Tata Consultancy Services Recap

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Tata Consultancy ServicesRecap
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Discussion Took Place on Three Levels (and
Across Three Decades)

• Country analysispros and cons
• Industry analysisgrowing competition and
  steady upgrading
• Firm analysisstrategy/services/delivery
  channels
• These levels of analysis are difficult to pick
  apart.

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Country Factors

• Positive
• widespread English
• technical education
• political stability

• Negative
• poor infrastructure
• extensive business regulations
• import restrictions
• little domestic demand
• negative reputation effect

A few bright spots, but not a promising
environment in which to grow an industry.
Somewhat better in the 1990s, but only marginally
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Industry Development 1970s -gt early 1990s

• Competence in basic service at good prices
• Low-cost labor in a cognitive industry
• Worldwide demand booms
• Financial sector deregulation
• The IT revolution (mini computers, PCs, advanced
  languages, legacy systems collapse)
• Migration services
• Low barriers to entry at the low-end meant
  increasing competition

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TCSStrategy and Business Model

• Close relationships with customers
• Heavy investments in upgrading
• Service offerings (design, testing)
• Line of business expertise
• Productivity tools (offshore delivery, software)
• Periodic transitions
• Helps avoid commoditization and competition
• Group membershipfinancial backing reduced risk
  of transitions

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Expanding into Additional Programming Services
AcceptanceTesting
DetailedDesign
Coding/Testing
TechnicalDesign
Systems Planning
Maintenance
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Moving Up the Professional Service Value Chain
End-to-End Solutions
Logica, IBM, CSC, KPMG, Andersen Consulting,
LoB Products
EDS, CSC, Logica, Andersen Consulting, IBM
System Integration / Outsourcing
Andersen Consulting, Other Indian firms
Global Development Centers
Turnkey Projects/ Migration
Many international and Indian firms
Programming Services
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A Virtuous Cycle Arose Out of a Difficult
Environment
- Export earnings - Slow growth in
infrastructure - Positive policies in late-1990s
Country Factors
Industry
- Build reputation - Build industry skills -
Blaze a path
- Tough comp. environment - Benign policy neglect
TCS / Other Leading Firms
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Accounting for Industry Success

• Firms / Luck 70
• History/endowments 20
• Policy 10

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TCS Positioning
Cutting Edge
TCS Capabilities
Technical Competence
Other Leading Indian Firms
1970
2000
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Software Services in the Early 2000s

• Macro analysis
• Govt. now promotes the industry
• New infrastructure and training programs
• Legal innovations
• Industry analysis
• Competition is tougher
• Labor shortages
• Domestic market still underdeveloped
• TCS
• Rivals are catching up in core business
• How to leverage intellectual capital
• Organizational form?

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TCS Initiatives

• New geographic markets
• EU, Japan, Korea
• Establish software factories abroad
• Hungary (4/01), Phoenix (6/01), Hanoi (Q1/01)
• Larger projects
• Worldwide outsourcing for AIG group
• Negotiating worldwide outsourcing for a top 10
  commercial bank.