Strategic analysis of TCS

STRATEGIC ANALYSIS OF TCS

Introduction India is the world's largest sourcing destination for the information technology technolog y (IT) industry, accounting for approximately 67 per cent ce nt of the US !"#$!%& illion maret The industry employs aout !& million worforce *ore importantly, the industry has led the economic transformation of the country and altered the perception of India in the gloal economy India's cost competiti+eness in pro+iding IT ser+ices, which is approximately %$# times cheaper than the US, continues to e the mainstay of its uniue selling proposition (US-) in the gloal sourcing maret .owe+er, India is also gaining prominence in terms of intellectual capital with se+eral gloal IT firms setting up their inno+ation centres in India The IT industry has also created significant demand in the Indian education sector, especially for engineering and computer science The Indian IT and IT/S industry is di+ided into four ma0or segments 1 IT ser+ices, usiness process management (2-*), software products and engineering ser+ices, and hardware The IT$2-* IT$2-* sector in India grew at a 3ompound 4nnual 5rowth rate (345) of ! per cent o+er "&!&$!, which is %$# times higher than the gloal IT$2-* IT$2-* spend, and is estimated to expand at a 345 of 8 per cent to US %&& illion y "&"&

Market Size India, the fourth largest ase for new usinesses in the world and home to o+er %,!&& tech start$ ups, is set to increase its ase to !!,&& tech start$ups y "&"&, as per a report y 9asscom and :inno+ *anagement 3onsulting -+t ;td India-), according to a report y the 2oston 3onsulting 5roup (235) and Internet and *oile 4ssociation 4ssociation of India (I4*4I) India
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TATA CONSULTANCY SERVICES LIMITED (TCS) OVERVIEW :

technology (IT) ser+ice ser+ice,, consulting consulting and and usiness TCS is an Indian multinational information technology (IT) solutions company headuartered in *umai, *aharashtraT3S operates op erates in #6 countries It is a susidiary of the Tata 5roup and 5roup and is listed on the 2omay Stoc /xchange and /xchange and the 9ational the 9ational Stoc /xchange of India India T3S is one of the largest Indian companies y  y maret capitali@ation (=& capitali@ation (=& illion) and is the largest India$ased IT ser+ices company y company y "&!% re+enuesT3S is now placed among the A2ig #< most +aluale IT ser+ices rands worldwide In "&!, T3S is raned 6#th o+erall in the Forbes Bo Borld's rld's *ost Inno+ati+e 3ompanies raning, raning, maing it oth the highest$ raned IT ser+ices company and the first Indian compan y It is the world's !&th largest IT ser+ices pro+ider, measured y the re+enues

VISION: Top !& y "&!&

 y pro+iding inno+ati+e, MISSION: To help our customers achie+e their usiness o0ecti+es y est$in$class 3onsulting, IT solutions C ser+ices Be Be shall mae it a 0oy for all staeholders to wor with us /xcellence, espect for the indi+idual, 3ontinuous 3on tinuous learning and sharing, VALUES: Integrity, /xcellence, ;eading change

HISTORY : a !"#$ !"#$ to %&&& %&&& ' Tata Tata 3onsultancy Ser+ices ;imited was founded in !86= y a di+ision of Tata of Tata Sons •

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;imitedIts early contracts included punched ;imitedIts included punched card ser+ices card ser+ices to sister company TIS3D (now Tata Steel), Steel), woring on an Inter$2ranch econciliation System for the 3entral 2an of India, India, and pro+iding ureau ser+ices to Unit Trust of India India In !87, T3S conducted its first campus inter+iews, held at IISc IISc,, 2angalore and *umai The recruits comprised !" Indian Institutes of Technology graduates Technology graduates and three IISc graduates, who ecame the first T3S employees to enter a formal graduate trainee programme In !878, T3S deli+ered an electronic depository and depository and trading system called S/3D* for the Swiss Swiss company company SIS SegaInterSettle (deutsch deutsch) ) T3S followed this up with System E for the 3anadian >epository System and System and automating the ?ohannesurg Stoc /xchange /xchange T3S associated with a Swiss partner, TFS Tenosoft, Tenosoft, which it later acuired

