TATA
CONSULTANCY
SERVICES
TCS is Asia's largest IT services company, with the Fortune Top 10 US companies. In the year 2003
presence across 35 countries. the company achieved a significant milestone for
Indian IT firms, when its revenues crossed US$ 1
Background billion.Two years later, it achieved the milestone of
becoming the first Indian IT company to cross the
Tata Consultancy Services Limited (TCS) is Asia's US$ 2 billion annual revenue mark. Its huge
largest Information Technology consulting, services, resource base of over 66,000 employees instils
and BPO organisation. Incorporated in 1968, the confidence with large customers that view TCS as a
company has been promoted by the Tata Group. competent and dependable player, with the
During the early boom years of IT services expertise and proven ability to handle large and
outsourcing,TCS concentrated as much on complex projects.
servicing the Indian market as on growing its
international business.This focus helped the TCS' growth has been driven by a host of
company acquire significant competencies to acquisitions in India as well as abroad. It merged
manage large complex projects like depository the Tata Group's holdings in Airline Financial
systems and stock exchanges that could be later Services (AFS),WTI and Phoenix Global Solutions
taken to other markets. to create its BPO business in 2004. It also acquired
Computer Maintenance Corporation (CMC) in
Today the company has a presence in 35 countries 2001, which gave it a foothold in the domestic
across six continents. Its customers include six of government sector.This was followed by the
acquisition of Tata Infotech in April 2005, which
brought in capabilities in systems integration,
contract manufacturing and training. Internationally,
TCS has made strategic acquisitions of FNS
(Australia) and Comicrom (Chile) and has a joint
venture with the Pearl Assurance Group (UK).
The company's promoters,Tata Sons Limited, along
with other entities of the promoter group, hold a
majority stake in TCS (83.69 per cent). Domestic
Company Products Established Founder Distribution
TCS IT services 1968 Tata Group North America, South America,
Europe, Africa, Asia, Australia
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Products significant presence in Retail & Distribution, Life
sciences & Healthcare, Energy and Utilities, Media
and Entertainment,Transportation and
Government.
TCS' breadth of services comes closest to that
offered by the likes of IBM, Accenture and EDS,
starting from the bottom of the value chain with
application development and maintenance projects
to the top of the value chain with product
development. Engineering design and services is
one of the areas where TCS has an edge over its
domestic rivals.TCS executes high-end work in
aerospace design and industrial design because of
its strong domain focus on the manufacturing
sector.These capabilities, along with new offerings
in consulting, infrastructure management services
and BPO will serve as growth engines for the near
future.
Financial analysis
TCS was a closely held company till 2004, the year
it got listed on the Indian bourses. During 2005 the
company's consolidated revenue was US$ 2.2
financial institutions, mutual funds, private billion.The company's consolidated revenue in FY
corporate bodies, non-resident Indians and the 2006 was US$ 2.97 billion.The Americas were the
Indian public hold the residual shares. largest contributors to the revenue, with a share of
nearly 59.06 per cent, followed by EU, which had a
Products and services share of 22.40 per cent.The share of revenue from
the domestic market was 12.50 per cent, with the
The company's areas of operation include remaining contributed by Asia Pacific countries.
