Increased focus on IP assets – in AI, Automation -are expected to
make this non-linearity even more evident in the coming years.
Strategic approach to IPs
As service providers add IP assets, the challenges in transitioning the business model are significant. In
addition to core capabilities of product management, product development and product sales, issues such as
culture and organizational structure also need to be addressed. The Indian IT Industry has taken varied
approaches as they transform their business models. Some companies have created separate units to handle
products and platforms while some have in-house teams that manages them.
Irrespective of the strategic approach, IP creation and IP-led innovation is unanimously a key focus area for all
the providers. Identification and creation of IP assets is complex – especially in environments that are
traditionally service-oriented.
In the ensuing section, we elaborate on 5 different approaches to IP Creation that have been tried within the
Banking, Financial Services andInsurance (BFSI) industry by Wipro.
Business Models for IP creation -A BFSI perspective
Co-create with customers and monetize as IP
The Financial Services industry is full of regulatory compliances that every trading and investment company
needs to adhere to. In order to do that, Asset Management Companies (AMCs)generally use Investment
Compliance Systems, which ensure the monitoring of business activities in line with trading regulations and
laws enforced by global regulatory bodies. AMCs need agile Investment Compliance Systems to improve
responsiveness to complex regulatory rules, faster Time-to-Market (TTM), lower compliance costs, and
reduction or elimination of the need for audits.
Another trend that is increasing in the market is the desire of financial services companies to monetize their
investments in software solutions that they have previously created. Seeking to leverage this trend, Wipro
partnered with a largeUS-based Investment Management firm to“productize” an existing software solution.
The IP asset that was created was called WinTrac and went live in April 2017. WinTrac is a Pre- and Post-
Trade Compliance Solution that is built on a metadata-based toolkit framework that permits modularity and
customization. It has an extensible reporting framework and a flexible architecture that enables future proofing
and faster TTM for adherence to regulatory changes.WinTrac also lowers cost of compliance, scales to
complex asset types and orchestrates a more effective pre-trade and post-trade compliance for AMCs.
The advantages of taking this approach to IPCreation were an enterprise solution that could address the
complex needs of a large Investment management firm, and a referenceable implementation that could be
leveraged to penetrate other customers.
However, product managers need to be wary of real challenges that will prop up while taking this approach. In
addressing the requirements of the anchor client, extensibility of the solution must not be compromised. A
wide spectrum of possible customer segment needs to be kept in mind to create a ‘core product’. The inevitable
tradeoffs of core product vs client implementation need to be carefully navigated. At the same time, while
product development will be the primary focus inthe initial stages, product management aspects of analyst
buy-in, technology partnerships also need to be actively cultivated for a successful go to market strategy.
Co-create with external partners along the value chain
This is a tri-partite approach to IP creation. A US-based insurance provider was facing challenges in terms of
overall business growth. They hired a management consulting firm to analyze their business and suggest a
strategy to turn the company around. The firm suggested the insurance provider target the Small & Medium
Businesses (SMB) segment for growth. A sign of how different players in the services value chain are
changing, the consulting firm also wanted to participate in the upside of this new business model. Since the
consulting company lacked product development capacity, it engaged Wipro as a downstream partner to help
the end client launch this business model. An arrangement was worked out where Wipro would be responsible
for
product development, the consulting partner would take ownership of the GTM – product marketing and
positioning.
The challenge here was unique. As the number of customers that the insurance provider could target shifted
from tens to thousands, a digital solution to target and onboard customers was critical for success. The Digital
Small Commercial Insurance (DSCI) product was conceptualized. DSCI is a digital solution accessible to
agents and end customers to assess the risk profile of the SMB segment of customers. It uses a limited set of
questions, and data from various sources to create the risk profile. The value proposition of DSCI focused on
cycle time reduction in policy underwriting from 2 days to 15 minutes per policy, thereby leading to growth in
new business.
The perceived advantages of this approach were bringing together various aspects of the value chain – industry
player, business innovation partner, and technology development provider – to create the solution. Each player
was supposed to leverage its own competencies for the creation of the new business. However, the
interdependencies, expectations and hand offs between the various players in the solution development process
need to be tightly managed. A specific example is the articulation of business requirements for the product
development team. This is a critical step in the product development process, and alignment on level of
specificity is key to success. Another aspect is the sustained funding needed till the product can become
operating cash flow positive. Costs such as product marketing and technology debt costs are important to
understand to secure funding till the overall business becomes viable.
