VALUE CREATION MODEL FOR TCS

learning
satisfaction
flexibility
teamwork

processes ,business value for

excellence,innovation,glob investors and
al delivery employees
network,innovation

roi,profitability,growth,e
xpansion,strategic
marketing,retained
earnings.cash

There are certain features that are unique only to TCS that help the organization in creating
value. TCS serves large and fast-growing organizations who share a common set of objectives:

● Increase profitability and efficiency by doing more with less

● Rapidly and effectively respond to the changing market demands, thereby improving

organizational agility

● Leverage IT as a strategic driver for competitive advantage, not just as a business utility
global workforce

integrated
processes

multi-tiered
infrastructure
STAR MODEL OF ORGANIZATION DESIGN FRAMEWORK

DESIGN ELEMENTS

STRATEGY: The Company’s strategy specifies the goals and objectives to be achieved as well
as the values and missions to be pursued. It sets out the basic direction of the company. TCS
follows a cost leader strategy. The focus for TCS is to attain competitive advantage is to reduce
the per employee cost and attain economies of scale. This is the reason TCS doesn’t lay much
importance to R&D.

STRUCTURE: The structure of the organization determines the placement of power and
authority in the organization. TCS has a mechanistic structure wherein the there is a formal
structure and control is imposed on employees. Rules, procedures and a hierarchy of authority
help in getting work done in time and with minimum cost. TCS has a matrix structure where is
departments exists based on specialization. Decision making is centralized.

PROCESSES: TCS has vertical processes. The needs of different departments are centrally
collected, and priorities are decided for the budgeting and allocation of the resources to capital,
research and development, training, and so on. Communication tends to follow formal channels
and employees are given specific job descriptions delineating their roles and responsibilities.
Coordination is maintained through the chain of command.

Vertical processes

PEOPLE: People in star model depict the human resource policies of recruiting, selection,
rotation, training, and development. Human resource policies when in the appropriate
combination produce the talent required by the strategy and structure of the organization,
generating the skills and mind-sets necessary to implement the chosen strategy. The employees
in a service organization are the biggest source of competitive advantage. There is continuous
investment in learning, and an active sharing of knowledge with the aim to convert learning into
action.

REWARDS: The purpose of the reward system is to align the goals of the employee with the
goals of the organization. It provides motivation and incentive for the completion of the strategic
direction. The organization’s reward system defines policies regulating salaries, promotions,
bonuses, profit sharing, stock options, and so forth. Reward structure at TCS is primarily focused
on individual performances. Team rewards is not a part of the compensation.
STRUCTURE
The organization structure adapted by TCS is mechanistic in nature. A mechanistic organization
is characterized by the following structural factors:

▪ Degree of work specialization is high

▪ Departmentalization is rigid

▪ Managerial hierarchy has many layers

▪ Span of control is narrow

▪ Decision making is centralized

▪ Chain of command is long

▪ Organizational structure is very tall

COO AND
EXECUTIVE
OFFICER

HEAD EXECUTIVE
GOVERNMENT ASSISTANT
ISU

HEAD-GLOBAL CHEIF TECHNICAL

PRESALES HEAD-PMO
ARCHITECT/HEAD
SUPPORT

HEAD BUSINESS
FINANCE

HEAD PROCESS

HEAD HR

RESOURCE
MANAGEMNT
LEAD
 The figure above depicts the organization structure of TCS. which clearly demonstrates it
has many layers of hierarchy and decision making is centralized. While in an organic
structure it’s a flat organization.

CENTRALIZATION VS DECENTRALIZATION:

TCS as an organization is decentralized as there are many functional groups and the main
head/corporate office does not have the entire ownership of various processes. When it comes to
different functional the process is centralized within this functional. For example Recruitment,
L&D and MATC are centralized. For process standardization, TCS used industry standards to
define the fundamental governance processes for centralized services to be implemented across
locations.

As the organization was going through a transformation, clients want a step-by-step solution to
minimize the impact of change. To deliver quick results, the ERP function was chosen to pilot
the implementation of the governance model to deliver centralized services.

