Strategic Analysis of TCS

STRATEGIC ANALYSIS OF TCS
Introduction
India is the world's largest sourcing destination for the information technology (IT) industry,
accounting for approximately 67 per cent of the US$ 124-130 billion market. The industry
employs about 10 million workforce. More importantly, the industry has led the economic
transformation of the country and altered the perception of India in the global economy. India's
cost competitiveness in providing IT services, which is approximately 3-4 times cheaper than the
US, continues to be the mainstay of its unique selling proposition (USP) in the global sourcing
market. However, India is also gaining prominence in terms of intellectual capital with several
global IT firms setting up their innovation 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 ITES industry is divided into four major
segments IT services, business process management (BPM), software products and engineering
services, and hardware.
The IT-BPM sector in India grew at a Compound Annual Growth rate (CAGR) of 15 per cent
over 2010-15, which is 3-4 times higher than the global IT-BPM spend, and is estimated to
expand at a CAGR of 9.5 per cent to US$ 300 billion by 2020.
Market Size
India, the fourth largest base for new businesses in the world and home to over 3,100 tech startups, is set to increase its base to 11,500 tech start-ups by 2020, as per a report by Nasscom and
Zinnov Management Consulting Pvt Ltd.
Indias internet economy is expected to touch Rs 10 trillion (US$ 151.6 billion) by 2018,
accounting for 5 per cent of the countrys gross domestic product (GDP), according to a report
by the Boston Consulting Group (BCG) and Internet and Mobile Association of India (IAMAI).
Indias internet user base reached over 350 million by June 2015, the third largest in the world,
while the number of social media users grew to 143 million by April 2015 and smartphones grew
to 160 million.
Public cloud services revenue in India is expected to reach US$ 838 million in 2015, growing by
33 per cent year-on-year (y-o-y), as per a report by Gartner Inc. In yet another Gartner report, the
public cloud market alone in the country was estimated to treble to US$ 1.9 billion by 2018 from
US$ 638 million in 2014. Increased penetration of internet (including in rural areas) and rapid
emergence of e-commerce are the main drivers for continued growth of data centre co-location
and hosting market in India.
Dept. of MBA,
CBSMS, BUB
Page 1

TATA CONSULTANCY SERVICES LIMITED (TCS)
OVERVIEW :
TCS is an Indian multinational information technology (IT) service, consulting and business
solutions company headquartered in Mumbai, Maharashtra.TCS operates in 46 countries. It is a
subsidiary of the Tata Group and is listed on the Bombay Stock Exchange and the National Stock
Exchange of India. TCS is one of the largest Indian companies by market capitalization ($80
billion) and is the largest India-based IT services company by 2013 revenues.TCS is now placed
among the Big 4 most valuable IT services brands worldwide. In 2015, TCS is ranked 64th
overall in the Forbes World's Most Innovative Companies ranking, making it both the highestranked IT services company and the first Indian company. It is the world's 10th largest IT
services provider, measured by the revenues.
VISION: Top 10 by 2010
MISSION: To help our customers achieve their business objectives by providing innovative,
best-in-class Consulting, IT solutions & services. We shall make it a joy for all stakeholders to
work with us.
VALUES: Integrity, Excellence, Respect for the individual, Continuous learning and sharing,
Leading change.
HISTORY :
a. 1968 to 2000 Tata Consultancy Services Limited was founded in 1968 by a division of Tata Sons
Limited.Its early contracts included punched card services to sister company TISCO
(now Tata Steel), working on an Inter-Branch Reconciliation System for the Central Bank
of India, and providing bureau services to Unit Trust of India.
In 1975, TCS conducted its first campus interviews, held at IISc, Bangalore and Mumbai.
The recruits comprised 12 Indian Institutes of Technology graduates and three IISc
graduates, who became the first TCS employees to enter a formal graduate trainee
programme.
In 1979, TCS delivered an electronic depository and trading system called SECOM for
the Swiss company SIS SegaInterSettle (deutsch). TCS followed this up with System X
for the Canadian Depository System and automating the Johannesburg Stock Exchange.
TCS associated with a Swiss partner, TKS Teknosoft, which it later acquired.
Dept. of MBA,
CBSMS, BUB
Page 2
In 1981, TCS established India's first dedicated software research and development
centre, the Tata Research Development and Design Centre (TRDDC) in Pune.
In 1985, TCS established India's first client-dedicated offshore development centre, set up
for clients Tandem. TCS later (1993) partnered with Canada-based software factory
Integrity Software Corp, which TCS later acquired.
In early the Indian IT outsourcing industry grew rapidly due to the Y2K bug and the
launch of a unified European currency, Euro. Tata Consultancy Services created
the factory model for Y2K conversion and developed software tools which automated the
conversion process and enabled third-party developer and client implementation.
b. 2000 to present
On 25 August 2004, TCS became a publicly listed company.
In 2005, TCS became the first India-based IT services company to enter
the bioinformatics market.
In 2006, TCS designed an ERP system for the Indian Railway Catering and Tourism
Corporation.
In 2008, TCS's e-business activities were generating over US$500 million in annual
revenues.
In 2008, TCS undertook an internal restructuring exercise which aimed to increase the
company's ability.
TCS entered the small and medium enterprises market for the first time in 2011,
with cloud-based offerings. On the last trading day of 2011, TCS overtook RIL to achieve
the highest market capitalisation of any India-based company.
In the 2011/12 fiscal year, TCS achieved annual revenues of over US$10 billion for the
first time.
In May 2013, TCS was awarded a six-year contract worth over $1100 crores to provide
services to the Indian Department of Posts.
In 2013, TCS moved from the 13th position to 10th position in the League of top 10
global IT services companies.
In July 2014, TCS became the first Indian company to cross the Rs 5 lakh crore mark in
market capitalization.
In Jan 2015, TCS ends RIL's 23-year run as most profitable firm.
PRODUCTS AND SERVICES

