A

DISSERTATION REPORT

ON

“ORGANIZATIONAL ANALYSIS OF TATA CONSULTANCY SERVICES (TCS) LTD”

FOR

PARTIAL FULFILMENT F OR THE AWARD OF THE DIPLOMA OF

POST GRADUATE DIPLOMA OF MANAGEMENT(PGDM)

SUBMITTED TO SUBMITTED BY

Prof. Shabnam Siddqui Ms. Nisha Kumari

Enrollment No. UIMS-PGDM-10-035

1

Batch: 2010-2012

UDAI INSTITUTE OF MANAGEMENT STUDIES

JAIPUR

PREFACE

As a part of my syllabus of PGDM programme in Final year, I was assigned some

Practical and theoretical project work. Study of management will be immaterial if it

is not coupled with study of financial aspect of the business. It gives the student an

opportunity to learn the connection between comparison & execution to test & verify

application of theories & help in the comparison of management theories and

practice. The study gives a chance to know about the profitability and financial

position of the firm.

I have chosen TCS which is a $14.5 Billion Global company in Information

Technology Services, R&D Services, and Business Process Outsourcing. This report

contains the analysis of the 8 years data of the company. In the Scenario Analysis of

the company we have included the company’s industrial GDP, its Market Share,

Market Capitalization, Market Growth, HR policy etc. some other reason of choosing

this segment are;

Highly versatile & innovation oriented sector

Large number of employees are working

Highly challenging job opportunities

High growth opportunities

Work on international project

Platform to show the difference dimension of talent

2

ACKNOWLEDGEMENT

With a sense of gratitude and respect, I would like to extend my heartiest thanks to all

of those who provided help and guidance to make this project a big success. No

Project is ever the outcome of single individual’s talent or effort. This work is no

exception. This project would not have been possible without the whole hearted

encouragement, support and co-operation of our guide, friends and well-wishers.

Although it is not possible for us to name and thank them all individually, I must

make special mention of some of the personalities and acknowledge our sincere in

debtness to them. The successful completion of this project rests on the shoulder of

many persons who have helped us directly or indirectly. I wish to take this

opportunity to express to all those, without whose help, completion of this project

would have been difficult. I am indebted and thankful to all the individuals who have

guided, advised, inspired and supported me in making this project a success.

My gratitude to my honorable guide Prof. (Dr.) Neeran Gautam for giving us the

opportunity for developing the project and his able guidance, inestimable motivation

and constant encouragement throughout our project. Without his help this project

would never have been realized in its entirety. I would also like to express my

gratitude to my immediate project supervisor Dr. Ruby Dwivedi for her immense

help in this project.

3

CONTENT

SL.

NO.

TOPICS PAGE NO.

1 Introduction to the company 6

2 Introduction to IT industry& TCS strategic Analysis 10

3 External Analysis 13

4 External Environment- PESTLE Analysis 15

5 Porter’s 5 Forces model: IT Industry 17

6 Company Overview 20

7 SWOT Analysis 23

8 TCS’ Strategy Analysis 26

9 BCG matrix of Tata Group 30

10 BCG Matrix for TCS 32

11 TCS Joint ventures Annexure 37

11 Board of director 39

12 Key Financial Ratios of TCS 40

4

13 EV/EBITDA ratio of Tata Consultancy Services 48

14 Human Resource Planning (HRP) 53

15 TCS Training and Development mode 56

16 Self Competency Mapping For Compatibility Check 60

17 Alternative career Path 61

18 HR Outsourcing Human Resource Outsourcing: Scope for India

64

19 Conclusion 66

20 Annexure 67

5

INTODUCTION

Tata Consultancy Services is an IT services, business solutions and outsourcing

organization that delivers real results to global businesses, ensuring a level of

certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of

IT and IT-enabled services delivered through its unique TM Global Network

Delivery Model recognized as the benchmark of excellence in software development.

A part of the Tata Group, India‘s largest industrial conglomerate, TCS has over

100,000 of the world's best trained IT consultants in 50 countries. The company

generated consolidated revenues of US $5.7 billion for fiscal year ended 31 March

2008 and is listed on the National Stock Exchange and Bombay Stock Exchange in

India.

Tata Consultancy was established in the year 1968 and is a pioneer in the Indian IT

industry. Despite unfavorable government regulations like the Licence Raj the

6

company succeeded in establishing the Indian IT Industry. It began as the "Tata

Computer Centre", a division of the Tata Group whose main business was to provide

computer services to other group companies. F C Kohli was the first general

manager. JRD Tata was the first chairman, followed by Nani Palkhivala.

