Tata Consultancy Services

A new world wonder

Tata Consultancy Services (TCS) is a leading provider of IT services, business solutions and outsourcing.  Through its global network delivery model, the mammoth corporation offers its e-business, application development and maintenance, architecture and technology consulting, engineering, security, infrastructure development and management services to organizations in more than 53 countries worldwide.  However, the firm's bread and butter is providing businesses with customized software packages.  Throughout its history, it has catered to finance, banking, insurance, telecommunication, retail and many other industries.  TCS is a part of the Tata Group, one of India's oldest and largest business conglomerates, which is made up of 96 companies on six continents and employs over 350,000 people.
 
Major millennium milestones

Since its founding in 1968 as a low-cost outsourcer, TCS has become accustomed to racking up firsts, not surprising, given that it was the first software services company in India.  Even within the last decade, the firm has continued to blaze a trail within its chosen field.  Proving that the dot-com bust wasn't bad for everyone, in 2002, TCS became the first software company in India to post yearly revenue in excess of $1 billion.  Two years later, in July 2004, the software services company became the largest private-sector IPO in the Indian market, raising nearly $1.2 billion.  Most recently, in 2007, TCS unveiled TCS China, breaking into the Chinese industry with a joint venture with the country's government and other partners.  That, along with the $5.7 billion the company raked in throughout fiscal 2008, should be enough to prove to anyone that TCS isn't merely a big deal in the consulting world: It's a very big deal, and it's intent on getting even bigger.  Indeed, the company's stated aim is to break into the elite band of global consulting firms at the intersection of business and technology.

These days, the company's client list read like a who's who of international business, including the likes of Eli Lilly, Virgin Atlantic, Ferrari and Ericsson, and those are just some of its IT solutions clients.  Its full client roster includes financial institutions such as State Bank of India and Dutch giant ABN Amro, as well as the likes of Alcoa, Cummins and even Carnival Cruise Lines.

Global slump, IT in the dump?

Despite its resilience during the last economic downturn (y'know, the one that started round about the turn of the millennium, even if it seems like small potatoes now), even the Indian IT market is expected to take a significant hit this time around, as every corner of the earth has seen some effects of the current economic slump.  The National Association of Software Services and Companies (NASSCOM) predicted slower growth for the software industry over the end of 2008 and the beginning of 2009 than it saw between March and September 2008.  With $40.4 billion in software and back-office services exports, India and its IT firms are likely to see a fall-off in demand from some of the very clients it established during the previous downturn.  

Wisely, TCS CEO Subramanian Ramadorai has said that predicting the future of the industry in such uncertain terms is anyone's guess.  While not exactly comforting, Ramadorai's statement does at least demonstrate an awareness that difficult times don't necessarily come with an easy solution.  That awareness clearly extends to TCS employees as well: In December 2008, the company announced that its India-based employees would extend their work day by half an hour, from nine hours a day to nine and a half.

Indeed, the difficulties involved in making such predictions were underlined by none other than the NASSCOM in January 2009.  That month, it predicted growth in the region of 16 to 17 percent for the Indian software and services industry throughout 2009, a prediction that, believe it or not, actually represents lower levels of growth than in recent years.  Double-digit growth in any industry in the present economy would be an astonishing achievement, so any hand-wringing over the future of the Indian IT industry is perhaps a little misplaced.

Opportunity knocks

 

Regardless of what happens to the economy, TCS is likely to be protected from the worst of its ravages; it's insulated to some degree from the global economic climate by its parent company, and it always seems to have plenty of cash on hand just when it's needed.  Indeed, in October 2008, TCS leadership found a substantial reason to be cheerful about the economic crisis: The firm announced that it had reached an agreement with cash-strapped Citigroup to acquire all of the company's interest in Citigroup Global Services Limited, its India-based BPO unit for some $512 million.  Under the terms of the all-cash deal, which closed in January 2009, TCS will provide outsourcing services to Citi and the rest of its affiliates for the next nine-and-half years.  The job is expected to net TCS some $2.5 billion in revenue, or a little under five times the cost of acquiring the unit.  At the same time, meanwhile, the unit still has the ability to pick up extra work wherever it finds it, not a bad bit of business for TCS.

