A REPORT ON TCSA REPORT ON TCSA REPORT ON TCSA REPORT ON TCS----SSSSTRATEGIES, TRATEGIES, TRATEGIES, TRATEGIES, CCCCORE ORE ORE ORE

PHILOSOPHY, VISION, MPHILOSOPHY, VISION, MPHILOSOPHY, VISION, MPHILOSOPHY, VISION, MISSION &ISSION &ISSION &ISSION & ITS ITS ITS ITS

BUSINESS DBUSINESS DBUSINESS DBUSINESS DEFINITIONEFINITIONEFINITIONEFINITION

Submitted to: Submitted by:

Prof. Mukand Mate Abhisekh Garg (08BS0000105)

Faculty: Business Strategies Asish Kumar Sahu (08BS0000643)

Birendra Kumar (08BS0000771)

Happy Lamba (08BS0001153)

Javed Pirani (08BS0001279)

Pranjal Kumar Das (08BS0002282)

Surya Shakti Mohanty (08BS0003500)

Tanmay Khuntia (08BS0003571)

2

TCS

Vision

Global Top 10 by 2010

Mission

To help customers achieve their business objectives, by

providing innovative, best-in-class consulting, IT

solutions and services. To make it a joy for all

stakeholders to work with us

Values

Leading change, Integrity, Respect for the individuals,

Excellence, Learning and Sharing

3

Contents

1. Table of Contents………………………………………………………………………………………………………3

2. List of Illustrations……………………………………………………………………………………………………..4

3. Part Wise Description…………………………………………………………………………………………………5

4. History of TCS…………………………………………………………………………………………………………….6

5. TCS-A Fact File……………………………………………………………………………………………………………7

6. Heritage & Values………………………………………………………………………………………………………8

7. TCS-The Ace Performer………………………………………………………………………………………………9

8. Products and Services……………………………………………………………………………………………….11

9. Business Analysis………………………………………………………………………………………………………12

10. Brand Equity, Competencies and Value Proposition………………………………………………….13

11. TCS-Michael’s Five Forces Model.……………………………………………………………………………..15

12. TQM Implementation at TCS……………………………………………………………………………………..17

13. TCS’s Global Network Delivery Model………………………………………………………………………..19

14. TCS’s Point of Focus……………………………………………………………………………………………………21

15. Growth Strategy…………………………………………………………………………………………………………23

16. TCS Co-Innovation Network……………………………………………………………………………………….25

17. Organization Development at TCS………………………………………………………………………………26

18. TCS- The Paradigm Shift……………………………………………………………………………………………..29

19. Refrences……………………………………………………………………………………………………………………30

4

List of Illustrations

1. Fig: TCS Global-Page 8

2. Table: Product and Services-Page 11

3. Fig: TCS- One Crucial step at a Time-Page 11

4. Table: Growth and Value Drivers-Page 12

5. Fig: Share Price Movement-Page 12

6. Fig: Revenue from industry verticals in FY 2007-08-Page 13

7. Fig-The IT services value chain-Page 14

8. Fig: Every Thing Checked-Page 16

9. Fig: TCS- A Combined Effort-Page 18

10. Fig: Green theme for Corporate Sustainability-Page 19

11. Diagram: TCS Global Delivery Model-Page 20

12. Fig: TCS the CTO Based Organization-Page 20

13. Fig: Product Development Issues-Page 24

14. Fig: TCS COIN(Co-Innovation Network)-Page 25

15. Fig: TCS-The Way Forward-Page 28

16. Fig:TCS-Together we Can-Page 29

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Part Wise Description

1. Abisekh Garg- History of TCS & TCS-A Fact File

2. Asish Kumar Sahu- Heritage & Values & TCS-The Ace Performer

3. Birendra Kumar- Products and Services & Business Analysis

4. Happy Lamba- Brand Equity, Competencies and Value Proposition & TCS-Five Forces Model

5. Javed Pirani- TQM Implementation at TCS & TCS’s Global Network Delivery Model

6. Pranjal Kumar Das- TCS’s Point of Focus & Growth Strategy

7. Surya Shakti Mohanty- Organization Development at TCS

8. Tanmay Khuntia- TCS Co-Innovation Network & TCS- The Paradigm Shift

6

History of TCS

Tata Consultancy Services was established in the year 1968. TCS is considered a pioneer in the Indian IT

industry. Despite unfavorable government regulations, like the License Raj, the company succeeded in

establishing the Indian IT Industry.It began as the "Tata Computer Centre", a division of the Tata Group,

whose main business was to provide computer services to other group companies. F C Kohli was its first

General Manager. The legendary JRD Tata was its first Chairman and was followed by luminaries such as

Nani Palkhivala.

One of TCS' first assignments was to provide punch card services to a sister concern, Tata Steel (then

TISCO). It later bagged the country's first software project, the Inter-Branch Reconciliation System (IBRS)

for the Central Bank of India. It also provided bureau services to Unit Trust of India, thus becoming one

of the first companies to offer BPO services.

In the early 1970s, Tata Consultancy Services started exporting its services. TCS's first international order

came from Burroughs, one of the first business computer manufacturers. TCS was assigned to write

code for the Burroughs machines for several US-based clients . This experience also helped TCS bag its

first onsite project - the Institutional Group & Information Company (IGIC), a data centre for ten banks,

which catered to two million customers in the US, assigned TCS the task of maintaining and upgrading its

computer systems.

In 1981, TCS set up India's first software research and development center, the Tata Research

Development and Design Center (TRDDC). The first client-dedicated offshore development center was

set up for Compaq (then Tandem) in 1985.