Together with other organic growth initiatives like the expansion into Brazil, Mexico,

China and Hungary as well as by setting up strategic units to pursue new

opportunities in the financial services products space or new services like Remote

Infrastructure Management and Platform-based BPO, TCS set the stage for

positioning its brand and its offerings in a unique manner to global customers. The

culmination of all these led to the Company‘s offerings of TM Global Network

Delivery Model (GNDM ) across India, China, Europe, US and Latin America as

well as its integrated full services offerings, all backed by the promise of certainty of

experience for customers. In 2007, this value articulation of ―Experience certainty‖

was formally introduced, accepted and validated by global customers.

7

As the Indian economy continued to grow in the new millennium, the need for

technology to drive inclusive growth became part of the national agenda. TCS, which

had been investing in the domestic IT market since its inception was well positioned

to help the Government at the central and state level in its new initiatives. Some of

the complex, e-governance projects which directly impacted Indians include the

digitization of the Ministry of Corporate Affairs as well as citizen service portals

built for State Governments. On its own initiative, TCS created a digitized delivery

system for the NREGA program and is building a mobile based advisory service for

farmers.

In a reflection of the Company‘s pioneering spirit and with a desire to spread the

benefits of the IT revolution across the country and given Ramadorai‘s passion for

education and development, TCS has initiated several bold steps to take the IT

industry beyond the metros. A new training center was opened in Guwahati in the

North-East of the country. TCS launched Ignite, a unique program to train science

graduates software professionals. Over 2,500 young graduates including 60 per cent

first generation graduates have completed the program and been inducted into the

Company.

The philosophies of leadership, delivery excellence and the promise of ―Experience

certainty‖ are pillars on which the success of TCS is cemented. This is perhaps, best

reflected in the fact that as a $ 6 billion company, TCS has achieved its vision of

being counted amongst the top 10 IT service companies in the world today.

TCS' ability to deliver high-quality services and solutions is unmatched. It is the

world‘s first organization to achieve an enterprise-wide Maturity Level 5 on both

CMMI® and P-CMM®, using the most rigorous assessment methodology -

SCAMPISM. Additionally, TCS‘ Integrated Quality Management System (iQMS™)

integrates process, people and technology maturity through various established

frameworks and practices including IEEE, ISO 9001:2000, CMMI, SW-CMM, P-

CMM and 6-Sigma

8

9

Brand Name TCS

Logo

Category IT Services

Sector IT and Technology

Tagline/Slogans Experience Certainty

USP India's largest IT company

STP

Segment Enterprises seeking IT solutions

Target Group

Large overseas enterprises along with domestic clients. Focus

on emerging markets as well.

Positioning Trustworthy company with big customers

SWOT

Strength

1) High command on local and domestic market(India)

2)Strong brand backing (TATA)

3) Strong Ethics

Weakness

1) Doesn't innovate

2) Failed in product segment

Opportunity 1) emerging markets

Threats

1) Attrition and Employee loyalty

2) Bigger MNC's entering India and competing for global

clients

3) Focussing on organic growth

Competition

Competitors

1) Infosys

2) Wipro

3) Mahindra Satyam

IT Industry & TCS Strategic Analysis

In an increasingly flat world, significant complexity and uncertainty is getting

attached to the unprecedented economic crisis. The Indian economy has also been

impacted by the recessionary trends, with a slowdown in GDP growth to seven per

cent. The focus and exponential growth in the domestic market has partially offset

this fall and insulated the country, resulting in net overall momentum. The IT-ITeS

industry in India has today become a growth engine for the economy, contributing

substantially to increases in the GDP, urban employment and exports, to achieve the

vision of a “young and resilient” India. During the year, the sector maintained its

double digit growth rate and was a net hirer. This growth has been fuelled by

increasing diversification in the geographic base and industry verticals, and

adaptation in the service offerings portfolio. While the effects of the economic

crisis are expected to linger in the near term future, the Indian IT-BPO industry has

displayed resilience and tenacity in countering the unpredictable conditions and

reiterating the viability of India’s fundamental value proposition. Consequently, India

has retained its leadership position in the global sourcing market.

India is now the leading country in providing IT Enabled Services in the world.

According to a recent study, Indian IT & ITES is expected to grow at 10.8% in 2009,

the lowest in the last five years, due to the current global meltdown. But in next four

years, it would grow at 13.9% to touch revenue of $110 billion. NASCOM, the

premier institute which manages all the IT and ITES companies in India, estimated

that the revenue of the IT Enabled Services will cross the revenues of IT industry by

2010.