TCS and its 67 subsidiaries provide a wide range of information technology-related products and
services including application development, business process outsourcing, capacity planning,
Dept. of MBA,
CBSMS, BUB
Page 3

consulting, enterprise software, hardware sizing, payment processing, software management and
technology education services. Its established software products are TCS BaNCS and TCS
MasterCraft.
OPERATIONS
TCS have 230 offices across 46 countries and 147 delivery centers in 21 countries. At the same
date TCS had a total of 67 subsidiary companies.
LOCATIONS
TCS has operations in the following locations:
India, Africa, Asia (excluding India), Australia, Europe, North America, South America
FINANCIAL PERFORMANCE
The company reported revenues of (Rupee) INR946,484.1 million for the fiscal year ended
March 2015 (FY2015), an increase of 15.7% over FY2014. In FY2015, the companys operating
margin was 24.5%, compared to an operating margin of 29.1% in FY2014.
In FY2015, the company recorded a net margin of 21%,compared to a net margin of 23.4% in
FY2014.The company reported revenues of INR271,654.8million for the second quarter ended
September 2015, an increase of 5.8% over the previous quarter.
TCS STRATEGY ANALYSIS
Dept. of MBA,
CBSMS, BUB
Page 4
STRATEGIES IMPLEMENTED
1. Business Strategy:
TCS calls its Business Units as Industry Service Practice.
TCS has 42.8% of exposure to Banking Financial Services & Insurance sector. No doubt, TCS
has to re look its business strategy as the world financial institutions are in a tremendous shock of
subprime crisis and think of scaling up revenue from other verticals/industries.
2. Generic Business Strategy:

Low cost Global delivery 24X7 model.
Focus on customer relationship management, customer retention (for repeat business
revenue which is 95.6%).
Timely delivery with the help of proven delivery & quality framework iQMS.
Differentiation in low end services in terms of cost, resources.
Differentiation in high end services such as consulting in term of niche offerings,
expertise.
Protection from currency fluctuations with the help of currency hedging.
Due to its strong knowledge management system and resource strength, TCS has been
successful in getting the cost leadership in the industry.
Since last decade, TCS has been following a more focused strategy where they are going
as per local needs of customer and their nature of business. E.g. Middle East, Australia.
They are being more focused region wise and customer wise rather than being generic.
Focus on the Centers of Excellence (CoE) to strengthen capability so as to build state-ofthe-art solutions in specific technologies such as service-oriented architecture, testing,
and virtualization. These high-end skills and scale will help TCS to tackle larger projects
aimed at transforming clients IT applications and infrastructures.
Dept. of MBA,
CBSMS, BUB
Page 5