In 1989, TCS delivered an electronic depository and trading system called SECOM for SIS SegaInterSettle,

Switzerland. It was by far the most complex project undertaken by an Indian IT company. TCS followed

this up with System X for the Canadian Depository System and also automated the Johannesburg Stock

Exchange (JSE). TCS associated with a Swiss partner, TKS Teknosoft, which it later acquired.

In the early 1990s, the Indian IT outsourcing industry grew tremendously due to the Y2K bug and the

launch of a unified European currency, Euro. TCS pioneered the factory model for Y2K conversion and

developed software tools which automated the conversion process and enabled third-party developers

and clients to make use of it. In 1999, TCS saw outsourcing opportunity in E-Commerce and related

solutions and set up its E-Business division with ten people. By 2004, E-Business was contributing half a

billion dollars (US) to TCS.

On 9th August 2004, TCS became a publicly listed company, much later than its rivals, Infosys, Wipro and

Satyam.During 2004, TCS ventured into a new area for an Indian IT services company - Bioinformatics.

During the recent couple of years TCS has been on the growth of progress. Both nationally and

internationally TCS is recognised as the higly respected IT company and has surely put India on the

world’s IT map large and clear.

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Tata Consultancy Services Fact File

Type Public BSE: 532540

Founded 1968

Headquarters TCS House, Raveline Street, Fort, Mumbai

- 400 001 India

Key people

Ratan Tata, (Chairman of the Board, Tata

Group)

S Ramadorai, (CEO and Managing

Director)

Jobhi Mahalingam, (Executive Director

and CFO)

N Chandra, (Executive Director, COO, CEO

& MD Designate)

Phiroz Vandrewala,(Executive Director

and Head, Global Corporate Affairs)

Ajoy Mukherjee, (Vice President and

Head, Global Human Resources)

K Anantha Krishnan, (Vice President and

Chief Technology Officer)

Products

TCS Bancs, Digital Certification Products,

Healthcare Management Systems

Services

Information Technology Consulting, IT

Services, Outsourcing, BPO, Software

Products

Revenue ▲ US$ 6.015 billion (in FY 2008-09)

Net income ▲ US$ 1.123 billion (in FY 2008-09)

Employees 143,000 (As on 1 April, 2009)

Website http://www.tcs.com

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Heritage and Values

Established in 1968, Tata Consultancy Services has grown to its current position as the largest IT services

firm in Asia based on its record of outstanding service, collaborative partnerships, innovation, and

corporate responsibility.

TCS is proud of thier heritage as part of the Tata Group, founded by Jamsetji Tata in 1868 and one of

India’s most respected institutions today. Their mission reflects the Tata Group's longstanding

commitment to providing excellence:

To help customers achieve their business objectives by providing innovative, best-in-class consulting, IT

solutions and services, and to actively engage all stakeholders in a productive, collaborative, and

mutually beneficial relationship.

Their vision is to be one of the top 10 global companies by the year 2010.

Their values – integrity, leading change, excellence, respect for the individual, and fostering an

environment of learning and sharing.

TCS' ability to deliver high-quality services and solutions is unmatched. They are the world’s first

organization to achieve an enterprise-wide Maturity Level 5 on both CMMI® and P-CMM®, using the

most rigorous assessment methodology - SCAMPISM. Additionally, TCS’ Integrated Quality Management

System (iQMS™) integrates process, people and technology maturity through various established

frameworks and practices including IEEE, ISO 9001:2000, CMMI.

Fig: TCS Global

9

TCS-The Ace Performer

TCS continues to demonstrate therobustness of its business model with a strong annual performance for

the year 2008-09. During this period, the Company's consolidated revenues grew by 23 per cent to

Rs.27813 crore, thereby helping Tata Consultancy Services cross the $ six billion revenue milestone. TCS

consolidated operating profits grew by 26 per cent to Rs.7170 crore and its operating margins improved

by 109 basis points to 23.73 per cent. The net profit was Rs.5256 crore, a growth of 5 per cent over

2007-08, due to external factors like extreme currency volatility.

The Company's Board of Directors has recommended a final dividend of Rs 5 per share subject to

shareholder’s approval. This brings the total dividend payout in the financial year to Rs.14 per share. The

Board of Directors has also recommended an issue of bonus shares in the ratio of 1:1 – the second

bonus issue since your Company went public in 2004. This demonstrates the confidence in the ability to

perform and the soundness of the business model of the Company. At the end of the year 2008-09, TCS'

global footprint extended to over 42 countries through its 140 offices globally.

TCS remained focused on helping customers experience certainty while simultaneously adding new

customers and growing the business in new market segments and emerging verticals. The Company

closed 28 large deals and added 163 new customers globally in the past one year. There was an increase

in the number of customers across all revenue bands of $1 million, $5million, $ 10 million, $20million

and $ 50 million. TCS' biggest market North America crossed the $3 billion revenue milestone and grew

by 26 per cent in 2008-09 despite the recession in the region, while Europe grew by 38.5 per cent during

the year. The growing presence in multiple markets is important for the Company to ensure

diversification of its revenue base and sustain its growth momentum.

The immense talent, professionalism, dedication and support of over 143,000 TCSers continues to be

the Company's greatest asset. This includes 10,000 international associates from 67 nationalities. TCS

inducted 48,000 professionals including more than 22,000 campus graduates over the past year. More

than 1.6 million learning days have been invested in developing new competencies during 2008-09 and

around 23,000 TCSers gained additional technology certifications. The policies to recruit and retain

women professionals continue to bearfruit and the number of women in the Company has risen from

28% to 30% of the total employee count last year. TCS continued to drive new growth opportunities as

demonstrated by the strategic, $ 505 million acquisition of Citigroup's captive BPO in India.