Dept. of MBA, CBSMS, BUB

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In !8=!, T3S estalished India's first dedicated software research and de+e lopment

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centre, the Tata esearch >e+elopment and >esign 3entre (T>>3) in -une In !8=, T3S estalished India's first client$dedicated offshore de+elopment centre, set up

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for clients Tandem T3S later (!88%) partnered with 3anada$ased software factory Integrity Software 3orp, which T3S later acuired In early the Indian IT outsourcing industry grew rapidly due to the G"F ug and the launch of a unified /uropean currency, /uro Tata 3onsultancy Ser+ices created the factory model for G"F con+ersion and de+eloped software tools which automated the con+ersion process and enaled third$party de+eloper and client implementation

( %&&& to )re*ent + Dn " 4ugust "&&#, T3S ecame a pulicly listed company • •

In "&&, T3S ecame the first India$ased IT ser+ices company to enter

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the ioinformatics maret In "&&6, T3S designed an /- system for the Indian ailway 3atering and Tourism

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3orporation In "&&=, T3S's e$usiness acti+ities were generating o+er US&& million in annual

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re+enues In "&&=, T3S undertoo an internal restructuring exercise which aimed to increase the

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company's aility T3S entered the small and medium enterprises maret for the first time in "&!!,

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with cloud$ased offerings Dn the last trading day of "&!!, T3S o+ertoo I; to achie+e the highest maret capitalisation of any India$ased company In the "&!!H!" fiscal year, T3S achie+ed annual re+enues of o+er US!& illion for the

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first time In *ay "&!%, T3S was awarded a six$year contract worth o+er !!&& crores to pro+ide

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ser+ices to the Indian >epartment of -osts In "&!%, T3S mo+ed from the !%th position to !&th position in the League of top 10

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global IT services companies. In ?uly "&!#, T3S ecame the first Indian company to cross the s  lah crore mar in

maret capitali@ation In ?an "&!, T3S ends I;'s "%$year run as most profitale firm

,RODUCTS AND SERVICES

T3S and its 67 susidiaries pro+ide a wide range of information technology$related products and ser+ices including application de+elopment, usiness process outsourcing, capacity plann ing, Dept. of MBA, CBSMS, BUB

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consulting, enterprise software, hardware si@ing, payment processing, software management and technology education ser+ices Its estalished software products are T3S 2a93S and T3S *aster3raft

O,ERATIONS

T3S ha+e "%& offices across #6 countries and !#7 deli+ery centers in "! countries 4t the same date T3S had a total of 67 susidiary companies

LOCATIONS

T3S has operations in the following locations India, 4frica, 4sia (excluding India), 4ustralia, /urope, 9orth 4merica, South 4merica

-INANCIAL ,ER-ORMANCE

The company reported re+enues of (upee) I98#6,#=#! million for the fiscal year ended *arch "&! (JG"&!), an increase of !7K o+er JG"&!# In JG"&!, the company
TCS. STRATE/Y ANALYSIS


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STRATE/IES IM,LEMENTED ! 0u*ine** Strate12: T3S calls its 2usiness Units as Industry Ser+ice -ractice • •

T3S has 3%$4 of exposure to 0ankin1 -inancia5 Ser6ice* 7 In*urance sector 9o dout, T3S has to re loo its usiness strategy as the world financial institutions are in a tremendous shoc of suprime crisis and thin of scaling up re+enue from other +erticalsHindustries

% /eneric 0u*ine** Strate12: ;ow cost 5loal deli+ery "#E7 model • •

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Jocus on customer relationship management, customer retention (for repeat  usiness re+enue which is 86K) Timely deli+ery with the help of pro+en deli+ery C uality framewor 1 iL*S >ifferentiation in low end ser+ices in terms of cost, resources >ifferentiation in high end ser+ices such as consulting in term of niche offerings, expertise -rotection from currency fluctuations with the help of currency hedging >ue to its strong nowledge management system and resource strength, T3S has een successful in getting the cost leadership in the industry Since last decade, T3S has een following a more focused strategy where they are going as per local needs of customer and their nature of usiness /g *iddle /ast, 4ustralia They are eing more focused region wise and customer wise rather than eing generic Jocus on the 3enters of /xcellence (3o/) to strengthen capaility so as to uild state$of$ the$art solutions in specific technologies such as ser+ice$oriented architecture, testing, and +irtuali@ation These high$end sills and scale will help T3S to tacle larger pro0ects aimed at transforming clients< IT applications and infrastructures