The export revenue generated from ITES is about US$ 47.5 billion and has a

projection of more than US$ 86 billion by 2012. (CAGR – 20.7%)

Source: NASSCOM McKinsey Research

10

India holds a dominant share of the global offshore IT-ITES sector (65% of the

global market in offshore IT and 46% of the ITES market). Yet, at US$ 31.3 bn in

FY07, Indian IT-ITES exports accounted for less than 3% of the global spend on IT-

ITES. This clearly indicates significant headroom for growth. If India maintains its

current share of the global offshore IT-ITES market, IT-ITES exports from India will

exceed US$ 60 bn by FY10 and US$ 86 bn by FY12. Further, growing at current

trends, Indian IT-ITES exports are projected to reach nearly US$ 330 bn by FY20

(nearly 14% of the projected worldwide spend). Software and services exports

(including BPO) are expected to account for over 99 per cent of total exports,

employing over 1.76 million employees. But the Indian IT companies will have to

move up in the value chain and concentrate more on high value added services.

11

Why Outsourcing?

“Outsourcing system allows companies to contract for services that are not within the

scope of their expertise, so that they can focus their time, money and energy on their

core competencies instead of wasting valuable resources trying to gain Understanding

of areas that are somebody else's expertise".

Challenges

While the industry has significant headroom for growth, competition is increasing,

with a number of countries creating enabling business environments aimed at

replicating India’s success in the IT-BPO industry. Hence, concentrated efforts are

required by all stakeholders to address the current challenges, to ensure that India

realizes its potential, and maintains its leadership position.

12

External Analysis

Current position of IT/ITeS sector in India

13

External Environment - PESTLE Analysis

14

National Revenues: IT & ITES Industry in India

15

Market share

16

Sources of Revenue

Porter’s 5 Forces model: IT Industry

This industry analysis model was developed by Michael E. Porter of Harvard

Business School in 1979. 

This model was challenged and a extended six forces model has been developed

which includes Complementary such as combination products (e.g: MS Window and

Mcafee Antivirus)

The five forces with reasons for existence are described below with an example of

telecoms industry.

Reasons that attract new entrants in ay industry are:

Good returns

High and steady growth

17

Low barriers to entry (capital costs, raw materials)

Latest technology

Reasons for high probability of Substitute products and services are:

Switching costs

Price performance trade off of substitutes

Patents of Invention

Reasons for threat from Buyers:

Buyer purchase volumes relative to seller sales.

Option for substitute products with lower switching costs.

Brand identity

Reasons for threat from Suppliers:

Switching costs between suppliers

Presence of substitute products.

Costs relative to total purchases in the industry.

Supplier brand identity favoured by buyer.

 Rivalry among or within firms:

Like for like product performances

Advertising strategies

Customer service

Price competition

Time to Market

 

18

THREAT OF SUBSTITUTES 1. Other offshore locations such as Eastern Europe, the Philippines and China, are emerging and are posing threat to Indian IT industry because of their cost-advantage. However, this should have an impact only in the medium to long term. 2. Price quoted for projects is a major differentiator, the quality of products being same.

BARGAINING POWER OF CUSTOMERS

1. Large number of IT companies vying for IT projects – resulting in high competition for projects. 2. Huge decline in IT expenditure: Indian IT sector is dependent on USA and BFSI in particular for majority of its revenues, and with the recent financial crisis, the new spending from these has reduced tremendously. 3. However, for the existing products and services, the clients continue the old companies.

BARGAINING POWER OF SUPPLIER

1. Due to slowdown, the job-cuts, the layoffs and bleak IT outlook. 2. Demand and supply of IT professionals is no longer that favorable to employees. 3. Availability of vast talent pool – freshers and experienced.

BARRIERS TO ENTRY

1. Low capital requirements. 2. Large value chain, space for small enterprises. 3. MNCs are ramping up capacity and employee strength.

RIVALRY AMONG FIRM1.Commoditized offerings 2.'low-cost,little-differentiation’ positioning. 3. high industry

19

TATA CONSULTANCY SERVICES

Rapid globalization, diversification, and intense competition have resulted in a

more dynamic and complex world. Corporations have to increase agility in a

way in which their business units across geographies operate and collaborate

seamlessly across people, processes and technology.

Tata Consultancy Services Limited (TCS) is a leading and India’s largest provider of

IT Services, Business Solutions and Outsourcing with revenues of USD 6B during

FY08-09. TCS envisioned and pioneered the adoption of the flexible global business

practices that today enable companies to operate more efficiently and produce more

value. More than 95 percent of TCS customers reward the company’s reliability,

passion, creativity, and unique ability to handle the broadest range of their IT needs.