This acquisition, which has since been renamed TCS e-Serve Limited, has enabled the Company to add a

vital new aspect to its banking and financial services business. The acquisition came with 12,500

talented professionals and a contract from Citigroup worth $2.5 billion over nine years. This move will

help expand the Company's leadership in the Banking Financial Services domain and has already made

TCS BPO among the top two BPO players in India in terms of the size of operations. TCS has also

increased its focus on a sustained efficiency program across the enterprise.

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TCS' growth has occurred within a challenging economic climate. The Company has demonstrated

leadership, remained disciplined in execution and faced a volatile market with a positive 'can do'

attitude. The recession which began as a client-specific US instance expanded to an industry-generic

malady and affected global businesses. While there has been some impact on the short-term growth

rates of the Indian IT industry in this financial year, TCS' value proposition to global business remains

strong. Looking towards the future, the Company will remain focused on agility, innovation and

operational excellence.

TCS has always adapted quickly to changing circumstances by its responsive and creative thinking. For

customers, TCS presents an enviable value proposition enabled by four decades of experience, domain

knowledge, technology excellence and offerings of full services play. TCS is well poised to gain

advantage from newer areas such as Healthcare, Energy, Utilities and Telecommunication including the

impact of new technologies such as Broadband, 3G, WIMAX, LTE and others.

TCS continues to invest for the future. Sustainability, Green IT and Cloud Computing are areas of

opportunity and your Company is leveraging these. The Cloud Computing based IT services model for

small and medium enterprises, currently being piloted in India, is an example of a business model

innovation that will set a new precedence in the IT industry. Such initiatives can be replicated, once they

are mature, into multiple global markets. TCS' platform-based BPO initiatives in areas like Human

Resources and Finance and Accounting will also contribute to future growth.

TCS has been continuously making investments to open up new markets and services. The investments

the Company has made in new growth markets like Asia-Pacific, Latin America and now in Middle East

and Africa are attaining scale, size and a meaningful presence. In 2008-09, the new growth markets grew

at a rate of 16%. The Company's vast pool of human capital is helping chart the Company's future

progress not only in terms of its business but also by its impact on the community. Over 50,000 hours of

volunteering effort was expended by TCSers, in the past year. One area where considerable progress

was made has been in the area of corporate sustainability. The increased environmental consciousness

across the organisation has resulted in reduction in air travel, 8% drop in electricity consumption, lower

paper and printer cartridge utilisation. This coupled with 'green' buildings and 'green' technologies has

helped reduce carbon footprint this year.

TCS continues to be an engine of growth because of its proven ability to reinvent the organisation and

the business. The Company is positioned to work in collaborative mode, learning constantly, critically

evaluating all that it does and demonstrate the leadership it is known for. Thanks to the employees and

their extended families, the many shareholders and the community at large, the future holds new

promise for TCS as a top technology company globally.

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PRODUCTS AND SERVICES

TCS

TECHNOLOGY SOLUTIONS

OTHER SOFTWARE PRODUCTS SERVICES

TCS Data Cleansing Framework TCS Clin-E2e

IT Services

TCS Business Rules Engine

TCS Hospital Management

Solution

IT Infrastructure Services

TCS Experience Based KM TCS Silicone Ambulatory ECG

Device and Solution

Enterprise Solutions

TCS Call Management Solution

TCS Enterprise Integration and

Control Environment Solution/

Energy and Utilities

Consulting

TCS PKI Suite (Public Key

Infrastructure)

TCS Bio-Informatics Solution

Business Process Outsourcing

TCS Certificate Validation Server Business Intelligence

TCS File Authentication Solution Engineering &Industrial Services

TCS eLearning Effectiveness

Measurement Solution

Small & Medium Enterprises

TCS Code Generator Framework

Source: company website

Fig: TCS- One Crucial step at a Time

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BUSINESS ANALYSIS: TCS MEETING GLOBAL CHALLENGES TROUGH TOUGH

INITIATIVES:

Growth Drivers Value Drivers

- Promotional campaign : “Experience

Certainty”

- Entering into joint ventures and

acquisitions

- Expanding in Multiple geographies with

infrastructure investment in Europe &

Latin America

- Acquiring new Clients : Twenty large (US$

50 million-plus) deals

- Cost cutting by Efficient systems

- Business Restructuring

- Software Package prices gone up by

approx. 6.1 %

- GNDM: One service standard to customers

globally.

- Technology & labor cost benefits : Keeping

India as key operations location

Fig: TCS-Share Price Movement

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To study company’s Brand Equity, its core competencies and value proposition

to the customers.

Industries being served by TCS:

The Industry verticals where the Company has a sizable presence are-

• Banking & Financial Services

• Insurance

• Manufacturing

• Telecommunications

• Life Sciences and Health Care

• Retail

• Transportation

• Utilities

• Entertainment and Media

Fig: Revenue from industry verticals in FY 2007-08

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Fig-The IT services value chain

Till now, the clients have been coming to India IT vendors saying “Go build this IT system for me” while

they go to a foreign IT consulting firm saying “Go solve this business problem for me”. This reflects the

space that Indian IT organizations occupy in the value chain. They are predominantly seen in the

application maintenance (and to a lesser extent in application development) and infrastructure

management space. Clients typically engage them in low risk - low cost projects while foreign IT firms

tend to get mission critical projects (high value and high cost) where they understand business

problems, decide the IT strategy for their clients along with building applications and managing them

High

Value Sapient

IBM

Consulting

Deloitte

Accenture

Low HCL Satyam

TCS

Infosys

Wipro

EDS

Low High Cost

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Michael Porter’s Five Forces

In the case of both software outsourcing and BPO, for TCS there are few important suppliers, because

TCS’ inputs are standard commodities and there is little opportunity for differentiation on the input side.