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8 Cor)orate Strate12: •

T3S is a firm elie+er in Aorganic growth< and acuire only those companies which are in line with T3S< strategic long term goals

3 Market ,enetration Strate12: • •

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Current Market*: US4 and /urope Current ,roduct*: 4>*, 2-D, F-D, consultancy ser+ices (in 2JSI, manufacturing and retail) and software products (financial products) Reco99endation: 4s most large clients in US and /urope are cutting costs, T3S needs to e more aggressi+e on cost and uality front

 Market De6e5o)9ent Strate12: • •

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Ne;*, 2-D, F-D, consultancy ser+ices (in 2JSI, manufacturing and retail) and software products (financial products) Reco99endation: Since these are fast de+eloping IT maret, T3S needs a paradigm shift in focus from US and /U marets to these marets

# ,roduct De6e5o)9ent Strate12: • •

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Current Market: US4 and /urope Ne; ,roduct: 3onsultancy and pacage implementation ser+ices in relati+ely growing sectors esp life sciences C healthcare, a+iation sector, and F-D ser+ices Reco99endation: 3oncentrate on uilding expertise in these domains y strategic acuisitions

= /5o(a5 Strate12: TCS. /NDMTM i* at t>e >eart o? TCS. 15o(a5 *trate12


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$ Ot>er 15o(a5 *trate1ie*: •

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Since last few years T3S is successfully le+eraging laor cost in /astern /urope, South 4merica and 3hina 5etting ig foreign names on oard of directors is also one of the ey strategies for T3S The current three foreign directors are 3layton * 3hristensen (.2S -rofessor, 0oined in "&&6), >r on Sommer (former 3hairman of the 2oard of *anagement of >eu tsche Teleom 45, 0oined in "&&6) C ;aura * 3ha (memer of the /xecuti+e 3ouncil of the .ong Fong Special 4dministrati+e egion (S4) and 9on$/xecuti+e 3hairman of .S23 In+estment 4sia .oldings ;imited) ;oo eyond US and UF for growth and eyond India for sills to emerge as a gloal firm 3learly ullish with successes such as 429 4mro in continental /urope, Lantas in 4ustralia, and almost !=K to "&K re+enue from the 4sia -acific maret, T3S wants to grow its usinesses in gloal marets including India ecent acuisitions in Ireland and ;atin 4merica demonstrate its amition to create deli+ery centers of respectale si@e outside of India T3S was the first one to set up a deli+ery centre in 3hina

" Di6er*i?ication Strate12 •

In Jeruary "&&=, T3S restructured its gloal operations to adop t an integrated, customer$centric approach, which is expected to helpful in eliminating the ris factors arising from the US economic collapse The company

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T3S- decline of &"K in the second uarter (4pril, *ay, ?une) might hinder T3S
!& Strate1ic A55iance*

Some of the strategic alliances are listed elow a Inte5: Intel and T3S pro+ide information technology products and ser+ices that complement each other The companies are engaging in a technology alliance model in which the two organi@ations collaorate on research and de+elop solution offerings to deli+er customer$specific solutions to the maret place This alliance has matured o+er the last two years of collaorati+e wor, with the companies implementing a well$defined model for collaoration using a three$stage approach ?oint inno+ation engagements, defining new or impro+ed solutions and 0oint go$to$maret strategies for the solutions The companies ha+e completed two significant +irtuali@ation and alanced compute research pro0ects with these o0ecti+es Virtua5ization: >emonstrate ser+er consolidation through +irtuali@ation using • multi$core IntelM EeonM processors and IntelM Nirtuali@ation Technology on a real$life customer application to reduce total cost of ownership 0a5anced Co9)ute: >emonstrate and +alidate alanced compute model usages in real end$user scenarios, showcasing central manageaility and client side computing using a comination of DS and application streaming technologies on IntelM +-roO technology$ased platforms

