TATA CONSULTANCY SERVICES (TCS)

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1 STRATEGIC MANANGEMENT AT TATA CONSULTANCY SERVICES Submitted on 26/03/2004 By: ARVIND VERMA 27 Symbiosis Institute of management studies (TM&IT) 1

2 Table of contents : 1. Intro TCS : Building the companies vision...4 Leading change...6 Strategy and the internet...7 What leaders really do...8 The work of leadership...9 Knowledge creating company and strategy for managing knowledge...10 Knowledge management...10 Control in the age of empowerment...11 Future...12 Symbiosis Institute of management studies (TM&IT) 2

3 TATA CONSULTANCY SERVICES INTRODUCTION TCS is a division of Tata Sons, the holding company of the $10.4 billion Tata Group, India's best-known business conglomerate. Established in 1968, its founding was based on the understanding that the management problems in Indian industry could be resolved through the effective use of information technology. Under the leadership of F C Kohli, TCS spearheaded the pioneering efforts in creating a globally recognizable brand for the Indian software industry. Strong linkages with academia, workplace professionalism, and in-house training and learning helped TCS lay the foundation for growing into a world-class organization. TCS invested heavily in software engineering practices and standards, software quality assurance, software project management, software processes, and research and development in software engineering and technology. With more than three decades of experience in diverse areas of industry and commerce, Tata Consultancy Services offers end-to-end strategy consulting and system integration services to Fortune 500 clients across 55 countries. With over 100 offices in 32 countries, TCS employs 24,000 consultants and has 100,000 man-years of experience. TCS posted revenues of Rs 5,012 crores ($1.04 billion) in TCS leverages its expertise in its service practices ebusiness, Application Development and Maintenance, Architecture and Technology Consulting, Engineering Services, esecurity, Large Projects, Quality Consulting, and Infrastructure Development and Management to provide strategic consulting and system integration services to worldwide clients in banking, insurance, other financial services, telecom, manufacturing and process industries, retail, transportation, healthcare, government and utilities. Besides providing IT solutions to its clients, TCS develops and markets a variety of products in nearly all streams of industry. It has developed products such as Hospital Management System for the healthcare industry, eibs, NCS, FIG and Quartz for the banking and financial services industry, CemPac for the cement industry, TARABS, Insurance Product Designer Workbench and Issue Quote for the insurance industry, and also software development tools such as MasterCraft, Assent, DataClean and Infrex. Collaborative research with industry and academia, partnerships with global technology leaders, and innovative projects for over 1,000 clients give TCS an in-depth knowledge of the global economy. Its SEI-CMM (Software Engineering Institute s Capability Maturity Model) Level 5 status, the expertise of its consultants, its world-class products, and proven offshore capabilities strengthen TCS s value proposition (eight of the US Fortune top 10 are TCS clients) TCS follows a continuous quality-enhancement process, and 15 of its delivery centers in India have been assessed at SEI-CMM Level 5. All of TCS s major development centres are ISO 9001:2000 certified, and its quality management system is also ISO 9001:2000 compliant. Symbiosis Institute of management studies (TM&IT) 3

4 BUILDING YOUR COMPANY S VISION Vision (Provides guidance about what core to preserve and what future to stimulate progress toward). To be among the global top 10 by 2010 The achievement of the vision would be measured in terms of revenues, profitability, number of fortune 500 customers and technology leadership. Core purpose (Company s reason for Being) To help customers achieve their business objectives by providing innovative, best-in-class consulting, IT solutions and services. This is what Business Excellence is all about. CMM and TBEM imitative are steps in this direction Core Values (What we stand for???) Integrity, leading change, excellence, respect for the individual, learning and sharing Such values hold pride of place in the scheme of things and would uphold in the quest for Business Excellence. Integrity: Integrity as a value is a key to all Tata companies. It means ensuring the highest level of ethical behavior in all business and professional dealings Respect for the Individual: TCS has many avenues that empower each associate as an individual. Through the way it is organized in project teams, through the iqms. Through the Ultimax one can plan one s career, update competencies. All this provides hassle -free work environment for the individual. Learning and sharing: TCS has a collective strength of knowledge workers. Great idea have broken the walls of the center and have become organization wide practices like IPMS, like PAL, like Star of the month Excellence: TCS is trying to bring about a culture of excellence by making visionary leadership, customer driven excellence, agility, Focus on future, Management by fact etc. as the base of TBEM model. BHAG: (Big, Hairy, Audacious Goal- Aid long-term Vision) To become a billion dollar company by (Achieved) Vivid Description (Vibrant, vivid, engaging description of what it will be like to achieve the BHAG) Make it a joy for all stakeholders to work with us. Symbiosis Institute of management studies (TM&IT) 4