The four forces that are most problematic are the bargaining power of customers, the threat of new

entrants, the threat of substitutes, and the competitive rivalry with existing players. We examine each of

these four forces in their turn for both software services outsourcing and BPO.

In the early days of the software exporting business, the software vendor market was dominated by a

few large global suppliers such as IBM. Indian firms were viewed as too small to matter for obtaining

significant business. In addition, they competed actively with each other at the low-end. The result was

that TCS and its Indian peers chose components of the business that were relatively low value-added

and relatively simple to do.

TCS also faced a client market that was dominated by the large banks and insurance companies. While it

actively sought alliances with larger vendors as a competitive strategy, its most successful strategy was

to directly approach clients and accept the lower rates that its competitive position necessitated.

Looking ahead, TCS must continue to work to reduce the bargaining power of customers by trying to

move the purchase decision away from price. This means that TCS must deliver more than

undifferentiated programming by moving up the value chain. Such a movement is difficult in software

services because the customers have deep domain expertise and almost invariably wish to retain the

tasks grouped under strategic consulting. Moreover, customers understand that if they outsource the

strategic consulting, then their bargaining power will be reduced. TCS must develop sufficient expertise

so as to make outsourcing these tasks a compelling value proposition. Of course, it is exactly in these

realms that the multinational outsourcing firms such as IBM, Accenture, and EDS are the most ferocious

competitors.

Forging alliances is often viewed as a good strategy to offset clients’ bargaining power. However,

building alliances with firms working in clients’ locations should be discounted as this would further

focus TCS in applications’ development. On the other hand, the acquisition of a medium-sized American

firm with strong client relationships and domain skills could provide an attractive opportunity. Although

costs per employee would rise, the rise would be small since labor requirements are lower for higher

value-added work.

Meanwhile, the threat of new entrants is declining rapidly as the larger firms have rapidly increased

their size, market share, and credibility with customers. However, although firms strive to reduce their

direct competition through product differentiation, in each market segment there continue to be

numerous players.

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A key concern for TCS is competition from existing players as it has generated competition for existing

business and created significant pricing pressures. Globally, firms such as EDS have positioned

themselves as capable of undertaking large, “turnkey” projects in order to differentiate themselves from

competitors such as IBM and Accenture that focus on higher value-added work such as consulting. This

suggests an organically-driven growth strategy for TCS: that TCS continue to do the same kinds of work

that it currently does, but try to capture a greater portion of the value-addition by undertaking larger

projects. Though it has already demonstrated a capability in remote project management, it would be

required to further increase this capability.

However, there are some risks to this strategy. TCS’ large size suggests that it may have already

maximized economies to scale in applications development. Adding scope, however, offers the potential

for large gains since it necessarily involves higher value-added activities. In the early days, this was

difficult, partly due to the technical difficulty in de-integrating the value-chain beyond the

modularization of applications programming. Over the past few years, however, engineering services,

systems design, and systems integration work have increasingly been outsourced (within the U.S.),

suggesting that, if the skills are at hand, such work could be done in India.

Most of the American providers of such services offer domain and software skills. TCS already has the

software skills to move into these areas. But domain skills are a challenge. This reflects a general lack of

domain expertise outside the financial services sector in India. Put differently, India does not have

global-class, nontechnical knowledge in various other industries. As a result it is difficult to offer the full

panoply of services a firm would want when it considers outsourcing a software development activity.

This may be being rectified as the liberalization of the Indian economy since 1991 has led to the

development of a host of new industry capabilities, such as in insurance. This promises an expansion of

domain-specific skills in fields outside the traditional industries – but these will develop only gradually.

These facts indicate that it will be difficult for TCS as an organization based and staffed primarily in India

to change its revenue mix through organic growth. Acquiring Indian firms doing higher value-added

business is a possibility, but there are few such firms in the Indian business environment. Essentially, the

constraint that TCS faces is environmental rather than firm specific. In most sectors, Indian business

conditions are sufficiently dissimilar to overseas client conditions that local domain expertise is of low

relevance.

The threat of substitutes in software services does exist as technology tools to speed coding etc.

However, at this time the threat of substitutes seems rather remote.

Fig: Every Thing Checked

17

Total quality management (TQM) process adopted by TCS, its implementation

and implications during implementation across China.

TQM: TCS takes responsibility for the products and services it delivers. Their Quality Management

processes ensure that the service they deliver has minimal defects. TCS also provides warranty periods

in its contracts with its customers for after-delivery service in the case of a defect.

TCS’s commitment to quality and schedules ensures that the client's needs are met consistently. It

adopts a systematic approach to problems and encourages experimentation, innovation and creativity in

finding feasible solutions. Being a process-oriented organization, TCS believes that the definition of a

good process and subsequent adherence to that process is a critical part in ensuring a successful project.

Quality Management System: TCS’s Quality Management System (QMS) is based on the ISO 9001:1994,

IEEE standards, ISO 9001-3 and CMM Guidelines. Well-defined architected processes are adopted for

development, implementation, maintenance and conversion projects. These processes are defined in

the Process Handbook documents which form a part of the TCS QMS. TCS also conducts different

reviews at different stages of the project life cycle to ensure high quality.

Reviews: There are three levels of review that are performed- Internal Quality reviews, performed by

members of the project team, External Quality reviews that are carried out by analysts external to the

project team and a Final Inspection to make sure all open defects and suggestions have been closed.

The objectives of the review will be to ensure that-

• The project requirements are met

• No errors have been introduced

• Standards are adhered to

• Testing has been adequate

Testing: Different type of testing is done to make sure that the system works at its most minute level, as

well as a whole.

• Unit Testing: Testing each module/block as a single unit

• Integration Testing: Testing the different interfaces of the system to make sure it works as a

whole.