 SA,: S4- as a leading technology and product +endor is one of the ey partners of T3SThe partnership with S4- has een a long$standing one and multi$dimensional ;e+eraging and extending this existing partnership to collaorate for 0oint research and inno+ation was a logical next step for oth S4- and T3S Senior esearch Scientists of S4- and T3S initiated this collaoration setting the o0ecti+es and defining the modus operandi for carrying out research in a collaorati+e manner 4nd they committed to cause y undertaing the responsiility to e /xecuti+e Sponsors in the respecti+e organi@ations •

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3ollaoration with S4- esearch was initiated after detailed discussions and exchange of research interests from oth S4- and T3S Identified areas include *odel$dri+en 4rchitecture and Integration of /nterprise$>ata, Be "&, Internet of Ser+ices, and Internet of Things

c He;5ett',ackard: .- and T3S ha+e initiated discussions for 0oint research in the areas of SaaS, -ower *anagement C 3ooling, UtilityH5rid 3omputing, 3loud 3omputing, 5reen IT and 9ext 5eneration >ata 3enter Some of the potential research initiati+es could also in+ol+e de+elopment of maret$specific offerings ased on +alue$added ser+ices, using products and solutions from .- d EMC%: Bith T3S eing an IT solutions and ser+ices pro+ider, /*3" and T3S ha+e conceptuali@ed IT solution architectures for specific industry$domains integrating products from /*3" and software platforms from T3S !! Ac@ui*ition Strate12:

T3S has acuired companies to achie+e expertise and maret share in the areas in which T3S was not a leader T3S has acuired firms which allow it to attain hori@ontal and +ertical integration This is a perfect example of how a company can use acuisition as its strategy for expansion

Some of the ma0or acuisitions y T3S are shown elow

Na9e

Ac@ui*ition date

Acti6itie*

Note*

4ccess to domestic capailityP 3*3 ;imited

"&&! Dctoer

IT Ser+ices

continues to e a separately run company

4irline Jinancial Support Ser+ices

"&&# ?anuary

2-D

India (4JS) -hoenix 5loal Solutions


"&!& *ay

2-D expertise in 4irline and .ospitality sector

2usiness -rocess

4cuire expertise in insurance$domain

Dutsourcing

consulting

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4cuire lue$chip /uropean customers Swedish Indian IT esources

lie /ricsson, IF/4, Nattenfall and "&& *ay

IT Ser+ices

42 (SIT4)

.utchisonP SIT4 was T3S< exclusi+e partner in Sweden and a non$exclusi+e partner in 9orway 4cuired life and pension outsourcing

-earl 5roup

"&& Dctoer

Insurance

usiness from -earl 5roupP >omain nowledge of life and pension underwriting usiness T3S acuired core aning solution

Jinancial 9etwor Ser+ices (J9S)

"&& Dctoer

3ore 2aning -roduct

product (2493S) and access to !!6 customers in % countriesP J9S was an existing partner for T3S

3omicrom

"&& 9o+emer

2aning 2-D

/ntry into ;atin 4mericaP 4ccess to payment processing platform The merger of Tata Infotech added !

Tata Infotech

"&&6 Jeruary

IT Ser+ices

new Jortune && clients and enhanced T3S< systems integration and infrastructure ser+ice capailities

T3S *anagement

"&&6 9o+emer

IT Ser+ices

4ccess to 4ustralian clients

/xpand product portfolio y acuiring TFS$Tenosoft

"&&6 9o+emer

2aning -roduct

rights to Luart@ and ownership of 4lpha and e$portfolio, enhanced presence in Swit@erland and Jrance

3itigroup 5loal Ser+ices ;imited


"&&= >ecemer

3apti+e 2-D of 3itigroup Inc

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T3S acuired ey 2aning and Jinancial Ser+ices (2JS) domain nowledge