3. Corporate Strategy:
TCS is a firm believer in organic growth and acquire only those companies which are in
line with TCS strategic long term goals.
4. Market Penetration Strategy:
Current Markets: USA and Europe

Current Products: ADM, BPO, KPO, consultancy services (in BFSI, manufacturing and
retail) and software products (financial products).
Recommendation: As most large clients in US and Europe are cutting costs, TCS needs
to be more aggressive on cost and quality front.
5. Market Development Strategy:
New/Emerging Markets: India, Middle-east and Australia

Current Product: ADM, BPO, KPO, consultancy services (in BFSI, manufacturing and
retail) and software products (financial products).
Recommendation: Since these are fast developing IT market, TCS needs a paradigm
shift in focus from US and EU markets to these markets.
6. Product Development Strategy:
Current Market: USA and Europe

New Product: Consultancy and package implementation services in relatively growing
sectors esp. life sciences & healthcare, aviation sector, and KPO services.
Recommendation: Concentrate on building expertise in these domains by strategic
acquisitions.
7. Global Strategy:
TCS GNDMTM is at the heart of TCS global strategy.
Dept. of MBA,
CBSMS, BUB
Page 6
8. Other global strategies:
Since last few years TCS is successfully leveraging labor cost in Eastern Europe, South
America and China.
Getting big foreign names on board of directors is also one of the key strategies for TCS.
The current three foreign directors are: Clayton M Christensen (HBS Professor, joined in
2006), Dr. Ron Sommer (former Chairman of the Board of Management of Deutsche
Telekom AG, joined in 2006) & Laura M Cha (member of the Executive Council of the
Hong Kong Special Administrative Region (SAR) and Non-Executive Chairman of
HSBC Investment Asia Holdings Limited)
Look beyond US and UK for growth and beyond India for skills to emerge as a global
firm. Clearly bullish with successes such as ABN Amro in continental Europe, Qantas in
Australia, and almost 18% to 20% revenue from the Asia Pacific market, TCS wants to
grow its businesses in global markets including India.
Recent acquisitions in Ireland and Latin America demonstrate its ambition to create
delivery centers of respectable size outside of India.
TCS was the first one to set up a delivery centre in China.
9. Diversification Strategy
In February 2008, TCS restructured its global operations to adopt an integrated,

customer-centric approach, which is expected to helpful in eliminating the risk factors
arising from the U.S. economic collapse. The companys operations are now divided into
five units: Industry Solutions (for vertical-specific services), Major Markets (North
America, Western Europe and the U.K), New Growth Markets (Latin America, Eastern
Europe, Middle East & Africa and India), Strategic Growth Business (TCS Financial
Solutions, SMB and Platform-based BPO) and Organizational Infrastructure.
Dept. of MBA,
CBSMS, BUB
Page 7
TCSs diversification plan seems to have worked since the company has been gaining
momentum in Europe and other emerging markets, which is evident in the companys
marked growth rate of 40% year to year in its FY08s European operations. The firms
operations in Latin America and Middle East have also seen considerable expansion. In
order to deepen its penetration, TCS has established delivery and offshore centers in
countries like Brazil, Uruguay and Mexico.
The weakening European economy and its GDP decline of 0.2% in the second quarter
(April, May, June) might hinder TCSs diversification plans, as it is bound to have a
direct impact on BFSIs outsourcing services. TCS, which draws 44% of its global
revenue from the BFSI sector, is likely to be affected. Also, the Indian market is
becoming difficult to afford, leading to a wider gap between the demand and supply of IT
consultants. This can be traced to the fact that hired employees lack required skills or fail
to deliver their expertise, but still seem to be demanding higher wages.
10. Strategic Alliances