consulting, application software development,
maintenance and enhancement, enterprise solutions TCS' contribution in making Made in
implementation, software products and India global
frameworks, software R&D, IT enabled services and
IT infrastructure establishment and maintenance. It TCS has a presence in 35 countries across the
provides services in system software, commercial globe. It has established a global footprint, both in
applications and engineering and industrial services English speaking and non-English speaking areas
and serves a number of industry verticals. Amongst with services and solutions provided to over 900
these, Banking, Financial services and Insurance is global clients through a network of more than 100
the largest, followed by the Manufacturing and offices across the world. Aiming to be a truly global
Telecom verticals.The company also has a player, the company has non-Indian employees
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TCS's global network of offices high quality solutions to its clients.TCS has
Americas Europe Asia-Pacific Middle East structured its operations into Global Delivery
& Africa Centres, Regional Delivery Centres and Near-shore
Delivery Centres based on customer proximity and
Argentina Belgium Australia Saudi Arabia
Brazil Denmark China South Africa coverage.The 42 Global Delivery Centres in India,
Canada Finland Hong Kong UAE in addition to the one in China, are of very high
Chile France India
scale, serve large customers, and have matured
Mexico Germany Japan
Uruguay Hungary Korea processes supported by a depth of skills.The
USA Ireland Malaysia Regional Delivery Centres like the ones in
Italy New Zealand
Budapest, Hungary and Montevideo, Uruguay are
Luxembourg Singapore
Portugal South Korea medium scale, serve regional and local customers
Spain Taiwan and have selected capabilities.These centres have
Sweden
the distinction of being capable of addressing
Switzerland
The language and cultural challenges.The Near-shore
Netherlands Delivery Centres like the ones in New Jersey, USA
and Peterborough, United Kingdom for example,
representing 6.5 per cent of its workforce across are smaller in scale, and support customers of the
its international development centres and offices. same geographies and time zone - meeting the
needs of some customers that need the comfort of
TCS established its first global footprint way back proximity.
in 1971 when it began serving customers in the US
and later opened its first office in New York in TCS has aggressively backed its globalisation plans
1979.Today it has over 50 offices in the US with by strategic acquisitions. In 2005 it acquired
more than 10,000 employees and five Centres of Comicrom for US$ 23 million. Comicrom had
Excellence focussing on industry specific issues. revenues of US$ 35.5 million during FY 2005, and is
After US,TCS moved on to UK in 1975, where it a leading BPO organisation in Chile with a 57 per
has 8 offices.TCS is the only Indian company that cent market share of the cheque processing
has a strong presence in the Spanish and business and counts more than 70 per cent of the
Portuguese speaking regions of the world. Its banks operating in Chile as its customers.
business arm,TCS Iberoamerica, provides high
quality IT services as well as consulting and BPO In October 2005,TCS made a strategic decision to
services to over 100 clients across 12 countries become a complete solutions provider for the
including Mexico, Central America, South America, global banking industry by acquiring Sydney-based
Spain and Portugal. In the Asia Pacific region,TCS
has the capability to serve the Japanese, Chinese
and Korean speaking zones.TCS' China centre
meets this need, while also addressing the domestic
market in that country.
TCS uses the global Network Delivery ModelTM,
wherein it combines the skills of consultants with
expertise on local industry and business issues with
global technology and industry experts to provide
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FNS, through the company's newly formed During the year,TCS formed a majority-owned
subsidiary in Australia,TCS FNS Pty Limited.The subsidiary in the UK named Diligenta Limited
acquisition of FNS further strengthens TCS' (Diligenta) to undertake the Pearl transaction.
portfolio of banking and financial services products Diligenta will subsequently focus on offering similar
by adding BANCS, a strong, scalable, high- services to other life insurance and pensions
performance Core Banking Solution with an companies which presents its with a significant
established global customer-base.TCS expects to growth opportunity in an industry with high-entry
derive high synergistic value by combining its own barriers.
product portfolio with BANCS software and by
offering the customer its servicing capabilities. Factors fuelling TCS' global initiatives
BANCS has been installed in over 115 banks On its part,TCS has continuously moved up the
spread over 35 countries and its clients include value chain by expanding its consulting offerings
Tier I and Tier II banks in emerging markets in set, leveraging its proficiencies in emerging
Europe, Asia, Australia and Africa. In India, 40 per technologies such as Radio Frequency Identification
cent of all bank business will soon be done on (RFID) and embedded systems, and through new
BANCS software following its implementation at all offerings in Engineering and industrial services.To
branches of State Bank of India and its associate become an integral part of the global economy,TCS
banks, Indian Bank and others. has used different global locations to deliver
services. Its Delivery Centres in South America,
The company acquired Swedish Indian IT non-English speaking Europe and China have not
Resources AB (SITAR) through its subsidiary in only given the company a multi-lingual workforce
Sweden viz.TCS Sverige AB, in May 2005. SITAR but also meet a critical requirement of large
was TCS' exclusive partner in Sweden and a non- multinational customers, who require IT services in
exclusive partner in Norway. SITAR's client list non-English speaking markets.
includes Ericsson, IKEA,Vattenfall and Hutchison.