TCS has 143,000+ world’s best trained IT consultants located in 50 countries. TCS

achieved this by creating and perfecting a unique method of global deployment and

delivery of high quality, high value services known as Global Network Delivery

Model (GNDM™), the strategic services delivery concept that has reshaped the IT

services industry. GNDM™ is a unique network of 79 Delivery Centers in 16

countries. These delivery centers operate at the same quality (TCS is the only

company in the world to be assessed at CMMi Level 5 through a single assessment

across all its delivery centers), security and skill levels, giving customers the same

experience of certainty across the organization globally.

GNDM provides the fastest turnaround time from concept to service delivery, with

certainty of cost, quality and schedule, tailored for its customers based on the type of

work, risk mitigation needs, business knowledge requirements, geographic spread,

scale of delivery etc.

Being a pioneer in the IT industry, TCS have a good appreciation of trends and

challenges faced by industries TCS choose to focus. The solutions TCS build are

20

powered by domain expertise, enterprise solutions and infrastructure services, turning

the challenges of globalization into a competitive edge for clients.

TCS helps some of the world’s largest companies adopt the right technology-enabled

solution that helps them:

Optimize business performance

Facilitate alignment of business with technology

Connect their extended supply chains

Reduce product development time

Improve product differentiation

Provide real-time business insight

Lower operational costs

Profile

Tata Consultancy Services Ltd. (Founded in 1968, went public in August, 2004)

Vision: Top 10 by 2010

Leadership in IT Outsourcing: TCS is the largest IT consulting company in Asia

with 143,000 of the world's best trained IT consultants and an acknowledged pioneer,

innovator and thought leader in the IT space, having literally coined the term

“Offshore Development”. It is also a global consulting, IT services and systems

integrator with a 40-year track record and world class processes and methodologies.

TCS has won many accolades for its significant contribution to the maturity and

visibility of the Indian IT services worldwide

Trusted Partner: TCS is part of one of Asia's largest conglomerates - the TATA

Group. The group, with annual revenue of more than USD 72.5 billion+ (Feb, 2009),

spans across diversified industry segments such as consumer package goods (CPG),

energy, telecommunications, financial services, chemicals, engineering & materials.

The TATA Group, a symbol of trust in India, is known for its pioneering spirit and

the brand stands for business excellence and integrity.

Headquarters

TCS is headquartered out of Mumbai, India.

21

Location

TCS is operating in 47. TCS has 50+ delivery centers in India across 15 cities; 15+

development centers outside India. TCS’ employees are spread across countries.

Thus, Global presence helps in country availability of competencies for any technical

assistance mission or application project. Also, TCS deputes the associates on long

term and short term basis to the local countries for specific engagements.

Turnover

Tata Consultancy Services Limited (TCS) is a leading and India’s largest provider of

IT Services, Business Solutions and Outsourcing with revenues of USD 6 Billion

during FY08-09.

Number of customers

Over 985 active clients; 6 out of Top 10 US Fortune companies are TCS clients.

Customer revenue contributions are presented below:

Mission: To help our customers achieve their business objectives by providing

innovative, best-in-class Consulting, IT solutions & services. We shall make it a joy

for all stakeholders to work with us.

Values: Integrity, Excellence, Respect for the individual, Continuous learning and

sharing, Leading change.

22

SWOT Analysis

Tata Consultancy services (TCS) is one of the major IT service providers. The

company provides a wide range of services including business consulting,

information technology, business process outsourcing, infrastructure, and

engineering. The company has extensive global reach, which provides a diverse

revenue base. However, increasing competition threatens to erode its market share.

TCS’ Resources & Capabilities

TCS has over 143,000+ (Apr-2009) World Class Professionals. 30% of workforce is

women. Non Indian nationals comprise 8.3% of TCS workforce. TCS employees are

from across 67 nationalities.

23

Key Differentiators of TCS

Pioneer in the industry & Brand

Having started in 1968, TCS has established himself as the industry leader. Being

part of the trusted Tata group is also a big differentiator for TCS giving it a strong

brand strength.

Integrated full-services player

Portfolio of offerings extends from consulting to implementation, testing and support;

from engineering services to BPO; from products to end-to-end solutions.

Collaboration with multiple stakeholders

Having worked on large global scale enterprise projects, TCS appreciates the need

for flexibility to work with multiple stakeholders from customers, partners, and other

service providers. TCS have developed innovative engagement models that have

proven TCS’ ability to deliver significant value to its customers in managing their

projects as the sole solution provider, or prime/lead partner, or supporting partner.

Global Network Delivery Model

Unique network of 79 Delivery Centers in Brazil, Uruguay, Chile, China, Hungary,

UK, Japan, Australia, Singapore and India that operate at the same quality, security

and skill levels, giving customers the same experience of certainty across the

organization globally with a lower total cost of ownership.

