Strategic Management

Tata Consultancy Services: Selling Certainty

Facilitator
Prof. Anita Kerai
By:
Suchetana Adhikary(p39229)
Vaibhav Mogra(P39232)
Isha Jain(P39196)
Meet Dadhania(P39193)
Roshan Khetade(P39219)
Praharsh Shah(P39212)
About TCS
• TCS entered the India’s IT space in 1968 with initial dealings in punch card operations to automate clients’ data
processing.
• In 1974, it went into a joint venture with U.S computer maker Burroughs Corporation with which they pioneered
into exports, earning foreign exchange and importing modern equipment.
• In 1978, the joint venture came to an end and TCS had to rebuild its client base.
• Mid 1980s the company shifted towards fixed price contracts offering complete IT solutions to its clients.
• Late 1980s, TCS started shifting towards offshore development which was spurred by lower labour costs in
emerging economies. However, it was less aggressive in offshoring than its competitors and in FY07, TCS
generated 41% of its revenue from offshore delivery (Infosys 50%). Offshore work priced lower than on shore.
• In 1992-93, 80% of TCS revenues was generated through exports.
• 80% shares were held by Tata Sons. Focused on promoting India’s high economic development resting on the
pillars of high ethical standards.
• 9 types of offerings and had 5 growth engines: IT infrastructure services, Platform based business process
outsourcing, Engineering and Industrial services, Global consulting and Asset based offerings.
• 175 offices in 50 countries. Focused on selling to large accounts.
• Extensive training programs and relied more on experienced workforce (60:40 of fresh hires and experienced vs.
90:10 Infosys).
The Experience-Certainty Strategy
• TCS with its Global Network Delivery model was able to solve challenging business problems of global
organizations in a timely and efficient manner.
• To differentiate from competitors and to add value to the brand, TCS launched the tagline “Experience
Certainty” in 2006 to emphasize on the delivery excellence and operational efficiency that TCS follows.
• It simplified its service offerings from 9 types to just 3 in order to reach higher operational efficiency and
customer satisfaction with lower defects and delivery time.
• Internal training especially for frontline sales team and delivery personnel was prioritized.
• Between 2005-06, TCS collected extensive data which upon analysis suggested certain findings based on which
the ‘Experience Certainty’ tagline was launched.
• TCS deliverables completed on time 96.6% of the time and 87% of customers felt that TCS projects met
schedules.
• There was just 1.4 defects per 1000 function points as compared to industry benchmark of 4.1
• Upon seeking external validation, TCS was the Industry standard and was the best.
• Clients while seeking for IT service vendors focused more on predictable delivery services rather than
technological innovations.
• Fuelled by all the above factors, TCS decided to launch the marketing campaign to gain competitive advantage
by assuring customers of excellent results within a budgeted time and with certainty.
Problem Statement
TCS intended to use the same business strategy to compete against global IT
leaders and to differentiate from other IT companies operating in India and reach
$10 billion in revenue by 2010. Will TCS be able to translate and communicate
the concept of certainty into foreign operations and sustain its growth in the
competitive IT services sector? Will the tagline substantiate into organizational
changes and efficiencies?
Porter’s 5 Force Model IT Industry
LOW – MODERATE

THREAT OF NEW
- LEADERSIP AND BRAND ARE IMPORTANT IN

ENTRY
IT SERVICE
MODERATE – HIGH
- LARGEST FIRMS ARE FAST GROWING AND
- INDIA IS HUB OF IT-ITES (OFF HAD HUGE MARKET SHARE
SHORE)
- PRICE DISCRIMINATION
AMONG POTENTIAL
CUSTOMER COMPETITIVE
BUYER POWER
LOW
SUPPLIER POWER RIVALRY LOW
HIGH - INDIAN IT SECTOR IS IGLY
CONCENTRATED
- BIG PROJECTS AND IG

SUBSTITUTION
LOW MARGINS

THREAT OF
- NO OTHER SOLUTION FOR IT - QUALITY

- PRICE OF SWITCHING IS HIGH AS - RELATIONSIP BETWEEN

INTERGRATION OF SYSTEM IN COMPANY BUYER AND SELLER WILL
NEGOTIATE PRICE
Tangible Resources at TCS for Competitive Advantage
Financial
- TCS launched IPO , in India which went upto $1 billion
- Strong balance sheet in year 2005-2006 , revenues $21.9 billion.