Different sectors and companies use the centralized approach. The centralized approaches have
several limitations like an enormous amount of knowledge would be required to be able to deal
effectively with user information requests that cover variety of tasks. A centralized system
constitutes:

● A processing bottleneck

● A single point of failure

ADVANTAGES AND DISADVANTAGES OF THE STRUCTURE AT TCS

The Factors that influence organization structure are:

1)Strategy
2)Technology
3)Size
4)Environment

The main advantage of a mechanistic structure is its ability to achieve efficiency. Therefore, in
organizations that are trying to maximize efficiency and minimize costs, mechanistic structures
provide advantages. The source of competitive advantage for TCS lies on achieving operational
efficiency. TCS follows a cost leader strategy. TCS is a cost leader in the IT business which
helps it to bag projects and thwart competition from players like Accenture, HP, Cognizant etc.
The projects undertaken by TCS don’t feature product development. The projects are lower
down the value chain and involve building IT systems for the clients. Clients outsource low risk-
low cost projects to Indian IT companies where as the foreign IT firms tend to get projects which
are high value-high cost ones. The focus for TCS to attain competitive advantage is to reduce the
per employee cost and attain economies of scale. These are the reasons that TCS follows a
mechanistic structure. The fact that TCS continues to do the same kinds of work that it currently
does justifies the mechanistic structure.

Advantages of mechanistic structure:

1. The formal structure and control imposed on employees allows TCS to conform to
clients' requirements and various compliances.
2. There is immense time and margin pressure from clients. Rules, procedures and a
hierarchy of authority help in getting work done in time.
3. Communication tends to follow formal channels and employees are given specific job
descriptions delineating their roles and responsibilities. This helps in establishing
accountability for every employee.
4. The mechanistic structure helps in avoiding role ambiguity, and uncertainty among
employees.
5. Due to the mechanistic structure, coordination is maintained through the chain of
command.
6. The quality of product is ensured , as work is assigned to individuals according to their
specialization.
Disadvantages of mechanistic structure:

1. Mechanistic organizations are often rigid and resist change, making them unsuitable for
innovativeness and taking quick action.
2. Mechanistic structure inhibits entrepreneurial action and discouraging the use of
individual initiative on the part of employees.
3. The structure limits individual autonomy and self-determination, which will likely lead to
lower levels of intrinsic motivation on the job. This had lead to lower satisfaction levels
of employees at TCS which in turn has been leading to higher attrition levels.
4. Highly mechanized organizations operating in rapidly changing environments run the risk
of becoming obsolete as competitors sacrifice maximum efficiency in exchange for
flexibility to tackle new environmental conditions. IT business is saturated with players
who work on same kind of business model as TCS has.

CONTEXTUAL DIMENSIONS OF ORGANIZATIONAL DESIGN

 size

organisational
culture
technology

contextual
dimensions

goals and strategy

environment

SIZE-

The total strength of the organization is around 214,770 while the size of the development center
at noida that we visited has a strength of around 1000, out of which 30% are females. TCS is one
of the largest private sector employers in India with a core strength 214,770 individuals.TCS has
turned into the second-largest employer among listed companies after Coal India Limited. But
the biggest employer in the country is Indian Railways with 16 lakhs employees. TCS's BPO arm
had revenues of $925 million in the year that ended in March 2011, and has 34,000
employees.TCS has one of the lowest attrition rates in the Indian IT industry.

CULTURE-the culture at TCS can be explained with the following diagram:-


fully satisfy
and generate increasing
value for customers and
other stakeholders
WORK CULTURE-
encouraging, supporting and
acting upon the findings of
learning activities;
ensuring a process for the
measurement, review and
improvement of key results
is
developed and implemented
KEY VALUES-
focus on developing leaders
TCS
culture
identifying your
competencies as well of
your team mates
managing customer
relationshiips
personally communicating
aligning the organisation’s the organisation’s mission,
structure to support delivery vision, values, policy and
of its policy and strategy; strategy, plans, objectives
and targets to people;
ensuring a process, or
processes, for stimulating, understanding the internal
identifying, planning and and external drivers of
implementing improvements change for the organisation;
to enabling approaches,
communicating changes and
the reasons for them to the
organisations people and
other stakeholders;
 ⮚ Visionary Leadership

⮚ Customer-driven Excellence

⮚ Organizational and Personal Learning

⮚ Valuing Employees and Partners

⮚ Agility

⮚ Focus on the Future

⮚ Managing for Innovation

⮚ Management by Fact

⮚ Social Responsibility

⮚ Focus on Results and Creating Value

⮚ Systems Perspective

POLICY-

CODE OF CONDUCT

● Promote, uphold, practise and champion the tata brand name.