• System Testing: Testing the system for system level functionality, security, external interface,

usability and integration of the different modules under it.

• Acceptance Testing: Based on pre-defined acceptance criteria, the client conducts the

acceptance test during this phase. The TCS team provides support during this phase.

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The following awards/certifications have been received by TCS in the areas of Quality Management-

• JRD-QV Appreciation received the second consecutive year in a row (Based on the Malcolm

Baldrige National Quality Award—America’s highest honour for performance excellence- which

was established to promote quality awareness, to recognize quality and business achievements

of U.S. organizations, and to publicize these organizations’ successful performance strategies).

• ISO 9001 Certification: TCS had been certified enterprise-wide; with the certificate being

applicable till 2008. The audit was carried out by RWTUV Germany.

• CMMI Level 5 Certification: TCS had been certified enterprise-wide; with the certificate being

applicable till 2007 end. The audit was carried out by Ron Radice from SEI and Bill Hefley (co-

author of P-CMM) as lead assessors.

Fig: TCS- A Combined Effort

19

Global Network Delivery Model

The Global Network Delivery Model (GNDM) is a truly global network. GNDM is much more than having

an Indiacentric delivery model with near-shore centres and is not about setting up Offshore

Development Centres (ODC) in different geographies. The GNDM enables TCS’s delivery centres to

collaborate on projects, leverage all assets, work on a ‘follow-the-sun model’ if necessary, and above all,

through their homogeneity in terms of quality, skills as well as look-and-feel, give customers the same

experience of certainty, irrespective of whether they work with TCS in Chennai, China or Chile. The

Company became the first organization in the world to be certified enterprise-wide for ISO 9001- 2000,

ISO27001:2005 and ISO 20000:2005 in January 2007. Their customers can continue to experience the

certainty of "high quality of service delivery", as they stay focused on continuous improvement of

security, quality and processes in an industry where technology changes occur frequently.

The essential functions of GDM include:

Onsite - these are operations performed at the site of the client.

Offshore - these include operations performed away from the client’s site, generally from low-cost

countries.

Multi-location delivery centers - it is important to have a multi-location offshore presence in order to

mitigate risks associated with a single location delivery center and to ensure continuity of the business

process.

Front end - these include marketing and sales functions carried out in the client’s country in order to

obtain repeat business orders and to seek new clients. For a GDM to be successful it is important to

establish the right structure and thus have the right mix of onsite, front-end and offshore components.

GDM focusses on Green theme to strenghten Corporate Sustainability efforts.

Fig: Green theme for Corporate Sustainability

20

Delivery centers and their role in TCS’s GDM are depicted below: -

Fig: TCS the CTO Based Org.

Global Delivery

Model

Offshore

(India)

Multilocation Delivery

Centres in emerging countries

(China, Latin America)

Onsite

Risk mitigation, Access to local

markets with advantage of

lower development cost Lower

Development

Costs

Access to a large

pool of skilled

employees Domain

knowledge

Proximity to

clients

Access to

new

geographies

21

TCS’s Point of Focus

From the formative decades of the 1970s and 1980s when the global IT Services industry was disrupted

by the notion that work could be done remotely from places like India, TCS’ innovation has been defined

by its investment in building tools and solutions that accelerates software development for customers

and enables its professionals to deliver high quality of services from off-shore locations.

During the Company’s growth phase in the 1990’s and the early part of this decade, innovation agenda

at TCS focused on enabling the organisation to cope with bigger scale and global expansion as it grew

rapidly in size and reach. Over the last five years, innovation in the Company has been closely linked

with building thought leadership in the global market place through creation of new solutions and

technologies as well as building an innovation ecosystem around the TCS Innovation Labs through

partnerships with universities, start-up companies and other technology companies.

Within the organisation, the Research and Development organisation aligns itself closely to support

TCS’business objectives. There is also an innovations go-to-market team that supports the sales teams

to win new business. The Industry Solution Unit interface works on creating solutions based on R&D

from the Innovation Labs and Co- Innovation (COIN) partners. Co-Innovation comes alive for the

customers in ’Co-Innovation Days’held for each strategic customer.

There is a separate incubation group – an in-house venture capital firm, focusing on big bets of the

future from ‘Inception to Implementation’. This initiative has made good progress with solutions and

services in the areas of advertising ecosystems, mobile value-added services and digital devices. The

Corporate Tools group promotes the use of tools and enables the business units to deliver continuously

improving productivity and quality of services to the customers.

Internally, several initiatives are held on an ongoing basis to foster TCS’ culture of innovation. The TCS

Top10 coding challenge, which was open to associates across organisational units in the enterprise,

created a buzz among programmers in every region and geography. Web 2.0 platforms such as JustAsk

and IdeaMax were deployed to capture tacit knowledge as well as innovative ideas within the enterprise

and were eagerly adopted.

This year has been a watershed year with respect to Intellectual Property (IP) creation in TCS. TCS has

redefined their IP strategy with a view to building a stronger portfolio for future monetisation,

collaboration and risk mitigation. TCS has been granted 42 patents so far in multiple country

jurisdictions, and another 190+ are in various phases of approval.

TCS’ innovation has been widely recognised on the global stage. TCS Mobile Agro Advisory Solution

“mkrishi” won the Wall Street Journal Innovation Technology Award for 2008 in the wireless category

andthe Golden Peacock Innovation Award. US-based publication Infoworld ranked TCS’ Global Certainty

IdeaStorm in its list of Top 100 Innovative IT Projects. Many of the Company’s researchers and Scientists

22

have won individual laurels and awards.

The Company’s R&D organisation has grown and has more than doubled the number of PhDs. TCS’ R&D

has attracted top talent from notable universities across the world and its research internship program

brings interns from many world class universities to the labs.