High Quality and Maximum security

In 2005, TCS was awarded enterprise-wide triple certification for:

Quality (ISO 9001:2000), Security (BS 7799-2:2002) & Services (BS 15000-1:2002)

Innovation Network

TCS has established 19 labs with strong links to start-ups, academia and alliance

partners to continuously develop innovative solutions for their customers.

24

TCS Technology Partnerships and Relationships

Tata Consultancy Services combines its system integration expertise, flexible global

delivery model and deep industry insights with the technological expertise and

capabilities of its renowned alliance partners to offer competitive advantage to its

customers. The alliances enable TCS to deliver cutting edge technological solutions

and enhanced services to help customers integrate their business applications

effectively while improving the operational efficiencies and ROI. Strategic partner

relationships of TCS include leading industry players like SAP, Oracle, IBM, and

Microsoft among others.

Strategic Partners

IBM - Global System Integrator Partner

Oracle - Global System Integrator and Global Certified Advantage Partner

Microsoft - Global System Integrator Partner

SAP - Global Consulting Partner

Growth Engine Partners

Siebel - Consulting Partner

Web Methods - Global System Integrator, Preferred Offshore Partner

BEA - TCS is BEA’ Strategic Partner

SUN - System Integrator Partner, GSS Partner

Business Continuity

TCS follows a well defined and mutually agreed (with customer) business continuity

and disaster recovery plan. The BCP is tested on a pre determined frequency. This

was recently invoked during the under-sea cable fault leading to disruptions in the

voice/internet connectivity. The traffic was diverted through alternate routes as per

the plan.

25

TCS’ Strategy Analysis

TCS’ organization restructuring in April 2008 was one of the major moves in last

decade to adapt to external environments. Having an organization structure that

would respond to customer demands is most efficient way to lay down your business

strategies. TCS did it little late but just in time.

26

Business Strategy

TCS calls its Business Units as Industry Service Practice. TCS’ BU wise revenue

distribution is as shown below

This clearly shows that TCS has 42.8% of exposure to Banking Financial Services

& Insurance sector. No doubt, TCS has to re look its business strategy as the world

financial institutions are in a tremendous shock of subprime crisis and think of

scaling up revenue from other verticals/industries

.

27

Generic Business Strategy:

1. Low cost Global delivery 24X7 model.

2. Focus on customer relationship management, customer retention (for repeat

business revenue which is 95.6%).

3. Timely delivery with the help of proven delivery & quality framework – iQMS.

4. Differentiation in low end services in terms of cost, resources.

5. Differentiation in high end services such as consulting in term of niche offerings,

expertise.

6. Protection from currency fluctuations with the help of currency hedging.

7. Due to its strong knowledge management system and resource strength, TCS has

been successful in getting the cost leadership in the industry.

8. Since last decade, TCS has been following a more focused strategy where they are

going as per local needs of customer and their nature of business. E.g. Middle East,

Australia. They are being more focused region wise and customer wise rather than

being generic.

9. Focus on the Centers of Excellence (Coe) to strengthen capability so as to build

state-of-the-art solutions in specific technologies such as service-oriented

architecture, testing, and virtualization. These high-end skills and scale will help TCS

to tackle larger projects aimed at transforming clients’ IT applications and

infrastructures.

28

This shows that TCS has a heavy exposure to IT Solutions – Application

Development & Maintenance – 48.6%. TCS has traditionally a low cost

outsourcing player which provides application development and maintenance

services, which till date account for almost half of its revenue. Though TCS has

managed to bring down this percentage significantly in last decade by entering into

niche areas like, BPO, infrastructure services, business consulting, IT consulting,

asset leveraged solutions etc. TCS sees a strong growth potential especially into

consulting, BPO and infrastructure services. Thus TCS is investing heavily into these

areas to explore new market segments.

29

BCG matrix of Tata Group

Portfolio Analysis of the Tata Group

 The BCG Growth Share matrix uses the dimensions of relative market share and the

market growth rate to establish a 2*2 matrix containing 4 main quadrants – Stars

(high market growth, high market share), Cash Cows (low market growth, high

market share),Question marks (high market growth, low market share) and Dogs(low

market growth, low market share). The ideal strategy is to hold on to the Stars and the

Cash Cows, divest the Dogs and take a call on the Question Marks (hold/divest).We

have conducted a detailed analysis (using the BCG Matrix) of the portfolio of

companies in the Tata Group. This involved analyzing the sectors in which the Tata

group operates as well as the companies in the Tata Group within each sector. We

studied the operational and financial performances of each company to understand

their growth stories. Special emphasis was laid on identifying the organic an

inorganic growth routes pursued by each of these companies under the Tata umbrella.