Super+alu Ser+ices India

"&!& Septemer

3omputational esearch

"&!" 4ugust

;aoratories

3apti+e ITH2-D unit of Super+alu Inc in India

.igh -erformance 3omputing

T3S had a deal with Super+alu to ha+e their Software Dutsourcing to T3S and acuired Super+alu India 4cuire expertise in .igh -erformance 3omputing (.-3) applications and 3loud ser+ices 4ccess to lue$chip Jrench and

4lti S4

"&!% 4pril

IT Ser+ices

/uropean clients in aning, luxury, manufacturing and utilities sectors

!% TCS oint 6enture* •

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T3S went for a 0oint +enture (?N) in Je "&!! with three 3hinese partners and is illed y the company as a Qrole modelR for the 3hinese IT industry The T3S 0oint +enture, in which *icrosoft too a !& per cent stae, planned to employ o+er the next fi+e year at least ,&&& people that would represent a considerale scaling up from the company's then present strength of =&& employees in 3hina The 3hinese software industry remains fragmented and lacs scale Dnly aout !& 3hinese IT firms among some =,&&& employ more than !,&&& people The T3S 0oint +enture will thus e one of the largest software companies in 3hina once it reaches its ,&&&$employee target The new +enture is widely expected to enale T3S to finally rea into the %&$illion domestic 3hinese IT maret, a maret that has in the past pro+ed elusi+e for Indian IT companies 4nother ?N is etween TCS and S0I BState 0ank o? India in 9o+ "&&8 to cater ad+anced technology solutions and domain consulting for the aning and financial ser+ices sector The 0oint +enture is called 3$/dge Technologies ;td and has an authori@ed capital of s #& croreT3S holds ! per cent of the euity in 3$/dge and S2I the alance with no asset transfer The 0oint +enture was to offer transformational capailities to ans and financial institutions in India and other marets y helping them to use technology as a competiti+e tool in the maret place using ureau ser+ices and ser+ice platforms QIn three to fi+e years, we hope the company creates niche ser+ices in the national and international stage,'' said *r amadorai

SWOT ANALYSIS


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STRATEGIC ANALYSIS OF TCS S T R RE N GT H S

T C S

W EA K N ES SE S

O P P O RT U N N IIT TIE S

TH R EA T TS S

Stren1t>* ! Su))ort ?ro9 ,arent Co9)an2 •

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4s a susidiary of Tata 5roup, the company could capitali@e on its parent company
% /5o(a5 Market ,re*ence •

2y spreading the usiness across the world, T3S has an ad+antage in minimi@ing the ris arising out of a specific region The growing presence of the company in multiple marets is important to ensure di+ersification of its re+enue ase and sustain growth


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T3S estalished a 5loal 9etwor >eli+ery *odel (59>*), which enales it to pro+ide ser+ices to customers across multiple locations in India, 3hina, 9orth 4merica, /urope and ;atin 4merica 4s of *arch %!, "&!, the company operates in !%" locations including %! in /urope, "8 in 9orth 4merica, "# in 4-43, " in the UF and Ireland, !# in ;atin 4merica, and 8 in the *iddle /ast and 4frica 4dditionally, it has deli+ery and training centers in countries including 3hina, 2ra@il, .ungary, 3hile and Uruguay The company also has deli+ery centers in o+er "& countries outside India The worldwide deli+ery centers enaled T3S to le+erage sills and local usiness nowledge to deli+er high uality solutions T3S< strategy to focus on 4sia$-acific, ;atin 4merica and the *iddle /ast and 4frica enaled it to de$ris geographical concentration and create a significant presence in the new growth marets The contriution of new growth marets to the total re+enue of the company douled in the last decade In JG"&!, the new growth marets reported re+enue of I9!",7""7 million, which accounted for !%#K of the company
8 Re*earc> and De6e5o)9ent Acti6itie* •