Corporate Sustainability has always been at the core of TCS’ corporate DNA. With strong focus on

education, health and environment, Corporate Sustainability in TCS is driven by the Tata Group’s vision

of giving back to the society. The primary driver of this effort has been through volunteering by TCSers.

With Maitree, the employee engagement platform as an effective facilitator, TCSers spent over 50,000

person-hours during 2008-09 on community initiatives such as education, healthcare support, training

differently-abled people. A long-term focus has been to effectively use TCS’core competence in IT to

drive literacy through the Computer Based Functional Literacy (CBFL) Program. Conceptualised in 2000,

the CBFL Program has grown to cover nine languages today. Over 120,000 people have been trained

with the help of CBFL till FY09. The decrease in overall instruction hours has led to significant decline in

dropout rates, especially among women. CBFL has been instrumental in enhancing literacy across AP,

TN, MP, Maharashtra, UP, Delhi and Rajasthan while Orissa, Karnataka and Uttarakhand will implement

it shortly.

TCS’ IT Wiz, India’s biggest technology quiz for schools completed a decade in 2008. It is a benchmark in

the inter-school quiz circuit for the intensity of competition and the numbers that it draws. Covering 12

cities, the TCS IT Wiz has emerged as a key vehicle to create awareness about IT among school children.

In 2008-09, around 15,000 children participated. Corporate Sustainability (CS) in TCS has matured to the

level where it encompasses a gamut of activities to sustain social transformation globally. TCSers

worldwide are CS champions and actively involved in local and global causes in North America, China,

Australia and Europe.

Business Oriented themes

Promote Business Agility

Optimise Enterprise Knowledge

Conserve the Environment

Enhance Health Care

Manage Enterprise Risk and Compliance

IT Oriented themes

Improve Operational Efficiency

Application Development and Management

Engineering and Industrial Services

Simplify and Transform

Foster Information Ubiquity

Enable Understanding of Customers and Markets

Enrich User Experience

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The Growth Strategy

In the late 1990s, to accelerate its revenue growth, TCS decided to employ a three-pronged strategy.

This involved developing new products with high revenue earning potential, tapping domestic & other

fast growing markets and focusing on inorganic growth through mergers & acquisitions.

Results surprise positively: Tata Consultancy Services (TCS) declared surprisingly strong results in

Q1FY10. Revenue grew by 0.5% QoQ (v/s an expected decline of 1.8%) and PAT grew by 15.7% QoQ (v/s

an expected decline of 4.0%). EBITDA margins have expanded by 100 bps QoQ, despite this being the

first quarter of the year. The expansion in margins was achieved due to 3.9% QoQ reduction in SG&A

costs and just 0.2% increase in CoGS (essentially due to no salary hikes, decline in manpower, more

offshore execution and low visa costs). Excellent volume growth; contained pricing decline: After a

quarter of decline in volumes, TCS witnessed a strong come back in volumes. Overall volumes grew by

an impressive 3.54% QoQ (v/s an expected decline of 2.0%). This growth was achieved on the back of

270bps shift towards offshore execution. The company also managed to contain its pricing decline to

just 25bps QoQ (v/s an expected decline of 100 bps). With most price renegotiations, complete pricing is

likely to remain stable, going forward.

Sustainable growth indicators still negative: Despite stellar numbers this quarter, the outlook for the

company and the sector is far from sunny. Most of the metrics that point to a sustainable turnaround

(employee addition, higher onsite, higher T&M, etc.) are still not positive. We expect the performance

over the next few quarters to remain volatile between growth and declines.

Management commentary cautiously optimistic: Management commentary on the earnings call remains

somewhat more optimistic compared to Q4FY09. However, they are still cautious about future growth

outlook. All positive statements on good current performance are peppered with comments about

macro level uncertainty.

One of the keys to high performing teams lies not just in the communication of shared goals, but in

getting the climate right. Research by McClelland has shown the strong link between the climate in

which people work and their level of performance. Another notable result of this research is that an

estimated 70% of climate is created by management style. So, if you want to look at eam performance

you have to look at climate, and if you want to look at climate you have to look at the manager's style.

When we look at the challenges facing most business leaders today they talk about the need to:

•Deal with increasingly uncertain environments

•Create year on year results against increasing competition

•Constantly strive to do more with less

•Get teams to take responsibility and step up to the mark

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In conjunction with a team performance intervention, TCS enabled the Director of a Financial Services

company to turn a two and a half year backlog around within three months. It focussed critically on the

need to square up to performance issues, galvanised the team and its leaders into action, forged and

put the spotlight on a common goal and instilled new standards on a previously inefficient group. In a

global media company tasked with integrating five teams into one, TCS provided a start point for their

improvement process and gave clarity on key issues facing the merged team, specifically:

• Enhancing leadership style

• Refining goal clarity and

• focus Improving communication

Working groups focussed on each of these areas and developedaction plans. Finally a bonus system was

developed for managerslinked to the positive progress of the climate, making them fully responsible for

the climate they created. Within a complex pension’s environment, a major IT project team needed to

develop a new platform for their products. The team faced significant challenges including

• A massive increase in scope (moving the IT platform from onecompany to a group-wide

application)

• New political influences and changes through being acquired

• A significant increase in team size

TCS gave the project team a voice; the ability to say what was going right, and what was going wrong. It

gave the management team immediate information around what they needed to do to keep the project

moving and to cope with the increase in complexity and personnel changes within the team.