Some of the strategic alliances are listed below.
a. Intel: Intel and TCS provide information technology products and services that
complement each other. The companies are engaging in a technology alliance model
in which the two organizations collaborate on research and develop solution offerings
to deliver customer-specific solutions to the market place. This alliance has matured
over the last two years of collaborative work, with the companies implementing a
well-defined model for collaboration using a three-stage approach: Joint innovation
engagements, defining new or improved solutions and joint go-to-market strategies
for the solutions.
The companies have completed two significant virtualization and balanced compute
research projects with these objectives:
Virtualization: Demonstrate server consolidation through virtualization using
multi-core Intel Xeon processors and Intel Virtualization Technology on
a real-life customer application to reduce total cost of ownership.
Balanced Compute: Demonstrate and validate balanced compute model
usages in real end-user scenarios, showcasing central manageability and client
side computing using a combination of OS and application streaming
technologies on Intel vPro technology-based platforms.
b. SAP: SAP as a leading technology and product vendor is one of the key partners of
TCS.The partnership with SAP has been a long-standing one and multi-dimensional.
Leveraging and extending this existing partnership to collaborate for joint
research and innovation was a logical next step for both SAP and TCS.
Senior Research Scientists of SAP and TCS initiated this collaboration setting
the objectives and defining the modus operandi for carrying out research in a
collaborative manner. And they committed to cause by undertaking the
responsibility to be Executive Sponsors in the respective organizations.
Dept. of MBA,
CBSMS, BUB
Page 8
Collaboration with SAP Research was initiated after detailed discussions and
exchange of research interests from both SAP and TCS. Identified areas
include Model-driven Architecture and Integration of Enterprise-Data, Web
2.0, Internet of Services, and Internet of Things.
c. Hewlett-Packard: HP and TCS have initiated discussions for joint research in the
areas of SaaS, Power Management & Cooling, Utility/Grid Computing, Cloud
Computing, Green IT and Next Generation Data Center. Some of the potential
research initiatives could also involve development of market-specific offerings based
on value-added services, using products and solutions from HP.
d. EMC2: With TCS being an IT solutions and services provider, EMC2 and TCS have
conceptualized IT solution architectures for specific industry-domains integrating
products from EMC2 and software platforms from TCS.
11. Acquisition Strategy:
TCS has acquired companies to achieve expertise and market share in the areas in which
TCS was not a leader. TCS has acquired firms which allow it to attain horizontal and
vertical integration. This is a perfect example of how a company can use acquisition as its
strategy for expansion.
Some of the major acquisitions by TCS are shown below:
Name
Acquisition
date
Activities
Notes
Access to domestic capability;

CMC Limited
2001 October
IT Services
continues to be a separately run

company.
Airline Financial
Support Services
2004 January
BPO
India (AFS)
Phoenix Global
Solutions
Dept. of MBA,
CBSMS, BUB
2010 May
BPO expertise in Airline and

Hospitality sector
Business Process
Acquire expertise in insurance-domain
Outsourcing
consulting
Page 9
Acquire blue-chip European customers

Swedish Indian IT
Resources
like Ericsson, IKEA, Vattenfall and

2005 May
IT Services
AB (SITAR)
Hutchison; SITAR was TCS exclusive

partner in Sweden and a non-exclusive
partner in Norway.
Acquired life and pension outsourcing
Pearl Group
2005 October
Insurance
business from Pearl Group; Domain

knowledge of life and pension
underwriting business.
TCS acquired core banking solution
Financial Network
Services (FNS)
2005 October
Core Banking Product
product (BANCS) and access to 116

customers in 35 countries; FNS was an
existing partner for TCS.
Comicrom
2005 November
Banking BPO
Entry into Latin America; Access to

payment processing platform.
The merger of Tata Infotech added 15
Tata Infotech
2006 February
IT Services
new Fortune 500 clients and enhanced

TCS systems integration and
infrastructure service capabilities.
TCS Management
2006 November
IT Services
Access to Australian clients
Expand product portfolio by acquiring

TKS-Teknosoft
2006 November
Banking Product
rights to Quartz and ownership of

Alpha and e-portfolio, enhanced
presence in Switzerland and France
Citigroup Global
Services Limited
Dept. of MBA,
CBSMS, BUB
2008 December
Captive BPO of
Citigroup Inc.
Page 10
TCS acquired key Banking and

Financial Services (BFS) domain
knowledge.
Supervalu Services
India
2010 September
Computational
Research
2012 August
Laboratories
Captive IT/BPO unit of