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T3S carries out regular research and de+elopment acti+ities to de+elop new products It performs research and inno+ation in three primary areas, namely, software, applications and systems In the software area, the company focuses on mining operational process models to facilitate training and transformation and also modeling human eha+ior in the worplace In application area, the company emphasi@es on enterprise contextual intelligence, digital health and digital manufacturing It also wored on analytics as a ser+ice, human sensing, and performance prediction and optimi@ation pro0ects Its energy caron +iew tool and data acuisition and management system pro0ects ha+e mo+ed from research to usiness The company also enters into partnerships with other organi@ations and companies in the areas of data analysis, customer experience and ad+anced technologies 4s of *arch "&!, T3S filed ","77 patents and pulished o+er %&& papers till date In JG"&!, the company filed &8 patents and otained "&6 patents In JG"&!, T3S in+ested I9 "" illion on its C> acti+ities

Weakne**e* ! O)erationa5 I**ue* Dept. of MBA, CBSMS, BUB

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4s part of regular operations, the company is su0ect se+eral litigations and claims that could affect its maret reputation, usiness operations and financial performance in the e+ent of ad+erse outcomes In 4pril "&!, a former T3S employee in the US filed a lawsuit against the company alleging +iolation of federal ci+il rights law The plaintiff reported that the company discriminated 4merican worers y fa+oring South 4sians in hiring, promotion and termination The plaintiff also claimed that o+er 8K of T3S
% Dec5inin1 Li@uidit2 •

•

T3S reported declined liuidity position in the last fiscal year In JG"&!, the company reported current assets of I9#==!%illion, as compared to I9#"=87 illion, an increase of !%7=K o+er that in "&!# .owe+er, its current liailities were I9"&%!= illion in "&!#, as compared to I9!67& illion, an increase of "866K o+er that in "&!# Its current ratio was "#& in "&!, as compared to "7% in "&!# It
O))ortunitie* ! Strate1ic A1ree9ent* •

•

•

The company entered into certain strategic agreements that are aimed at enhancing its usiness operations and existing product line This could help the company in maintaining its competiti+e position in the industry In Dctoer "&!, the company partnered with Symantec 3orporation, a pro+ider of information protection and security software, to pro+ide analytics dri+en security ser+ices Through this partnership, the company intends to offer security industry expertise along with Symantecuring the same month, the company entered into a gloal alliance partnership with Taleau Software, a pro+ider of usiness analytics software Through this


Page 14


•

•

partnership, the company plans to de+elop large scale deli+ery capailities, using Taleau
% /ro;in1 De9and ?or C5oud Co9)utin1 •

•

•

T3S stands to enefit from the growing demand for cloud computing 4ccording to industry estimates, the gloal maret for cloud computing is expected to reach approximately US&& illion y JG"&"& >ependence on hard$to$deploy physical ser+ers results in slow response to organi@ational needs, which dri+es organi@ations and go+ernment agencies worldwide to use cloud computing 3loud computing pro+ides easy and cost effecti+e solutions to organi@ations, enaling them to address their need for data storage It offers reliale and easy storage to the telecom and related companies for de+eloping moile apps 4t the same time, it is expected to reduce the IT companies< spending on data analytics -ositi+e outloo for cloud computing may increase the demand for the company
8 Launc> o? Ne; ,roduct* •

•

•

•

The company focuses n de+eloping technologically ad+anced products that meet the emerging industry challenges In Septemer "&!, the company, through >igital Software C Solutions (>SCS) group, launched the Intelligent Uran /xchange (IUE), a powerful analytics$ased software solution for intelligent city operations The IUE solution is a highly scalale, modular software that integrated ig data with domain specific ad+anced analytics to pro+ide cities with real$time, actionale insights It helps in addressing expectations of digitally connected, uran citi@ens The company also launched 3ustomer Insights C Intelligence (3ICI) software solution for retail ans The new solution is a pre$integrated and modular software that accelerates the transition from a product$focused organi@ation to a customer$centric enterprise In ?une "&!, the company un+eiled T3S 2a93S >igital (T3S 2a93S), a no+el solution for financial institutions in 9orth 4merica T3S 2a93S deli+ers an intuiti+e, interacti+e and insightful customer experience It also allows seamless integration of +arious staeholders in the financial supply chain and its ecosystem


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T>reat* ! Inten*e Co9)etition •