● Drug free working place

● Prohibition of harassment, including sexual harassment

● Maintaining confidentiality of information(emails/voice chats)

● 40 hours of working time per week

 ● Punctuality, time and attendance reporting

ENVIRONMENT

SUPPLIERS-

⮚ Academic Institutes are Key partners who help the organization with human capital and

technology updates.

⮚ Partnering is ensured through MOU, curricula design and creation of centers of

excellence. Communication is managed through Academic Liaison Manger, Academic

Portal, Senior management meetings with heads of institutes and other ongoing meetings

⮚ Suppliers include hardware/software suppliers, business associates, travel agents, airlines

and VSNL.

⮚ Suppliers relationships are managed through MOU or service contract and major the

requirements are timeliness of service and cost.

INDUSTRY-

Key local competitors are – Infosys Technologies, Wipro Technologies and Satyam
Computer Services – TCS revenue is highest of all.

PORTER’S FIVE FORCE MODEL-

SUGGESTED CHANGES IN ORGANIZATION DESIGN

STRATEGY:

● IT business in India is saturated with players which follow a cost leader strategy. The

increasing margin and time pressure from clients warrants that TCS shifts its strategy
from that of a cost leader to differentiator. This would help TCS to target projects which
are high on value chain.

● Lack of a structured approach to evaluate, imbibe and disseminate the best practices.

● Although it has an understanding of its competitive position, but the measurement,

assessment and impact of the threat is not well defined.

 ● Though the short-term horizons have been addressed the organizational strategic

objectives in the long term have not been much taken care of.

STRUCTURE:

● TCS needs to have organically driven structure which would foster collaboration and

team work. Cross functional teams are necessary to deliver products which are above the
value chain. The environment is highly uncertain, unstable or subject to vary rapid
changes in market conditions. There is a need that personnel are empowered to make
decisions and resolve problems themselves.

REWARDS:

● The reward system must be congruent with the structure and processes to influence the

strategic direction. Reward systems are effective only when they form a consistent
package in combination with the other design choices. The reward system at TCS has to
change from individual to team based. Incentive for the employees to perform as a team
needs to be there for delivering superior products.

● Lack of alignment in the results of the performance analysis with business results and

objectives.

● The performance projections for measures and indicators have not been fully evolved, the

absence of these measures. This hampering the goal setting process .

PROCESSES:

● TCS needs to have horizontal processes, also known as lateral processes. It is designed

around the workflow, such as new product development or fulfillment of a customer

order.TCS should build a culture of encouraging thinking &creating forums for dialogue,
while encouraging leadership at all levels as the attributes of Customer Satisfaction
 measurement show some degree of variance to that of the stated customer’s key
expectations.

● . Risk taking, expressing differences and constantly generating new knowledge should be

encouraged among the employees.

● The lack of integration of process improvement initiatives such as PROPEL, PEEP etc.,

which influence the associate, work environment.

● The absence of a well-defined approach to evaluate the cost effectiveness of digitization

process.

● Monitoring and tracking of customer satisfaction metrics is done only at individual

customer levels. Monitoring at corporate level will help in improving its overall building
processes analysis thereby giving it a competitive advantage .

Lateral Processes

PEOPLE:

● Human resource policies also build the organizational capabilities to execute the strategic

directions. The employee needs to be given autonomy and control over their work which
would help in encouraging creativity. Valuing of employees should be institutionalized
through establishing processes that enable and enhance individual performance.
● The productivity levels of people is lower than that of its competitors majors so

improving an employee’s realization would enable it to achieve its stated vision