Having the information that TCS provided enabled the managers to do something about issues as they

arose and to take appropriate action. It allowed the Director to address managerialissues and to make

his team accountable. It also enabled benchmarking of improvements in performance over time and the

comparisons between teams. This in turn increased managers' accountability to get the climate and

performance right. TCS enabled the management team to successfully deliver the project and establish

the new IT system as the group's platform. Fig: Product Development Issues

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TCS Co-Innovation Network (COIN)

Globalization has lead to higher competitions, in which competitors quickly imitate sources of

competitive advantage. Hence, it becomes necessary for companies to successfully innovate on a

sustained basis. Advanced Information and Communication Technologies (ICT) have made it feasible for

companies to collaborate and do Globally Distributed Network (GDN). The continued progress along the

GDW journey combined with the need for tapping capabilities from other companies and the challenges

of innovation delivery helped Tata Consultancy Services (TCS) move to the next level i.e. ‘IT Services

Partner’ to‘Innovation Partner’.

Disruptive innovations are not a result of a single technology invented by a few people but a

combination of various innovations along the entire spectrum (idea generation to consumption) thus

making it necessary to collaborate. The framework of ‘Innovation Network’ is perhaps the only

sustainable way to deliver innovation in today’s environment. Innovation networks as a concept is not

completely new. Typically it has been the technology delivery entity, e.g. Microsoft, IBM driven

innovation networks, or the research entity, e.g. Gartner, Google driven innovation networks that has

been controlling the network and thus being the principle beneficiary. Client companies end up being

customers of the innovation initiatives coming out. In the case of TCS, it is one of the few instances of a

client driven innovation network where the research and delivery elements are participants.

Fig: TCS COIN

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With that 360-degree outlook in mind, TCS has convened a global, interconnected innovation ecosystem

— the Co-Innovation Network, or COIN — that links businesses large and small, well-established and

new, with a broad network of partners, suppliers, leading-edge vendors, outside consultants, academic

institutions, and venture capitalists. The prime purpose of COIN is to create for IT and the business it

supports the largest possible “funnel” of innovative and profitable ideas from numerous, collaborative

sources inside and outside an organization. The key to generating, sustaining, and profiting from

innovation is to participate in a multi-organization innovation network that creates a funnel of ideas full

and rich enough for some of them to survive the journey from thought to business-transforming action.

A true COIN framework needs to be developed to strengthen two key aspects — the ideation

perspective and the execution capability. One of the principle benefits of COIN is spreading the risk of

new undertakings across multiple partners to reduce each partner’s individual risk, while spreading the

search for new ideas across multiple partners to increase the flow of ideas into the funnel and the flow

of innovation back to the partners. Once the funnel is filled with ideas, management can take ideas from

concept to implementation.

Organization Development at TCS

In organizations worldwide today, there is a greater realization of the importance of Organizational

Developmental (OD) interventions in facilitating the rapid changes brought about in the current

competitive environment. Organizations today struggle to balance the tensions between Voice of

Customer, Voice of Technology, Voice of Strategy and Voice of Employee in the context of a globalized

and dynamic market, which makes competitive advantage and sustainability the key mantras of

corporate survival and success.

At Tata Consultancy Services Limited, (TCSL), too OD interventions have been instrumental in facilitating

change management and bringing about competitive advantage. OD has contributed to redefining the

organization’s relationship to its environment, its markets and key stakeholders.

In the years 1998-99, TCS had grown into the largest Indian software company with revenues of over Rs.

1600 crores and racing towards achieving its vision of being global top ten. As pioneers in the industry,

TCS’s strengths included on time delivery, premier position in the industry in terms of revenues, focus

on training programs, quality initiatives, use of good technical tools and procedures and encouragement

of individual excellence in performance. However, TCS was also, at that point in time, grappling with a

few areas of concern with regard to its operational paradigm.

Mounting revenue pressures: The pressure to retain its strong premier position led the organization to

tend towards short-term revenues, and relatively lesser efforts were being put into medium and long-

term markets and activities (such as products and building up knowledge). Though TCS built

relationships with individual customers, Relationship Managers largely tended to focus on obtaining

short-term projects – there was lesser investment on aligning to long-term objectives of customers. The

approach, by and large, was of reactive project management and we were yet to espouse the approach

27

of architecting proactive solutions for the customer.

Selectivity in projects: There was a tangible tension at TCS, between generating revenues and organizing

strategically, on basis of technology and business areas, impacting selectivity in projects accepted.

Pressures from customers on schedules was resulting in faster delivery and hence, snowballing into

further pressure on future schedules.

Focus on specialization: There was diffusion of expertise and we were yet to focus on building strategic

expertise in individual centers. Employees were rotated across domains and skills in the interest of learn

ability as well as for meeting requirements. In a sense, there was heightened focus on Voice of the

Customer, in comparison to the Voice of Employee.

Efforts on Experimentation & Innovation: The management at TCS felt that by and large, employees

tended to go straight by the book. Though Dr. De Bono’s techniques were introduced and employees

trained on these techniques to encourage innovation, there was a need to scale up on perceived

rewards for experimentation.

Rewards and Recognitions: The reward structure at TCS was, at this point in time, primarily focused on

individual performance and we were yet to explore the institutionalization of team based rewards at the

organizational level.

Inter group co-ordination & knowledge sharing: Sharing of knowledge was very centre-oriented, and

although, informally, best practices spread by interaction and word of mouth, we were yet to evolve a

formal system which would capture these for ease of replication across projects. Multiple centers and

multiple projects within the same centre ended up resolving the same sort of issues, resulting in

avoidable rework.

Branding and PR: Image building endeavors were not yet an area of focus and, in a subtle way, this

affected the sense of pride of employees. Among educational institutions, this meant greater difficulty

in terms of attracting quality talent, which further aggravated stress among the few key performers in

the organization.