5 ARTICULATING A VISION CORE IDEOLOGY Core Value: Integrity, leading change, excellence, respect for the individual, learning and sharing Core purpose: To help customers achieve their business objectives by providing innovative, best-in-class consulting, IT solutions and services. ENVISIONED FUTURE BHAG: To become a billion dollar company by (Achieved) Vivid Description: Make it a joy for all stakeholders to work with us. Symbiosis Institute of management studies (TM&IT) 5

6 LEADING CHANGE If transformation is the name of the game then India's first billion dollar IT services company is all set for it. Tata Consultancy Services chief executive officer S Ramadorai calls it an allout change. A change, which he explains, gains importance because of the extra dimension it adds to the company. TCS is aggressively pursuing company s globalization effort. Globalization for TCS implies an all-out change. A change is important, not because it s a good thing or a bad thing but because it gives TCS the extra dimension to address the global delivery need. This change is reflected in company s global delivery model and extends to company s global development centres. All of which are parts of company s globaliza tion effort Steps Taken by TCS for transformation: Establishing a Sense of Urgency Market reality: Globalization is today s essence Major opportunities lies in overseas market Forming a powerful Guiding coalition TCS increases the diversity of its offerings through strategic alliances with global leaders in technology and ebusiness, such as IBM, Netscape, Microsoft, SAP, Oracle and Compaq, to name a few. TCS is also a founder member of the Internet Security Alliance (ISA) and a member of the Universal Description, Discovery and Integration project (UDDI) Creating a Vision To get an extra dimension to address the global delivery need Communicating the vision TCS is aggressively pursuing company s globalization effort. This vision is communicat ed by press releases, information on internet. Empowering others to act on the vision TCS is aggressively pursuing company s globalization effort To that extent TCS have to keep innovation engine growing, grow global delivery centres, and leverage any talent or resource in the right way Planning for and creating short term wins An essential part of this is reflected in the customers experience where TCS stress on aspects like localization, ability to deliver the same quality on a global basis and company s value proposition in a facility outside India Consolidating improvements and producing still more change People who become part of this organization too have to be global in nature. And this is another place where acceleration will take place, more so as TCS take in people not only from India but from other countries as well Institutionalizing new approaches And lastly are company s technology alliances and company s product alliances. TCS want company s alliance partners to feel that they are dealing with the best solutions provider, the best organization [Ref: 'Flexibility in the delivery model is critical', An interview with CEO S Ramadorai (Financial Express, January 02, 2004) Symbiosis Institute of management studies (TM&IT) 6