Supervalu Inc. in India
High Performance
Computing
TCS had a deal with Supervalu to have

their Software Outsourcing to TCS and
acquired Supervalu India.
Acquire expertise in High Performance
Computing (HPC) applications and
Cloud services.
Access to blue-chip French and
Alti SA
2013 April
IT Services
European clients in banking, luxury,

manufacturing and utilities sectors.
12. TCS Joint ventures
TCS went for a joint venture (JV) in Feb 2011 with three Chinese partners and is billed
by the company as a "role model for the Chinese IT industry. The TCS joint venture, in
which Microsoft took a 10 per cent stake, planned to employ over the next five year at
least 5,000 people that would represent a considerable scaling up from the company's
then present strength of 800 employees in China. The Chinese software industry remains
fragmented and lacks scale. Only about 10 Chinese IT firms among some 8,000 employ
more than 1,000 people. The TCS joint venture will thus be one of the largest software
companies in China once it reaches its 5,000-employee target. The new venture is widely
expected to enable TCS to finally break into the $30-billion domestic Chinese IT market,
a market that has in the past proved elusive for Indian IT companies.
Another JV is between TCS and SBI (State Bank of India) in Nov 2009 to cater
advanced technology solutions and domain consulting for the banking and financial
services sector. The joint venture is called C-Edge Technologies Ltd. and has an
authorized capital of Rs. 40 crore.TCS holds 51 per cent of the equity in C-Edge and SBI
the balance with no asset transfer. The joint venture was to offer transformational
capabilities to banks and financial institutions in India and other markets by helping them
to use technology as a competitive tool in the market place using bureau services and
service platforms. "In three to five years, we hope the company creates niche services in
the national and international stage,'' said Mr. Ramadorai.
SWOT ANALYSIS
Dept. of MBA,
CBSMS, BUB
Page 11

STRENGTH S
T
C
S
W EA K N ESSES
O P P O R T U N IT IE S
TH R EATS
Strengths
1. Support from Parent Company
As a subsidiary of Tata Group, the company could capitalize on its parent

companys operational network, financial capabilities, industry experience, brand
value, global partnerships, government relations and other factors. Tata Group is
one the biggest business conglomerates in India and across the world. It is into
diverse sectors such as steel, automobiles, information technology, chemicals,
power, beverages, telecom, communications, hospitality, construction and others.
It is the world's second largest manufacturer of packaged tea and tea products. It
is also one the largest information technology service provider in the world.
In FY2015, Tata Group reported revenue of approximately INR7,125 billion.With
more than30 public companies, the company has market capitalization of over
INR 7,386 billion. The company also involves in a range of social activities
contributing to its brand value.
2. Global Market Presence
By spreading the business across the world, TCS has an advantage in minimizing
the risk arising out of a specific region. The growing presence of the company in
multiple markets is important to ensure diversification of its revenue base and
sustain growth.
Dept. of MBA,
CBSMS, BUB
Page 12
TCS established a Global Network Delivery Model (GNDM), which enables it to

provide services to customers across multiple locations in India, China, North
America, Europe and Latin America. As of March 31, 2015, the company operates
in 132 locations including 31 in Europe, 29 in North America, 24 in APAC, 25 in
the UK and Ireland, 14 in Latin America, and 9 in the Middle East and Africa.
Additionally, it has delivery and training centers in countries including China,
Brazil, Hungary, Chile and Uruguay.
The company also has delivery centers in over 20 countries outside India. The
worldwide delivery centers enabled TCS to leverage skills and local business
knowledge to deliver high quality solutions.
TCS strategy to focus on Asia-Pacific, Latin America and the Middle East and
Africa enabled it to de-risk geographical concentration and create a significant
presence in the new growth markets.
The contribution of new growth markets to the total revenue of the company
doubled in the last decade. In FY2015, the new growth markets reported revenue
of INR12,725.27 million, which accounted for 13.4% of the companys total
revenue.
3. Research and Development Activities
TCS carries out regular research and development activities to develop new
products. It performs research and innovation 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 behavior in the workplace.
In application area, the company emphasizes on enterprise contextual intelligence,
digital health and digital manufacturing. It also worked on analytics as a service,
human sensing, and performance prediction and optimization projects. Its energy
carbon view tool and data acquisition and management system projects have
moved from research to business. The company also enters into partnerships with
other organizations and companies in the areas of data analysis, customer
experience and advanced technologies.
As of March 2015, TCS filed 2,277 patents and published over 300 papers till
date. In FY2015, the company filed 509 patents and obtained 206 patents. In
FY2015, TCS invested INR 2.25 billion on its R&D activities.
Weaknesses
1. Operational Issues
Dept. of MBA,
CBSMS, BUB
Page 13
As part of regular operations, the company is subject several litigations and