The acquisition has enabled TCS to deal directly Another key factor responsible for growth has
with end-customers and help increase its market been the company's excellent skills in managing its
share in the region. human resources. In an industry marked with high
employee attrition,TCS has witnessed an attrition
In October 2005, the company announced a new rate, which is amongst the lowest in the industry.
growth initiative to enter the Life Insurance and This has been mainly the result of its efforts to
Pensions BPO market in the United Kingdom align its business objectives with those of individual
through a structured transaction with the UK- employees by investing in learning and
based Pearl Assurance Group (Pearl).This strategic development, robust career management, conducive
initiative to pioneer the next generation of work environment and strong reward and
industry-specific BPO solutions built around IIMS, recognition mechanisms.The training programmes
the company's proprietary insurance solution conducted by TCS for its employees have become
platform, will start operating in FY 2007. It will benchmarks in the industry.
service the Pearl Group's closed books portfolio of
four million insurance policies and is expected to TCS also has an enduring focus on processes for
generate revenues of over GBP 480 million (US$ ensuring high quality delivery. It has received the
847 million) over the next 12 years. ISO 9001 certification for quality. It is also assessed
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across multiple states and consolidation across
sectors like banking offering considerable
opportunities for growth.TCS and State Bank of
India have announced the formation of a joint
venture called C-Edge Technologies Limited to
provide advanced technology solutions and world-
class domain consulting for the banking and
financial services sector. After the acquisition of
FNS, this joint venture will play a key role in
deploying FNS products in the role of a preferred
systems integrator.
under the Capability Maturity Model (CMM), which
deals with the organisation's competency from the The company expects inorganic growth via mergers
technology viewpoint. In addition it is getting and acquisitions to complement its organic growth
assessed on People Capability Maturity Model riding on in-house capabilities.The acquisitions
(PCMM). In August 2004,TCS became the world's would be strategically chosen to close the present
first organisation to achieve an integrated gaps in skills as well as bring in new clients.
enterprise wide Maturity Level 5 on both the
Capability Maturity Model Integration (CMMI) and
the People CMMI. It has further set a benchmark in
quality standards by becoming the first company in
the world to use the SCAMPP methodology for P-
CMM appraisals.
Future plans
TCS' articulated vision is to be a Global Top 10
company by 2010. At the core of this aspiration is a
strategy wherein the company has identified six
strategic growth areas - Consulting, BPO, IT Globalisation at a glance
Infrastructure services, IT Solutions & Services, 169 offices in 35 countries across the world
Engineering & Industrial Services and Asset based Strong foothold in non-English speaking areas - its
offerings. Each of these businesses is expected to business arm TCS Iberoamerica provides services to
grow to US$ 500 million to US$ 1 billion in size more than 100 clients in 12 Spanish and
over the next few years. In order to drive this Portuguese speaking countries
growth in the future,TCS is strengthening its 87.5 per cent of revenues comes from markets
domain-specific offerings and end-to-end solutions. outside India
It is also looking at unexplored opportunities in Strategic acquisitions made to close gaps in current
Eastern Europe, Russia and China in the form of skills - Comicrom (Chile), market leader in banking
potential markets or global delivery centres. and BPO business in Chile, and FNS, Australia-
based banking solutions company
The domestic market offers multiple opportunities
for growth with e-governance initiatives taking root www.tcs.com
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