7 STRATEGY AND THE INTERNET The area where TCS focused last year and will carry forward this year too is digitizing the organization and connecting employees together both in TCS and in CMC a real challenge for the company. TCS have made a significant investment in the project. In April 2002, TCS did the employees services digitally, while in the second phase TCS is creating a knowledge management base and customer relationship management. This is available in the UK and TCS is rolling it across the world connecting suppliers and customers through intranet. Three years ago, TCS had many independent, standalone systems, multiple databases created in different parts of the organization. To generate a MIS, one had to collate information from a number of systems. Both in terms of accuracy of information and the effectiveness to take decisions based on the information, this was a major problem. If TCS want to run an organization using real-time information as quickly as possible, TCS should have an electronic transaction-based system. Some companies call it digital nervous system, while some call it enterprise integration. Threats of substitute solutions/services (+) software services industry has become more efficient and has expanded (-)Substitute offerings have come up Bargaining power of suppliers like SAP, Baan, oracle etc. Suppliers of enterprise solution like SAP, Baan etc. have access to more service providers online. Rivalry among TCS, infosys, Wipro, Cognizant and others differences among competitions offering have reduced but TCS still maintains the professional, technical excellence and the project management capabilities which come out as a differentiator Bargaining power of enterprises/clients seeking solutions/ services Bargaining power shifted to clients Barriers to entry (-)Barrier to entry in software services industry has been reduced (-)Many internet applications of TCS now followed by competitors HOW INTERNET HAS INFLUENCED SOFTWARE SERVICES INDUSTRY WHAT LEADERS REALLY DO Symbiosis Institute of management studies (TM&IT) 7

8 Chairman and CEO: S. Ramadorai : He has been the CEO of TCS from a very long time and posses the vision to make the company global top 10 company. He is both a good leader as well as an excellent manager Deputy Chairman: Tata Consultancy Services Deputy Chairman F.C. Kohli, is widely acknowledged as the 'Father of the ndian I Software Industry'. He took charge of the company in 1969 and is credited with growing it into one of the largest information technology firms in India. Bestowed with numerous awards, Kohli is also associated with many professional bodies like Nasscom and the Computer Society of India. Head, Strategy initiatives: Mahesh Bhandari leads the company s strategy initiatives. Mr. Bhandari is responsible for spearheading TCS initiatives into new business areas and geographies, evaluating and finalizing alliances, partnerships and investments globally CFO: Vinay Aggarwal CIO: Kesav Nori TCS Key portfolio holders = Leaders + managers Leadership Qualities Managerial skills TCS Key portfolio holders As leaders the key portfolio holders do the following: Sets a direction by developing the vision of the future of being among the global top 10 by 2010 Align people with the vision of company using techniques like balance score cards Motivating people using awards like star of the month (best performer of the month), hats -off (long term service awards -after completion of 3-5 years of service) and appraisals. As managers they do the following jobs: Planning and budgeting for short term and long term goals Organizing the human resources and technology and staffing the people with the right blend of technical knowledge. Controlling and problem solving using Grievance Redressal in just six steps THE WORK OF LEADERSHIP TCS follows the six principals for leading adaptive work: Symbiosis Institute of management studies (TM&IT) 8

9 1. Getting on the balcony : the business leaders at TCS view patterns as if they are on a balcony. Following activities provide them the platform : Employee Satisfaction Survey (ESS) is conducted regularly to gauge employee satisfaction and obtain feedback on work conditions and work practices. Performance appraisals: they are carried out to appraise the performance of employees. Three kind of appraisals are followed o Annual appraisal: It is conducted once in a year to ell yearly performance o Project end performance appraisal: it is done when employee is released from a project of 3 months or more o Appraisals for performance rewards 2. Identifying the adaptive challenge: The leaders at TCS have quickly identified the adaptive challenges which include Deploying organization wide network to tap the opportunities provided by the internet Anticipate a number of technologies that would have an impact in future Making TCS a global enterprise Becoming top 10 global company 3. Regulate distress: Distress at TCS is maintained as follows Grievance redressal Sports activities like Hand Cricket Organizing family day where employees bring their families to show how they work Organizing chess festival with unique rules called suicide chess Festival celebrations at TCS e.g. diwali celebrations with rangoli competitions, dumb charades etc. 4. Maintain disciplined attention: For this TCS takes following steps: Adheres to TCOC ( Tata Code of Conduct) Professionalism at work Dressing and personal grooming 5. Giving work back to the people: TCS get people to assume more responsibility as follows: TCS indulges in a People Engagement activity called PEEP for strengthening communication process. It involves conducting employee meetings across functions. PEEP stands for P Proactive E Employee E Engagement P Programme Program called PROPEL is followed to understand what an associate can do to achieve his and organizational goals. It stands for : P Professional excellence R Role enhancement O owning TCS culture P Personal growth E employee involvement L Learning 6.Protecting Voices of leadership: A succession planning for key positions is done. It has following steps: Critical positions are identified Mechanism to capture development needs for critical positions Symbiosis Institute of management studies (TM&IT) 9