claims that could affect its market reputation, business operations and financial
performance in the event of adverse outcomes.
In April 2015, a former TCS employee in the US filed a lawsuit against the
company alleging violation of federal civil rights law. The plaintiff reported that
the company discriminated American workers by favoring South Asians in hiring,
promotion and termination.
The plaintiff also claimed that over 95% of TCSs 14,000 US workforce is from
South Asia, primarily India. Though TCS refuted the plaintiff's claims and is
strongly defending its case claiming fair employment practices, any adverse
decision could lead to penalties and stringent legal actions against the company.
2. Declining Liquidity
TCS reported declined liquidity position in the last fiscal year. In FY2015, the
company reported current assets of INR488.13billion, as compared to INR428.97
billion, an increase of 13.78% over that in 2014.
However, its current liabilities were INR203.18 billion in 2014, as compared to
INR156.70 billion, an increase of 29.66% over that in 2014. Its current ratio was
2.40 in 2015, as compared to 2.73 in 2014. Its quick and cash ratios also
decreased to 2.39 and 0.97 in 2015, from 2.73 and 0.99 in 2014 respectively.
A declining current ratio indicates that the company is in a weak financial
position. The performance of the company depends largely on the cash reserves
and its ability to generate cash from operations. Lack of sufficient cash or cash
equivalents could hamper the operations of the company.
Opportunities
1. Strategic Agreements
The company entered into certain strategic agreements that are aimed at
enhancing its business operations and existing product line. This could help the
company in maintaining its competitive position in the industry.
In October 2015, the company partnered with Symantec Corporation, a provider
of information protection and security software, to provide analytics driven
security services. Through this partnership, the company intends to offer security
industry expertise along with Symantecs security technologies which would
enable customers to reduce costs and improve productivity.
During the same month, the company entered into a global alliance partnership
with Tableau Software, a provider of business analytics software. Through this
Dept. of MBA,
CBSMS, BUB
Page 14
partnership, the company plans to develop large scale delivery capabilities, using
Tableaus new features that address the need of agility and flexibility.
It also enables the customers to quickly and cost-effectively implement and
integrate rapid analytics and visualize multi-structured data in forms of patterns,
trends and visual insights.
In July 2015, the company also partnered with Adobe, one of the major players in
digital marketing and digital media solutions, for digital marketing solutions and
services.
2. Growing Demand for Cloud Computing
TCS stands to benefit from the growing demand for cloud computing. According
to industry estimates, the global market for cloud computing is expected to reach
approximately US$500 billion by FY2020. Dependence on hard-to-deploy
physical servers results in slow response to organizational needs, which drives
organizations and government agencies worldwide to use cloud computing.
Cloud computing provides easy and cost effective solutions to organizations,
enabling them to address their need for data storage. It offers reliable and easy
storage to the telecom and related companies for developing mobile apps. At the
same time, it is expected to reduce the IT companies spending on data analytics.
Positive outlook for cloud computing may increase the demand for the companys
offerings, which may result in improved financial performance.
3. Launch of New Products
The company focuses n developing technologically advanced products that meet

the emerging industry challenges. In September 2015, the company, through
Digital Software & Solutions (DS&S) group, launched the Intelligent Urban
Exchange (IUX), a powerful analytics-based software solution for intelligent city
operations.
The IUX solution is a highly scalable, modular software that integrated big data
with domain specific advanced analytics to provide cities with real-time,
actionable insights. It helps in addressing expectations of digitally connected,
urban citizens.
The company also launched Customer Insights & Intelligence (CI&I) software
solution for retail banks. The new solution is a pre-integrated and modular
software that accelerates the transition from a product-focused organization to a
customer-centric enterprise.
In June 2015, the company unveiled TCS BaNCS Digital (TCS BaNCS), a novel
solution for financial institutions in North America. TCS BaNCS delivers an
intuitive, interactive and insightful customer experience. It also allows seamless
integration of various stakeholders in the financial supply chain and its ecosystem.
Dept. of MBA,
CBSMS, BUB
Page 15