The conclusions drawn about these companies are based on analysis of the global

strategy of the Tata group and on detailed conversations with top executives in the

Tata Group. The analysis reveals that Tata Steel, Tata Power, Tata Motors and Indian

Hotels emerge as clear Stars (high market growth, high market share). Hence, they

should be retained and the investment in these companies should be increased. Tata

Chemicals and Tata Tea emerge as the Cash Cows (low market growth, high market

share)and should be held on to for the time being. Some of the Question Marks (high

market growth, low market share) are Tata Tele services, Voltas and Tata

Communications

30

The profitability of the Tata Group in the telecommunication sector has shown a

consistent decline from 10% in 2003 to 4% in 2006-07.Despite the telecom boom in

India, the question on the presence of the Tata Group in the telecommunications

sector warrants further discussion. For the Tata’s, the broad objective behind entering

any sector is to be among the top 3 in that sector. Despite having had a presence for

many decades in the consumer durables segment, the Tata’s have been unable to

capture the leadership position in the segment through Voltas. Moreover, the growth

registered by Voltas over the past few years has also been far from impressive which

necessitates the need to critically evaluate its performance in this segment. In

addition, the question of operating so many companies under the Tata Group needs to

be looked into. Does it make sense to have so many companies in the first place?

Should there be a relook into the question marks like Voltas, Tata Communications

and Tata Teleservices? These are hard questions that need to be answered as the

group keeps going forward. With close to 100 companies under one roof, the

question arises whether all of them should be under the Tata Group or should some

be spun off

31

BCG Matrix for TCS

Market Penetration Strategy

Current Markets: USA and Europe

Current Products: ADM, BPO, KPO, consultancy services (in BFSI, manufacturing

and retail) and software products (financial products).

Recommendation: As most large clients in US and Europe are cutting costs, TCS

needs to be more aggressive on cost and quality front.

Market Development Strategy

New/Emerging Markets: India, Middle-east and Australia

Current Product: ADM, BPO, KPO, consultancy services (in BFSI, manufacturing

and retail) and software products (financial products).

Recommendation: Since these are fast developing IT market, TCS needs a paradigm

shift in focus from US and EU markets to these markets.

Product Development Strategy

Current Market: USA and Europe

New Product: Consultancy and package implementation services in relatively

growing sectors esp. life sciences & healthcare, aviation sector, and KPO services.

32

Recommendation: Concentrate on building expertise in these domains by strategic

acquisitions.

Other global strategies

Since last few years TCS is successfully leveraging labor cost in Eastern Europe,

South America and China.

Getting big foreign names on board of directors is also one of the key

strategies for TCS. The current three foreign directors are: Clayton M

Christensen (HBS Professor, joined in 2006), Dr. Ron Sommer (former

Chairman of the Board of Management of Deutsche Telekom AG, joined in

2006) & Laura M Cha (member of the Executive Council of the Hong Kong

Special Administrative Region (SAR) and Non-Executive Chairman of HSBC

Investment Asia Holdings Limited)

Look beyond US and UK for growth and beyond India for skills to emerge as a

global firm. Clearly bullish with successes such as ABN Amro in continental

Europe, Qantas in Australia, and almost 18% to 20% revenue from the Asia

Pacific market, TCS wants to grow its businesses in global markets including

India.

Recent acquisitions in Ireland and Latin America demonstrate its ambition to

create delivery centers of respectable size outside of India.

TCS was the first one to set up a delivery centre in China.

Corporate Strategy

TCS is a firm believer in ‘organic growth’ and acquire only those companies

which are in line with TCS’ strategic long term goals.

Diversification Strategy

In February 2008, TCS restructured its global operations to adopt an integrated,

customer-centric approach, which is expected to helpful in eliminating the risk

factors arising from the U.S. economic collapse. The company’s operations are now

divided into five units: Industry Solutions (for vertical-specific services), Major

33

Markets (North America, Western Europe and the U.K), New Growth Markets (Latin

America, Eastern Europe, Middle East & Africa and India), Strategic Growth

Business (TCS Financial Solutions, SMB and Platform-based BPO) and

Organizational Infrastructure.

TCS’s diversification plan seems to have worked since the company has been gaining

momentum in Europe and other emerging markets, which is evident in the company’s

marked growth rate of 40% year to year in its FY08’s European operations. The

firm’s operations in Latin America and Middle East have also seen considerable

expansion. In order to deepen its penetration, TCS has established delivery and

offshore centers in countries like Brazil, Uruguay and Mexico.

The weakening European economy and its GDP decline of 0.2% in the second

quarter (April, May, June) might hinder TCS’s diversification plans, as it is bound to

have a direct impact on BFSI’s outsourcing services. TCS, which draws 44% of its

global revenue from the BFSI sector, is likely to be affected. Also, the Indian market

is becoming difficult to afford, leading to a wider gap between the demand and

supply of IT consultants. This can be traced to the fact that hired employees lack

required skills or fail to deliver their expertise, but still seem to be demanding higher

wages.