Scenario Building Workshops: An internal organization workshop was conducted with top management

for scenario building. This program focused at a larger level, on the “The TCS that can be “. The idea was

to challenge the conventional ways of thinking and to give shape to the key drivers of change through

realistic listening and dialoguing. These workshops were followed by dissemination and communication

of the scenarios with teams in order to develop a new language in the organization, consistent with the

envisaged future scenario. As a fallout of this workshop, several representatives of senior management

worked on building scenarios as for e.g. on TCS tools and approach to high end consulting. These looked

at ‘what we were and what we wished to be, our competition, changes and challenges with regard to

our business models, technologies, products and support functions’. Further, the factors that would

facilitate the desired change and focuses that needed to be redefined were clearly laid down.

28

Goal Alignment & Balanced Scorecard: In the interest of better alignment, a need was felt to re-look at a

few organizational processes and systems, as for instance, the performance management and appraisal

system at TCS. A Teach-Train-Transfer workshop on Goal alignment was conducted, with help from

expert OD consultants to build the context, to think through goal setting at TCS with a systems

perspective to goal alignment & to explore means of institutionalizing goal-oriented performance

management within the organization.

PROPEL – The Intervention: Culture Building at TCS. PROPEL was introduced as a revolutionary

intervention with the dual objectives of facilitating the exchange of ideas and helping in immediate

problem solving, while also encouraging bonding and self-development among and within teams.

Value Cards at the Large Relationship Value card for the relationship was fallout of the analysis of

tensions existing in the four dimensions as represented by Voice of Customer, Strategy, Employee and

Technology. A tool called “Value Card” was used to analyze the problems faced by the relationship in

relation to these tensions and to arrive at workable solutions to the identified problems, within

designated timeframes. The Value Card helped to effectively capture and track this through the

following steps:

Improvements through Measurements/ Initiatives: Excellence at the large relationship (AEP)

The Account excellence program (AEP) at the large relationship was modeled on the lines of the

Malcolm Baldridge National Quality Award/Tata Business Excellence Model, which touches upon 7 key

categories viz leadership, Strategic Planning, Customer and market focus, Measurement, Analysis and

Knowledge Management, HR Focus, Process Management and Business Results. This was aimed to help

the relationship to evolve towards meeting changing business needs with agility.

Darpan - Reflect and Improve

With aggressive expansion and dispersion of ever-growing associate strength in the relationship,

communication or the lack of it, had emerged as one of the biggest bottlenecks in employee motivation

and managerial decision-making. In this context, an associate satisfaction survey at relationship level

christened Darpan was initiated, with the objective to “Reflect and Improve “at the relationship level

through a better understanding of the explicit and implicit expectations of associates.

Fig: TCS the Way Forward

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TCS -The Paradigm Shift

Post OD scenario:

Organizational Development interventions have been instrumental in terms of enhancing value to the

customer & employee at Tata Consultancy Services. PROPEL as an organization wide intervention,

encouraged sharing of ownership and empowerment to change, as also the sharing of success stories

and best practices across the organization. Valuing of employees was institutionalized through

establishing processes that enable and enhance individual performance, and lead to empowered project

teams. Issue based mentoring was facilitated, with camps and confluences as enabling frameworks.

While confluences invested in personal transformation for the employee, camps invested in improving

theworkspace.

Through Scenario building, a collective transformation of dreams and concerns into response

capabilities was envisaged. Continuous scanning of environment for opportunities and threats was

proactively looked at, to collectively map the business domain of TCS. Goal alignment through cascading

of Balanced Score Card concept could be achieved organizationwide.

There was continuous investment in learning, and an active sharing of knowledge with the aim to

convert learning into action. Further, the focus shifted to adding knowledge through delighting every

customer. The earlier tendency of self-sacrificing hard work was replaced by a shift of focus to

teamwork and valuing of the employee. The OD interventions at TCS，helped push self imposed

boundaries and limitations through challenging organizational boundaries and limitations constantly.

In a nutshell, the OD interventions at TCS have helped build a culture of fostering systems thinking &

creating forums for dialogue, while encouraging leadership at all levels. For the organization at large, OD

helped to reiterate the merits of valuing enquiry, expressing differences, and constantly generating new

knowledge.

Fig: Together We Can

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References

• www.tcs.com

• www.nasscom.in

• www.mit.gov.in

• www.economictimes.com

• Indo Asian News Service.

• InfoTech, IT News- TCS restructures global operations into five groups and 20 units, 13 February

2008.

• Customer Case Study, Tata Consultancy Services.

• Impact of recession in American economy on India, by Mr. Tanveer Malik and Ms. Shweta

Pandit.

• Press Release- Tata Consultancy Services sets up strategic unit to expand presence in emerging

markets.

• Article on rediff business desk in Mumbai- what’s recession? How will US slowdown hit India? -

February 14, 2008.

• Financial Post- contract with India: welcome to a world of outsourcing- by Karen Mazurkewich,

Friday, April 25, 2008.

• Case Study- Evolution of quality processes at Tata Consultancy Services by Dr. Gargi Keeni,

September, 2004.

• Case Study- Innovation in TCS by Chief Technology Officer, TCS, March 31, 2008.

• Case Study- Process Improvement @ TCS by Pragnya Mishra, 29 January 2004.

• Case Study by Asit C. Mehta investment Intermediaries Ltd. on TCS.

• TCS report by Sygnus Business Consulting and Research Pvt. Ltd.

• White Paper- Evolving IT from “Running the Business” to “Changing the Business”.

• Article on Global Network Delivery Model of TCS.

• Press Release- TCS receives highest possible rating in market scope for BIPM (business

intelligence and performance management).

• Journal- Globalization of IT services by NASSCOM.

• Article- TCS to enter into JV with China government, Business Standard, June 30, 2005.Article-

Microsoft and TCS to open Outsourcing Center in China, Information Week, June, 2005.