TCS- tata consultancy service

A REPORT ON TCSTCS-STRATEGIES, CORE PHILOSOPHY, VISION, MISSION MISSION & ITS BUSINESS DEFINITION DEFINITION

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)

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

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Contents 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19.

Table of Contents………………………………………………………………………………………………………3 List of Illustrations……………………………………………………………………………………………………..4 Part Wise Description…………………………………………………………………………………………………5 History of TCS…………………………………………………………………………………………………………….6 TCS-A Fact File……………………………………………………………………………………………………………7 Heritage & Values………………………………………………………………………………………………………8 TCS-The Ace Performer………………………………………………………………………………………………9 Products and Services……………………………………………………………………………………………….11 Business Analysis………………………………………………………………………………………………………12 Brand Equity, Competencies and Value Proposition………………………………………………….13 TCS-Michael’s Five Forces Model.……………………………………………………………………………..15 TQM Implementation at TCS……………………………………………………………………………………..17 TCS’s Global Network Delivery Model………………………………………………………………………..19 TCS’s Point of Focus……………………………………………………………………………………………………21 Growth Strategy…………………………………………………………………………………………………………23 TCS Co-Innovation Network……………………………………………………………………………………….25 Organization Development at TCS………………………………………………………………………………26 TCS- The Paradigm Shift……………………………………………………………………………………………..29 Refrences……………………………………………………………………………………………………………………30

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List of Illustrations 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

Fig: TCS Global-Page 8 Table: Product and Services-Page 11 Fig: TCS- One Crucial step at a Time-Page 11 Table: Growth and Value Drivers-Page 12 Fig: Share Price Movement-Page 12 Fig: Revenue from industry verticals in FY 2007-08-Page 13 Fig-The IT services value chain-Page 14 Fig: Every Thing Checked-Page 16 Fig: TCS- A Combined Effort-Page 18 Fig: Green theme for Corporate Sustainability-Page 19 Diagram: TCS Global Delivery Model-Page 20 Fig: TCS the CTO Based Organization-Page 20 Fig: Product Development Issues-Page 24 Fig: TCS COIN(Co-Innovation Network)-Page 25 Fig: TCS-The Way Forward-Page 28 Fig:TCS-Together we Can-Page 29

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Part Wise Description 1. 2. 3. 4. 5. 6. 7. 8.

Abisekh Garg- History of TCS & TCS-A Fact File Asish Kumar Sahu- Heritage & Values & TCS-The Ace Performer Birendra Kumar- Products and Services & Business Analysis Happy Lamba- Brand Equity, Competencies and Value Proposition & TCS-Five Forces Model Javed Pirani- TQM Implementation at TCS & TCS’s Global Network Delivery Model Pranjal Kumar Das- TCS’s Point of Focus & Growth Strategy Surya Shakti Mohanty- Organization Development at TCS Tanmay Khuntia- TCS Co-Innovation Network & TCS- The Paradigm Shift

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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. 6

Tata Consultancy Services Fact File Type Founded

Headquarters

Public BSE: 532540 1968 TCS House, Raveline Street, Fort, Mumbai - 400 001 India

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 Key people & 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 Website

143,000 (As on 1 April, 2009) 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

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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

OTHER SOFTWARE PRODUCTS

TECHNOLOGY SOLUTIONS

SERVICES

TCS Data Cleansing Framework

TCS Clin-E2e

TCS Business Rules Engine

TCS Hospital Solution

TCS Experience Based KM

TCS Silicone Ambulatory ECG Enterprise Solutions Device and Solution

TCS Call Management Solution

TCS Enterprise Integration and Control Environment Solution/ Consulting Energy and Utilities

TCS PKI Suite Infrastructure)

(Public

IT Services Management

Key TCS Bio-Informatics Solution

IT Infrastructure Services

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

-

Promotional Certainty”

campaign

joint

Value Drivers

:

“Experience

-

Entering into acquisitions

ventures

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Expanding in Multiple geographies with infrastructure investment in Europe & Latin America

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Acquiring new Clients : Twenty large (US$ 50 million-plus) deals

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Cost cutting by Efficient systems

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Business Restructuring

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Software Package prices gone up by approx. 6.1 %

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GNDM: One service standard to customers globally.

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Technology & labor cost benefits : Keeping India as key operations location

and

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

High Accenture Deloitte

IBM Consulting Sapient Value Wipro Infosys EDS TCS

Satyam

Low

Low

HCL

Cost

High

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

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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

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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 (coauthor of P-CMM) as lead assessors. Fig: TCS- A Combined Effort

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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

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

Global Delivery Model

Offshore (India)

Lower Development Costs

Access to a large pool of skilled employees

Multilocation Delivery Centres in emerging countries (China, Latin America)

Onsite

Risk mitigation, Access to local markets with advantage of lower development cost Domain knowledge

Proximity to clients

Access to new geographies

Fig: TCS the CTO Based Org.

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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 21

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 22

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 longterm 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 26

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. 27

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

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