Strategic Alliances

TCS has strategic relationships with various global technology vendors. These

relationships are in various dimensions such as Customer, Service Provider, Supplier,

and Alliance Partner. Extending collaborative research to several global technology

vendors has made relationships with them more holistic. TCS and these technology

vendors collaborate on joint research leveraging each other’s strengths to research

and to the development of best-of-breed offerings. The intent is to define and develop

solutions with associated services and offer the same as an integrated business model

to customers. Some of the strategic alliances are listed below.

Intel: Intel and TCS provide information technology products and services that

complement each other. The companies are engaging in a technology alliance model

34

in which the two organizations collaborate on research and develop solution offerings

to deliver customer-specific solutions to the marketplace.

This alliance has matured over the last two years of collaborative work, with the

companies implementing a well-defined model for collaboration using a three-stage

approach:

Joint innovation engagements

defining new or improved solutions

Joint go-to-market strategies for the solutions

The companies have completed two significant virtualization and balanced compute

research projects with these objectives:

Virtualization: Demonstrate server consolidation through virtualization using

multi-core Intel® Xeon® processors and Intel® Virtualization Technology on

a real-life customer application to reduce total cost of ownership.

Balanced Compute: Demonstrate and validate balanced compute model usages

in real end-user scenarios, showcasing central manageability and client side

computing using a combination of OS and application streaming technologies

on Intel® vPro™ technology-based platforms.

SAP: SAP as a leading technology and product vendor is one of the key partners of

TCS. The partnership with SAP has been a long-standing one and multi-dimensional.

Leveraging and extending this existing partnership to collaborate for joint research

and innovation was a logical next step for both SAP and TCS.

Senior Research Scientists of SAP and TCS initiated this collaboration setting the

objectives and defining the modus operandi for carrying out research in a

collaborative manner. And they committed to cause by undertaking the responsibility

to be Executive Sponsors in the respective organizations.

Collaboration with SAP Research was initiated after detailed discussions and

exchange of research interests from both SAP and TCS. Identified areas include

35

Model-driven Architecture and Integration of Enterprise-Data, Web 2.0, Internet of

Services, and Internet of Things.

Hewlett-Packard: HP and TCS have initiated discussions for joint research in the

areas of SaaS, Power Management & Cooling, Utility/Grid Computing, Cloud

Computing, Green IT and Next Generation Data Center. Some of the potential

research initiatives could also involve development of market-specific offerings

based on value-added services, using products and solutions from HP.

EMC2: With TCS being an IT solutions and services provider, EMC2 and TCS have

conceptualized IT solution architectures for specific industry-domains integrating

products from EMC2 and software platforms from TCS.

Acquisition Strategy

TCS is looking at growth from two ways –first through organic means and second

through the inorganic way. The inorganic way of growth is through acquisitions of

those companies that make business sense to TCS. The companies should add great

value to TCS. Like for instance TCS acquisition of CMC is helping it taking a

sharper look at the domestic IT business. Both the companies have synergies in the

government sector, since both the companies are well known for doing work for the

government.

TCS as part of its strategy to look at growth options has set up an internal team which

will focus only on acquisition strategies .Below are some of the acquisitions of TCS

in the recent past:

Nov 2008: TCS Acquisition of Citigroup Services. TCS gains a range of new

capabilities, with end-to-end banking BPO service offerings, and an

opportunity to provide integrated IT and BPO services to the banking market,

as well as the significant contracted revenue commitment. Over 12,000 staff

has transferred with the deal. From the Citigroup side, they get a cash payment,

and an external partner committed to deliver (and probably to improve) the

services – they have monetized their investment in setting up CGS (Citigroup

Services). They no longer have direct responsibility for managing an offshore

36

delivery centre in a market becoming increasingly competitive, and they have

significantly reduced their overall headcount.

Feb 2006: Tata InfoTech (TIL) Limited was merged into TCS Limited. TIL

was a software services company like TCS with operations in the UK, U.S, and

Australia among others. The merger gave TCS a broader customer base and

deeper penetration into key geographies. The acquisition was touted as

providing TCS more ability to provide full-service to customers in affected

markets.

March 2006: TCS, through its subsidiary, Diligenta, acquired a basis in part

of UK’s Pearl Group. Pearl is the 2nd largest player in the UK’s life insurance

and pension BPO industry, giving TCS a new stake in BPO work for the UK

market.

Right after Pearl, TCS picked up Comicron in Latin America to offer banking

solutions in both IT and BPO services in that market, and now Spanish

language capability. Experience gained here will again allow TCS to expand

further into new markets with BPO offerings, especially in the rather large and

under-addressed Spanish-speaking world.

