Tata Consultancy Services Limited: The Pioneer in the Indian IT Industry
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Case Code: BSTR125 Case Length: 22 Pages Period: 1990-2004 Pub Date: 2004 Teaching Note: Available |
Price: Rs.500 Organization: TCS Industry: Information Technology, Software Countries: India Themes: Business Practices |
Abstract Case Intro 1 Case Intro 2 Excerpts
"Many years ago, there was an industrial revolution. We (India) missed it due to (factors over) which we had no control. Today, there is a new revolution - a revolution in information technology, which requires neither mechanical bias nor mechanical temperament. Primarily, it requires the capability to think clearly. This we have in abundance. We have an opportunity even to assume leadership. If we miss this opportunity, those who will follow us will not forgive us for our tardiness and negligence."
- FC Kohli, Deputy Chairman of TCS.
"TCS' achievements are mainly due to the company's foresight in gaining expertise and experience in emerging technologies. TCS' ability to provide end-to-end solutions is another of its major strengths. We may not be visible, and we do not publicize our achievements but we are definitely leaders in the industry."
- Atul Takle, Vice-President, Corporate Communications, TCS.
Introduction
In June 2003, Tata Consultancy Services (TCS) - the leading information technology (IT) company in India, reported revenues of Rs. 49.975 bn (US$ 1.04 bn) for the financial year ending March 31, 2003 (Refer Exhibit I and Exhibit II for the financials of TCS). This made TCS the first IT company in India to cross the $1 bn revenue mark.
Within a span of three and a half decades, TCS emerged as one of the largest software companies in Asia, employing 28,000 IT professionals from 30 nationalities working in 32 countries. TCS has also been the largest software exporter from India for past 30 years. TCS played a major role in developing the IT industry in India. The company was a pioneer, starting its business way back in 1968. During the first couple of decades, TCS faced many problems in doing business, owing to unfavourable government regulations and the licensing system, which made it difficult to even import computers. Recalling the hurdles faced by the company, SR Ramadorai, the CEO of TCS (Refer Exhibit III for organizational structure of TCS), said, "It would take us two years in India and almost a year in the US to get all the clearances we needed to import computers.
By the time we got the approvals, the model of the computer would have changed. Then we had to explain to Indian customs officers that model numbers don't mean much, etc. But they would say, go back and get the license amended. On top of that, we had to pay 300 per cent import duties and give export commitments that were sometimes 250 per cent the value of the computers we were importing. Those were painful processes. Very few companies would have persisted through all of that."
Despite all these hurdles, TCS was determined to succeed. The company grew by consistently upgrading its skill sets, technology and its infrastructure, and in the process, developed several new innovative software products. A unique aspect of the firm's style of functioning was that despite being an IT company, it was run along the lines of a manufacturing concern, with a factory approach. The company managed its new recruits similar to how a manufacturing concern managed the inflow of raw material. TCS looked after its work force like a manufacturing company dealt with its inventories. The company allocated its work force to its branches spread across the world, similar to a retailing company managing its stores.
TCS introduced the concept of Offshore Development Centres, where TCS engineers based in India worked on projects for clients abroad and saved costs for both TCS and its clients. By consistently undertaking and performing good quality jobs for clients at a fraction of the cost they would otherwise have incurred, TCS put India on the global map and became a premier IT outsourcing destination for companies in the West, particularly the US. Crediting TCS with bringing glory to the Indian IT industry, Nandan Nilekani, CEO of TCS' competitor, Infosys Technologies said, "TCS pioneered the Indian software industry and has played a seminal role in the global acceptance of the Indian software capabilities."...
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