•

•

4s a leading IT ser+ices company, T3S is su0ect to intense competition in almost e+ery maret Its presence in nearly & countries exposed it to other international, national, and regional IT C IT/S companies Such intense competition could hamper the o+erall growth prospects of the company The company
% E9)5o2ee Attrition •

•

•

In the information technology sector, success of any company depends on the management of intellectual properties and uality professionals T3S depends hea+ily on its silled personnel and management team The company operates through a team of highly ualified and well experienced employees, who ha+e rendered successful domestic pro0ects and o+erseas pro0ects Sustainale worforce is one of the ma0or challenges for any IT companies The high attrition le+el or failure to retain the ualified professionals can affect the performance of the company Its aility to execute pro0ect engagements and otain new clients depends in large part on its aility to attract, train, moti+ate and retain highly silled professionals, especially pro0ect managers, software engineers and other senior technical personnel If the company is unale to hire and retain ualified personnel, its pro0ect portfolio and profit margins may decline drastically

8 Increa*in1 IT co9)5eit2 •

•

The company is prone to riss arising out of IT complexity T3S offers complex IT and process ser+ices to its customers 4t times, in spite of testing and est uality control, it is not certain that it may a+oid errors in present +ersion or ad+anced +ersions of products It may face challenges in case of solutions containing undetected errors or if it fails to meet the customer expectations Some of the challenges the company faces include technical prolems, deployment of products across a wide range of platforms, and integration of


Page 16


software with third party software applications and dataases Such cha llenges may result in loss of customers and re+enue

0C/ MATRI -OR TCS ! On *er6ice 5ine*

T3S' ser+ices are currently organised into the following ser+ice lines (percentage of total T3S re+enues in the "&!#$! fiscal year generated y each respecti+e ser+ice line is shown in parentheses) •

4pplication de+elopment and maintenance (#&K) +alueP

•

/nterprise solutions (!6K)

•

IT infrastructure ser+ices (!#K)

•

2usiness process outsourcing (!"K)

•

4ssurance ser+ices (=K)

•

/ngineering and Industrial ser+ices (K)

•

3onsulting (%K)

•

4sset le+erage solutions ("K) 


Page 17

STRATEGIC ANALYSIS OF TCS HIG

D C T A O A S G R H S S

HIG

LO MARKET

C O W LO MARKET

T3S has a hea+y exposure to IT So5ution* + A))5ication De6e5o)9ent 7 Maintenance 1 3&4 T3S has traditionally a low cost outsourcing player which pro+ides application de+elopment and maintenance ser+ices, which till date account for almost half of its re+enue Though T3S has managed to ring down this percentage significantly in last decade  y entering into niche areas lie, 2-D, infrastructure ser+ices, usiness consulting, IT consulting, asset le+eraged solutions etc T3S sees a strong growth potential especially into consulting, 2-D and infrastructure ser+ices Thus T3S is in+esting hea+ily into these areas to explore new maret segments

% O6era55 0C/ 9atri o? TCS Rea*on* (e>ind t>e 1ro;t> o? TCS ' Bith increasing the usiness opportunities and expansions of usiness in the different sectors reuirement of IT increases 3loud computing, social media and data analytics, are offering new a+enues of growth for IT companies


Page 18


Rea*on* (e>ind t>e 1ro;t> o? 9arket ' supporting C roadcasting of J! race worldwide •

0C/ Matri $ IT$2-* industry is reaching around !!= illion with the growth of !%K in JG!# IT industry is one of the ma0or dri+er industries for 5>- of India 4nd the most important thing is that Indian IT Inc is growing with K share in gloal sourcing maret T3S is the maret leader, with !&!K of maret share In IT$2-* sector The main ad+antage of Tata 3onsultancy Ser+ice is that it has the highest maret cap of  #8,8%&%# 3r company in Indian maret irrespecti+e of sector or industry .ere, T3S comes on Star position due to the leadership of IT Inc and growth rate of IT Inc is also +ery high that it affects the nation-

,ORTER.S  -ORCES MODEL

C P ! $ L

C S O M $ ' g +

O M  ! " " #  " # A $ %

&  W  & $ & S

U !

 S (

) *

Co9)etiti6e Ri6a5r2 Dept. of MBA, CBSMS, BUB

Page 19

! A !