Threats
1. Intense Competition
As a leading IT services company, TCS is subject to intense competition in almost

every market. Its presence in nearly 50 countries exposed it to other international,
national, and regional IT & ITES companies. Such intense competition could
hamper the overall growth prospects of the company.
The companys major competitors include global IT services, systems consulting
and integration companies. It may also face competition from emerging IT sector
in China and the Philippines. Many of its competitors command significantly
greater financial, technical and marketing resources and generate greater revenue
than the company does.
Its competitors include Accenture Plc, Wipro Limited, Infosys Technologies, Tech
Mahindra, Birlasoft, Cognizant Technology Solutions, Computer Associates,
Capgemini, and others. The company also competes with local companies in
different countries that are more likely to receive government and defense
projects.
2. Employee Attrition
In the information technology sector, success of any company depends on the

management of intellectual properties and quality professionals. TCS depends
heavily on its skilled personnel and management team. The company operates
through a team of highly qualified and well experienced employees, who have
rendered successful domestic projects and overseas projects.
Sustainable workforce is one of the major challenges for any IT companies. The
high attrition level or failure to retain the qualified professionals can affect the
performance of the company.
Its ability to execute project engagements and obtain new clients depends in large
part on its ability to attract, train, motivate and retain highly skilled professionals,
especially project managers, software engineers and other senior technical
personnel. If the company is unable to hire and retain qualified personnel, its
project portfolio and profit margins may decline drastically.
3. Increasing IT complexity
The company is prone to risks arising out of IT complexity. TCS offers complex
IT and process services to its customers. At times, in spite of testing and best
quality control, it is not certain that it may avoid errors in present version or
advanced versions 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 problems,
deployment of products across a wide range of platforms, and integration of
Dept. of MBA,
CBSMS, BUB
Page 16

software with third party software applications and databases. Such challenges
may result in loss of customers and revenue.
BCG MATRIX FOR TCS

1. On service lines
TCS' services are currently organised into the following service lines (percentage of total TCS
revenues in the 2014-15 fiscal year generated by each respective service line is shown in
parentheses):
Application development and maintenance (40%) value;
Enterprise solutions (16%)
IT infrastructure services (14%)
Business process outsourcing (12%)
Assurance services (8%)
Engineering and Industrial services (5%)
Consulting (3%)
Asset leverage solutions (2%) .
Dept. of MBA,
CBSMS, BUB
Page 17
S
C
D
T
A
O
A
S
G
R
H
S
S
C
O
W
S
HIG
HIG
H
LO
W
MARKET
SHARE
LO
W
MARKET
GROWTH
TCS has a heavy exposure to IT Solutions Application Development & Maintenance

40%. TCS has traditionally a low cost outsourcing player which provides application
development and maintenance services, which till date account for almost half of its revenue.
Though TCS has managed to bring down this percentage significantly in last decade by entering
into niche areas like, BPO, infrastructure services, business consulting, IT consulting, asset
leveraged solutions etc. TCS sees a strong growth potential especially into consulting, BPO and
infrastructure services. Thus TCS is investing heavily into these areas to explore new market
segments.
2. Overall BCG matrix of TCS
Reasons behind the growth of TCS - With increasing the business opportunities and
expansions of business in the different sectors requirement of IT increases. Cloud
computing, social media and data analytics, are offering new avenues of growth for IT
companies.
Dept. of MBA,
CBSMS, BUB
Page 18
Reasons behind the growth of market - supporting & broadcasting of F1 race

worldwide.
BCG Matrix - IT-BPM industry is reaching around 118 billion with the growth of 13%
in FY14. IT industry is one of the major driver industries for GDP of India. And the most
important thing is that Indian IT Inc is growing with 55% share in global sourcing
market. TCS is the market leader, with 10.1% of market share In IT-BPM sector. The
main advantage of Tata Consultancy Service is that it has the highest market cap of $
495,930.34 Cr. company in Indian market irrespective of sector or industry.
Here, TCS comes on Star position due to the leadership of IT Inc. and growth rate
of IT Inc. is also very high that it affects the nations GDP.
PORTERS 5 FORCES MODEL
C
P
T
R
L
C
S
O
M
R
(
g
)
O
M
E
T
I
I V
E
I V
A
R
Y
N
E
W
E
N
R
N
S
U
T
E
S
H
i
h
Competitive Rivalry
Dept. of MBA,
CBSMS, BUB
Page 19
T
A
T
Intense competitive rivalry exists due to low switching costs.