Co-create with internal units
A multi-million opportunity across an identified set of customers led Wipro to develop an organic IP in the E-
KYC space. Wipro identified an American multinational investment bank to work with as an anchor customer.
Wipro’s E-KYC story was a classic case of cross-functional collaboration between the BFSI business unit,
Wipro’s homegrown AI and Automation platform HOLMES, and the Digital Operations & Platforms (DOP)
service line. BFSI brought in the domain expertise while HOLMES brought in the all-important cognitive
aspect to the E-KYC Solution. DOP was responsible for the operationalization of the solution.
In this case as well, an approach integrating domain, engineering and operations expertise is a unique aspect
that full-service providers can bring to bear to creating IP. It enables outcome or BPaaS models to deliver
solutions to clients. At the same time, it creates a forum where the tradeoffs between the three competencies
can be proactively managed. However, since multiple internal units are involved in product development, an
overall alignment of objectives, actionable and accountability is very important to create a successful business.
Unless managed proactively, issues such as, the operations unit desiring to use the best available market
product to offer business services, the technology teams unwilling to acknowledge the potential
cannibalization impacts of a BPaaS model on an operations unit, could be the hindrances to the successful
creation of a product.
Co-create with start-up ecosystem
Rapid growth in online and mobile banking, as well as empowered customers embracing digital touchpoints, is
fueling the need for investments in digital transformation. To leverage the latest technologies and optimize cost
efficiencies, banks are looking at an end-to-end digital offering.
Wipro has conceptualized and created Omnikonnect – an omnichannel collaboration platform that addresses all
enterprise collaboration needs without compromising compliance and security. The core collaboration engine
of Omnikonnect comes from Moxtra, a startup that offers a rich heritage of collaboration experts. The platform
is scalable and built such that it can be used across geographies with adaptation to local requirements.
Wipro partnered with Moxtra to develop vertical use cases on top of the core platform. Necessary domain and
product management capabilities from Wipro complimented the technology expertise of Moxtra in this space.
Wipro’s IP asset was Industry Specific Collaboration Templates & Workflows and Reusable Connectors.
The advantages of this approach were speed to market and lower cost of entry. The availability of Moxtra’s
core platform meant that Wipro did not need to invest in the core technology, and Moxtra was able to leverage
Wipro’s sales-force and customer real estate to limit customer acquisition costs. The aspects that need to be
managed here are cultural and IP ownership aspects. Startups tend to act much faster than large companies, and
expectations of selling a single solution as opposed to selling a portfolio of solutions need to be rationalized by
both parties. At the same time, guidelines or principles of IP ownership between the two parties need to be
established upfront for a successful partnership.
Mergers & Acquisitions
Mergers & Acquisitions is another approach to add IP assets to the business. In 2008, Wipro acquired US-
based Gallagher Financial Solutions. The flagship product NetOxygen is a loan origination and processing
software, which is designed to handle all aspects of the lending process for all channels and loan types.
When an IP asset is acquired, a conscious decision must be taken on integrating the entity. While Gallagher
Financial Solutions is now called Wipro Gallagher Solutions, it still functions as an independent entity. This is
because the speed and rules of the product business are different.
It is also important to conduct a thorough due diligence of the product being acquired. There are many
examples of failed acquisitions in the M&A landscape where an incorrect judgment of capabilities leads to the
system integrator (SI) further investing a significant amount of resources in making the acquired product
sellable, to an extent that had the company invested as many monetary and non-monetary resources in-house,
they would have developed a better product organically.
In a nutshell
With customers’ needs changing faster than ever, service providers are adapting to the change, by continuously
innovating their business models and positioning IPs as a key differentiator in their solutions. Thus, providing
value to the customer and countering margin pressures.
As elaborated above, there are various approaches to enable IP assets. There is no one size fits all approach.
Each option offers a unique trade-off. However, the bottom line is - IP assets as a key capability is here to stay
and SIs will focus on them. In a fiercely competitive world, IPs will provide newer avenues to generate non-
linear revenues. They will also enable SIs to reinvigorate innovation within their organizations.
Wipro has created a central nodal IP unit that orchestrates governance, management, commercialization and
marketing of IPs, while the development happens in a decentralized way across different units of Wipro.
Wipro Ventures (a venture arm to invest in startups) and the Strategic Partners/Alliances teams are an
important part of the overall approach to identifying and developing IP assets.
Reference
1-https://www.moneycontrol.com/news/technology/indian-it-on-path-to-non-linear-growth-export-revenue-
rises-by-9-bn-3043 361.html