EVA and Compensation Management System at Tata Consultancy Services
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Case Details:
Case Code : HROB075
Case Length : 14 Pages
Period : 1998-2005
Pub. Date : 2005
Teaching Note :Not Available
Organization : Tata Consultancy Services
Industry : Information Technology
Countries : -
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HROB075) click on the button below, and select the case from the list of available cases:
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Introduction Contd...
According to Ramadorai, "There's no ceiling on the bonus. It can be equal to the fixed portion of the salary, providing the cell has shown that kind of EVA growth. It is not just compensation, we wish our employees to also get a feeling of ownership for their own unit, and its performance. We want each employee to feel as if they are running their business. They have to think like entrepreneurs and know the cost attached to their business and how will they add value to the investment."5
Background Note
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TCS started operations in 1968, as a division of Tata Sons Limited, one of Asia's largest business conglomerates, with a wide range of interests in engineering, telecommunications, energy, financial services and chemicals. The initial journey in the IT business was not easy for TCS.
During the first two decades of its operations, TCS faced many hurdles due to the rigid government licensing system, which made it difficult to import computers. Describing the difficulties in doing business during those times, Ramadorai 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.
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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."6
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F C Kohli (Kohli) was the first CEO of TCS (from 1972 - 1996). In 1969, the company had 10 consultants and 200 operators who carried out IT assignments in Tata group companies. One of the first assignments that TCS undertook was the punch card managements system for Tata Iron and Steel Company (TISCO). One of the first projects done for external clients was the Inter Bank Reconciliation System (IBRS) for Central Bank of India in 1969. TCS worked on similar project for 14 other banks, and also went on to work for municipal authorities and telephone companies. During the 1970s, TCS aimed at serving foreign clients, mainly to improve its own systems and procedures, as the foreign clients demanded high service quality and capability... |
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