• •

Intense competiti+e ri+alry exists due to low switching costs *ost of the igger Indian firms offer same ser+ices and there is little product differentiation

T>reat o? Ne; Entrant* /asy entry as the capital reuired is low • ;arge players, howe+er, toughen prospects of small and medium players to win large • deals

Su(*titute ,roduct* Threat is medium as new centers, such as -hilippines and 3hina, are fast gaining ground among in+estors due to their low cost ad+antages 0ar1ainin1 ,o;er o? Su))5ier* 2argaining power of suppliers is less as most of their usinesses come from the same • geographies -rice taer rather than price maer • 0ar1ainin1 ,o;er o? Cu*to9er* 2argaining power is high as many IT firms fight for a similar pro0ect • Jirms are mostly dependent on same geography, which increases customer power •

RECOMMENDATIONS

T>e ?ir*t and ?ore9o*t reco99endation ?or TCS i* to c>an1e it* 6i*ion *tate9ent In our >u9(5e o)inion it i* *>ort *i1>ted TCS need* to >a6e a 6i*ion t>at ;i55 *>o; it* 5eader*>i) @ua5itie* and 5on1 ter9 t>inkin1 Ada)t to rece**ionF (ut don.t i1nore t>e ne; eco*2*te9

2ased on current situation, T3S strategists can adapt their positioning and direction, pa ying particular focus to the following issues to ensure long$term maret success •

T3S needs to focus on mareting as it can pro+e to e a differentiator in the present

•

economic scenario T3S needs to focus on communicating its +alue propositions and its distincti+e competencies in order to attract more clients


Page 20


•

There are plenty of opportunities a+ailale in the S*/ segment and also in other sectors

•

such as transportation, media, etc T3S needs to attract more clients from such sectors Increase focus on high end usiness ser+ices

•

T3S needs to mo+e from 4>* (4pplication >e+elopment and maintenance) to + alue

•

added ser+ices such as 2-D 3onsulting and -acage Implementation, etc T3S, eing the maret leader, can switch from pro+iding low cost ser+ices to charging a premium for its ser+ices 2ecause of economies of scale that T3S has achie+ed, it will

•

lead to a higher profit margin T3S, o+er the years, has een consolidating and acuiring smaller firms ensuring hori@ontal and +ertical integration This practice y T3S needs to go on if it wants to

•

continue to capture a larger maret share and eing the clear leader of the industry 4dapting to customer needs and gaining their confidence is +ital in high growth marets In JG "&!#, Indian domestic maret grew y more than !6K, ut T3S re+enue from India increased only y 6#6K Therefore, T3S should try to le+erage its success stories (I3T3 success done y its susidiary 1 3*3, -assport pro0ect etc) to acuire more

•

clients in this high growth maret T3S has created a separate usiness unit for S*/ This could pro+e to e a master stroe

•

from T3S as this means increased and aggressi+e focus on this segment T3S should consider doing the ao+e for their consulting +erticals well

•

4 primary area of focus for T3S (not 0ust T3S, for the entire IT industry) should e protection of intellectual property Indian IT companies ha+e +ery less patents registered which could lead to prolems in the form of competition as it will allow the competitors

•

to use the same technology without any hindrance ;astly, T3S should focus on not only retaining old clients ut also acuiring new clients D+er the last fi+e years, T3S has managed to acuire only " clients who are worth more than US> !&& million This shows that the sales team is not +ery efficient at attracting new clients This needs to e focused on if T3S wants to e the clear ma0ority in the maret


Page 21


RE-ERENCES ! Tata 3onsultancy Ser+ices wwwtcscom (In+estors section) " Jorrester reports wwwforrestercom % 5artner reports wwwgartnercom # IT$ITeS *aret C Dpportunities 1 I2/J (India 2rand /uity Joundation) report  Tata 3onsultancy Ser+ices 1 4 3ompany -rofile 1 wwwdatamonitorcom 6 9ewspaper *int 1 wwwli+emintcom 7 Biipedia$ wwwwiipediaorg


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!(A& %OU 


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Strategic analysis of TCS

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