Still expanding

Despite the credit crisis, TCS announced a regular stream of new contracts throughout 2008, and continued to open new facilities and training centers around the world.  One area of the world where the firm sees promise for growth is China; having first established a presence there in 2002, TCS opened its fourth delivery center in the country in November 2008, a 300-seat facility based in Tianjin that will focus specifically on BPO operations.  That same month, the firm also opened an office in Shenzhen.  For those not up to speed with their Chinese geography, Shenzhen is in Southern China, close to Hong Kong, and TCS' move there is an attempt to tap into the booming market in that part of the country.

Closer to its home base, TCS also opened a new training center in Guwahati, in the Indian state of Assam.  Located in northeastern India, Assam is a relatively untapped labor market for Indian consulting firms, due to a recent history of armed insurgency.  Indeed, with its investment in a 200-seat training center in Guwahati, TCS became the first IT firm to enter the region.  According to a November 2008 article in The Financial Express, TCS' move into the region gives it access to a "huge English-speaking population," which surely "presents an attractive recruitment opportunity … because of the shortage of skilled manpower in the traditional BPO hubs" around Mumbai, Bangalore, Pune and Hyderabad.

Earlier in the year, in March, the firm opened another delivery center, this time in Cincinnati, Ohio.  At 200,000 square feet of office space, and capable of housing up to 1,000 associates, the center became not only the largest TCS facility in North America, but serves as the primary software development and delivery center for North American customers.  

10-year genie in a bottle

In November 2008, TCS and Call Genie announced a 10-year contract in connection with a "major" Southeast Asian telecommunications company, for the use of Call Genie's CG InteractAgent and OpenAgent Search software.  Call Genie is a leading global provider of local mobile search and advertising solutions that connect ready-to-transact consumers directly with local merchants for local directory businesses, directory assistance services and local media publishers.  TCS will help the company deploy and maintain a local search and advertising solution that allows its operators to effectively search and access directory listing information for over 35 million subscriber lines.  In addition, TCS will manage the day-to-day and long-term maintenance of the system.

The firm managed to ink several more deals in the IT sphere throughout 2008, as well, in a variety of sizes, contract durations and geographical locations.  In May, for example, it tied up the renewal of a service agreement with Virgin Atlantic that will see TCS manage the long-haul airline's IT services until 2011.  The deal provides an example of a classic TCS project, one in which the firm manages its clients IT infrastructure from end to end, allowing that client to get on with the business of running its business.  For Virgin Atlantic, that end-to-end service includes not only providing a 24/7 service desk, but also being responsible for Virgin's IT infrastructure and application support services, as well as any necessary IT relationships with other vendors.

Taking flight

That's not the only work the firm has done in the transportation field of late; indeed, travelers the world over may have reason to be (slightly) more cheerful following a solution announced jointly by TCS and aviation security experts I-SEC Technologies in September 2008.  The "solution" is a suite of automatic document checking software that simplifies the verification of travel documents required for air travel (that's ID and tickets for most folks).  The software was developed in partnership with the Star Alliance network of airlines, a group that includes United, US Airways, Asiana, Air China and more.  TCS was responsible for designing the overall solution and managing it as Star Alliance rolls it out across various member airlines around the world.

TCS' reputation for dealing with official papers was given a further boost in October 2008.  That month, the government of India selected the firm for its Passport Automation Project.  Valued at more than 10,000 million rupees (around $202 million), the deal gives TCS end-to-end responsibility for implementing a nationwide scheme that will allow the government to issue a new passport within three working days.  As would be expected with a nationwide project in a country of more than 1.1 billion people, the scale of the project is sizeable, to say the least.  From the date of the announcement, TCS had 19 months to roll out a pilot project, while the deadline for countrywide roll-out was set at six years, during which time the government would be conducting a phased opening of 77 passport offices.  In addition to digitizing the passport application process, meanwhile, one of the primary goals of the project will be the creation of a system that allows applications to be filed online, while every stage of the application and issue process will eventually be trackable online.