Location and Infrastructure

- TCS operates 175 office and 50 countries.

- TCS invested in new delivery centers in Chennai , Pune , and Noida

Technological

- Global Network Delivery Model to serve the customer’s requirements through combination of delivery centers at different
levels and provide value by addressing issues of regulatory , language and time zone requirements.
- Drivers of operational performance like Software Reuse , Defect Prediction Model , Centre of Excellence , Process Maturity.

Organization
- The top management is serving the company from inception.
- Layered system of reports and reviews , dashboard for monitoring and standardization In color coding for problem
identification.
Intangible Resources at Strengthening Differentiation
Strategy
Brand Reputation
• In the 1980s, TCS successfully executed the computerization of Swiss banking clearing house SEGA and its cross-
border counterpart Interested. This established its reputation for quality delivery of large mission-critical projects.

• In early 2001, TCS publicly announced the goal of becoming one of the Top 10 global IT Services companies by
2010. By the end of 2006, it had achieved this goal along multiple dimensions.

Human Resources
• As of Q2 FY)&, the average age of TCS staff was 28.2 years old ans 75% of the workforce was male. During the
precious fiscal year, TCS received over 6,25,000 applications, of which 3.5% were selected. More than 85% of
applicants who received offers from TCS accepted them.

• For the third consecutive year, TCS was rated as India’s best employer in IT services.

• With in-house training, TCS had begun to hire top candidates from a broader variety of backgrounds.
• TCS’s HR practices were updated to address the need for more specialized roles through creation
of separate programming and sales streams.
• TCS attrition rates were commendable. They were as follows:
1. <1 year: 19%
2. 1-3 years: 30%
3. 3-5 years: 18%
4. 5-10 years: 26%
5. >10 years: 7%

Innovation and Technology

• At TCS, focused centers of excellence were designed to ensure TCS remained up-to-date on evolving
technologies and best practices and could readily deploy them for clients. The technology maturity model ensured
TCS’s success capabilities kept pace with the technology evolution.
• TCS rank in terms of spending on R&D was not good as compared to domestic and foreign competitors. In 2005-
06, it reported a R&D spending of 320 million INR or 0.28% of their sales. While in the same period, Infosys
reported a R&D spending of 1020 million INR or 1.1% of their sales.
• At the same time, the TCS Co-Innovation network included start-ups, alliance partners and academic institutions.
Strengths and Weakness
Distribution
Combination of operations , center , talent pool , Global Delivery Network , Innovation Network and financial power enables the
company to effectively provide service. Strong Distribution helps to wit stand external shocks

Human Resource
Huge amount of talent pool inside and outside of India and very well established training program. The large number of employees
will benefit the company to handle the projects better and to take e projects . Also the attrition rate is less.

Management
Strong leadership handling TCS since inception , efficient day to day operation sand commitment to customer satisfaction .

Innovation
Good amount of spending in R&D from revenue in derivation innovation , platform innovation and breakthrough innovation.

Marketing
Marketing is bit weak section as only words of mouth marketing from clients. No public promotion for the brand happens in the
market. So , for getting the competitive advantage they need to do advertising and branding for attracting customer by propagating
the credibility and better customer delivery and satisfaction.
Overall Strategy Evaluation
• TCS’s strategy was consistent with the external environment as India’s IT services sector was very concentrated.
The top 3-4 players (with revenues over $1 billion) earned just 45% of the revenues.

• Also, at this time, Infosys was following the ‘focus’ strategy by only concentrating on foreign markets.

• Wipro was following an aggressive growth strategy on the back of acquisitions and had developed a strong position
on infrastructure management.

• In this way, it was proper for TCS to launch a differentiation strategy to standout from its competitors.