10 A candidate pool for each critical position is developed KNOWLEDGE CREATING COMPANY & STRATEGY FOR MANAGING KNOWLEGDE Most knowledge is tacit, in peoples head Effectively managing the process of actively disseminating and of actively applying knowledge to make an organization successful in knowledge management. Knowledge processes are embedded through the enterprise. Every person in the enterprise actively participates in knowledge processes. Knowledge managers help the organization to improve the effectiveness of its knowledge processes. Understanding and optimizing knowledge management processes gives an organization competitive advantage regardless of it market segment. TCS A learned Organization Knowledge Dissemination Knowledge Information Data Global Top 10 by 2010 Leads to Improved Processes Is Information with guidance for action Is Facts with context and Perspective Is Raw Facts Knowledge Management TCS Vision of being among Global Top 10 Consultancy Firms by 2010 can be achieved on the sound foundation of effective knowledge management within the organization as well with the customers and alliances. This drives TCS in becoming a Learning Organization, which will facilitate continuous innovation and improvement thereby producing a World Class Organic Enterprise. The enterprise s ecosystem includes employees, custom ers, prospects, suppliers, other, Strategic alliance partners, governing board of directors. Sharing Knowledge, an essential component of knowledge management, leads to increased knowledge. CONTROL IN THE AGE OF EMPOWERMENT Symbiosis Institute of management studies (TM&IT) 10

11 SENIOR MANAGEMENT Corporate Group Heads IP/SP HEADS GEOGRAPHICAL HEADS CQM DELIVERY CENTER HEADS/ RM HEAD HR/ FUNCTIONAL HEADS Products Group Heads Large Customer Group Heads GL s PL s RM s BRM s SEPG Centre HR in Charge ML s Regional HR Heads TM s FUTURE Symbiosis Institute of management studies (TM&IT) 11

12 Tata Consultancy Services goal of becoming a billion -dollar company has been achieved, this was revealed by TCS chief executive officer (CEO) S Ramadorai in an exclusive interview to FE, where he stated the company s promise was being delivered The accomplishment comes ahead of the much talked about initial public offering (IPO) of TCS, which is currently a division of the holding company of the Rs 40,000-crore Tata Group, Tata Sons, and Asia s largest IT service s company. TCS will come out with an IPO only if it has to make acquisitions of more than 4 to 5 billion dollars. Such acquisitions are inevitable if the company wants to achieve its vision of being global top 10 by So, the company will probably come up with an IPO soon, so that it has enough time to consolidate the acquisitions and leverage them to achieve its vision. The challenge now, is how the company would compete in the global market. Price was not a factor in what the company had to offer to global clients, companies would do their homework. They will see the value creation price is not going to be the only factor. It will not come to you because it is the cheapest; it will come to you because it addresses numerous points. Can TCS achieve its vision??? If one goes by the current trends and make projections according to them, then the company can easily achieve its vision. But this is a straight line approach. In reality, when the company increases in size the management related problems increase many fold. So, it becomes a little difficult to forecast anything accurately at this stage. The company can take following steps to achieve their vision 1. Being highly adaptive so that it can change with the change in size and composition of the company. This includes updating skills and knowledge of the employees and Horning leadership and management skills of the employees. 2. Providing Standard offerings in global market, this will enhance the credibility of the company and help it creating a global Brand called TCS 3. Expansion by making global acquisitions: This can be done easily by raising money through the markets by means of an IPO. 4. Being innovative because that is the biggest differentiating factor that can win TCS many fortune 500 clients. With the experience that comes from the flagship of TATA s and excellent and world class services provided by TCS it seems that company can achieve its vision. Symbiosis Institute of management studies (TM&IT) 12

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