Most of the bigger Indian firms offer same services and there is little product
differentiation.
Threat of New Entrants

Easy entry as the capital required is low.
Large players, however, toughen prospects of small and medium players to win large
deals.
Substitute Products
Threat is medium as new centers, such as Philippines and China, are fast gaining ground
among investors due to their low cost advantages.
Bargaining Power of Suppliers
Bargaining power of suppliers is less as most of their businesses come from the same
geographies.
Price taker rather than price maker.
Bargaining Power of Customers
Bargaining power is high as many IT firms fight for a similar project.
Firms are mostly dependent on same geography, which increases customer power.
RECOMMENDATIONS
The first and foremost recommendation for TCS is to change its vision statement. In our
humble opinion it is short sighted. TCS needs to have a vision that will show its leadership
qualities and long term thinking.
Adapt to recession, but dont ignore the new ecosystem.
Based on current situation, TCS strategists can adapt their positioning and direction, paying
particular focus to the following issues to ensure long-term market success:
TCS needs to focus on marketing as it can prove to be a differentiator in the present
economic scenario.
TCS needs to focus on communicating its value propositions and its distinctive
competencies in order to attract more clients.
Dept. of MBA,
CBSMS, BUB
Page 20
There are plenty of opportunities available in the SME segment and also in other sectors
such as transportation, media, etc. TCS needs to attract more clients from such sectors.
Increase focus on high end business services
TCS needs to move from ADM (Application Development and maintenance) to value
added services such as BPO Consulting and Package Implementation, etc.

TCS, being the market leader, can switch from providing low cost services to charging a
premium for its services. Because of economies of scale that TCS has achieved, it will
lead to a higher profit margin.
TCS, over the years, has been consolidating and acquiring smaller firms ensuring
horizontal and vertical integration. This practice by TCS needs to go on if it wants to
continue to capture a larger market share and being the clear leader of the industry.
Adapting to customer needs and gaining their confidence is vital in high growth markets.
In FY 2014, Indian domestic market grew by more than 16%, but TCS revenue from
India increased only by 6.46%. Therefore, TCS should try to leverage its success stories
(IRCTC success done by its subsidiary CMC, Passport project etc.) to acquire more
clients in this high growth market.
TCS has created a separate business unit for SME. This could prove to be a master stroke
from TCS as this means increased and aggressive focus on this segment.
TCS should consider doing the above for their consulting verticals well.
A primary area of focus for TCS (not just TCS, for the entire IT industry) should be
protection of intellectual property. Indian IT companies have very less patents registered
which could lead to problems in the form of competition as it will allow the competitors
to use the same technology without any hindrance.
Lastly, TCS should focus on not only retaining old clients but also acquiring new clients.
Over the last five years, TCS has managed to acquire only 25 clients who are worth more
than USD 100 million. This shows that the sales team is not very efficient at attracting
new clients. This needs to be focused on if TCS wants to be the clear majority in the
market.
Dept. of MBA,
CBSMS, BUB
Page 21
REFERENCES
1. Tata Consultancy Services www.tcs.com (Investors section)
2. Forrester reports www.forrester.com
3. Gartner reports www.gartner.com
4. IT-ITeS Market & Opportunities IBEF (India Brand Equity Foundation) report
5. Tata Consultancy Services A Company Profile www.datamonitor.com
6. Newspaper Mint www.livemint.com
7. Wikipedia- www.wikipedia.org
Dept. of MBA,
CBSMS, BUB
Page 22
THANK
YOU
Dept. of MBA,
CBSMS, BUB
Page 23

Strategic Analysis of TCS

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Strategic Analysis of TCS

Hochgeladen von

Copyright:

Verfügbare Formate

STRATEGIC ANALYSIS OF TCS