Deals, lots of deals

In May 2008, the company demonstrated its industry diversity, hopping effortlessly from the transportation and hospitality sector (the Virgin deal) to the world of semiconductors, when it sealed a five-year deal with Dutch firm NXP Semiconductors.  That contract, worth $100 million, is another example of Tata providing end-to-end IT services, a description that in this case includes consulting, application management, development and support services for NXP's supply chain.

The previous month, meanwhile, the firm signed an eight-year IT applications services contract with Scottish Water, worth an estimated £60 million.  For its part, Scottish Water expects to save a minimum of £8 million per year from operating expenditure.  Also in Europe, TCS signed a five-year global contract in September 2008 with Swedish telecommunications firm Ericsson.  The project puts TCS in charge of delivering application maintenance and development services for the company's internal IT operations.

Taking it to the bank

While TCS has a very successful financial solutions software arm (BaNCS), it also conducts IT consulting work for banks and other financial services providers.  A perfect example of its expertise in that area came in June 2008, when it was announced that the firm had signed a memorandum of understanding to create an IT blueprint for India's J&K Bank.  J&K is more than just an acronym, however: It stands for Jammu and Kashmir, a state in India, meaning J&K bank is effectively a regional bank.  With TCS' help, the bank is seeking to speed up economic development in the region, a large part of which is likely to come down to developing a technology framework within the state.  After the firm's visit to the region prior to announcing the deal, TCS CEO Ramadorai issued a strong suggestion that the understanding with the bank was just the foundation stone in a more concerted effort to establish TCS' presence in the region, saying that "it has been a great experience for all of us to understand the business realities on the ground in J&K and learn about the economic and business potential of the state.  We will work with J&K Bank to put in place a technology blue-print, which we believe can propel the economic development in this area."

And banking the awards

As might be expected, TCS had no shortage of admirers in 2008, and the firm took home quite a bit of swag throughout the year.  First, at Frost & Sullivan's Best Practices Awards in April 2008, TCS won the customer value leadership award in IT services for the manufacturing industry.  September, meanwhile, turned out to be something of a banner month for TCS, if not the stock markets.  That month, it was awarded The Wall Street Journal's Global Innovation Technology Award in the wireless category, while also scooping one of Eli Lilly's Global Supplier Awards.  The former prize recognized the breakthrough of TCS' mobile-based crop-advisory service, mKrishi, which gives rural farmers in India better access to information, and therefore promotes increased productivity and yield potential, something that can even be adapted for illiterate farmers to use.  The Eli Lilly award, meanwhile, was of the more common garden "information technology excellence" variety.

2009 brought TCS a whole new type of success to thirst after, from the beginning of the Formula One racing season, TCS' logo appeared on the Ferrari F1 car as it speeds its way around racetracks the world over.  The contract with Formula One marks the first appearance of an Indian company's logo on the legendary Ferrari F1 vehicles, most famously driven to five of his seven world championships by the now-retired Michael Schumacher.  The deal came as part of a technology and marketing partnership between the two companies that stretches back to 2005.

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Tata Consultancy Services


TCS House
Raveline Street, 21 DS Marg
Mumbai 400001
Phone: +91-22-56689999
Fax: +91-22-56689333
www.tcs.com

STATS


  • Employer Type: Public
  • Stock Symbol: 532540;TCSEQ
  • Stock Exchange: BSE, NSE
  • CEO and Managing Director: Subramaniam Ramadorai
  • 2009 Employees: 130,000

Major Office Locations

  • New York, NY
  • Mumbai, India

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