Oct. 31, 2006: Similar to the financial stakes made above, TCS again

expanded its banking products and consolidated its European operations after

acquiring a 75% equity stake in its Switzerland-based partner, TKS-Teknosoft.

TKS was the marketing agent for TCS in Europe.

TCS Joint ventures

TCS went for a joint venture (JV) in Feb 2007 with three Chinese partners and is

billed by the company as a "role model” for the Chinese IT industry. The TCS joint

venture, in which Microsoft took a 10 per cent stake, planned to employ over the next

five year at least 5,000 people that would represent a considerable scaling up from

the company's then present strength of 800 employees in China. The Chinese

software industry remains fragmented and lacks scale. Only about 10 Chinese IT

37

firms among some 8,000 employ more than 1,000 people. The TCS joint venture will

thus be one of the largest software companies in China once it reaches its 5,000-

employee target. The new venture is widely expected to enable TCS to finally break

into the $30-billion domestic Chinese IT market, a market that has in the past proved

elusive for Indian IT companies.

Another JV is between TCS and SBI (State Bank of India) in Nov 2005 to cater

advanced technology solutions and domain consulting for the banking and financial

services sector. The joint venture is called C-Edge Technologies Ltd. and has an

authorized capital of Rs. 40 crore.

TCS holds 51 per cent of the equity in C-Edge and SBI the balance with no asset

transfer. The joint venture was to offer transformational capabilities to banks and

financial institutions in India and other markets by helping them to use technology as

a competitive tool in the market place using bureau services and service platforms.

"In three to five years, we hope the company creates niche services in the national

and international stage,'' said Mr. Ramadorai.

38

Board of Directors

Non-Executive Board Members

Ratan N Tata, Chairman

S Ramadorai, Vice Chairman

Laura Cha, Director

Prof. Clayton M Christensen, Director

Aman Mehta, Director

Dr. Ron Sommer, Director

Venkatraman Thyagarajan, Director

Dr. Vijay Kelkar, Director

Ishaat Hussain, Director  

Phiroz A Vandrevala, Director

Executive Board Members

N Chandrasekaran, Chief Executive Officer and Managing Director

S Mahalingam, Chief Financial Officer and Executive Director

39

Key Financial Ratios of Tata Consultancy Services

Mar '11 Mar '10 Mar '09 Mar '08

Investment Valuation Ratios

Face Value 1.00 1.00 1.00 1.00

Dividend Per Share 14.00 20.00 14.00 14.00

Operating Profit Per Share (Rs) 44.82 34.06 61.52 51.35

Net Operating Profit Per Share (Rs) 149.58 117.74 228.92 189.39 152.67

Free Reserves Per Share (Rs) 97.95 75.24 134.37 110.22

Bonus in Equity Capital 79.65 79.65 59.30 59.30

Profitability Ratios

Operating Profit Margin(%) 29.96 28.93 26.87 27.11

Profit Before Interest And Tax

Margin(%)27.67 26.62 24.75 24.42

Gross Profit Margin(%) 28.12 26.89 25.01 24.64

Cash Profit Margin(%) 27.21 26.44 26.09 25.29

Adjusted Cash Margin(%) 27.21 26.44 26.09 25.29

Net Profit Margin(%) 25.44 24.13 20.74 24.11

Adjusted Net Profit Margin(%) 25.44 24.13 20.74 24.11

40

Return On Capital Employed(%) 44.38 42.46 43.27 42.92

Return On Net Worth(%) 38.80 37.30 35.13 41.34

Adjusted Return on Net Worth(%) 38.74 37.75 41.06 39.16

Return on Assets Excluding

Revaluations99.53 76.72 136.38 111.43

Return on Assets Including

Revaluations99.53 76.72 136.38 111.43

Return on Long Term Funds(%) 44.38 42.46 43.27 42.96

Liquidity And Solvency Ratios

Current Ratio 2.41 1.49 1.83 1.98

Quick Ratio 2.40 1.48 1.83 1.97

Debt Equity Ratio 0.01 0.01 0.01 0.01

Long Term Debt Equity Ratio 0.01 0.01 0.01 0.01

Debt Coverage Ratios

Interest Cover 435.25 674.43 784.41 1,383.58

Total Debt to Owners Fund 0.01 0.01 0.01 0.01

Financial Charges Coverage Ratio 462.13 723.63 840.52 1,517.73

Financial Charges Coverage Ratio

Post Tax406.19 639.14 688.32 1,453.50

Management Efficiency Ratios

Inventory Turnover Ratio 5,451.66 3,398.94 1,321.77 1,137.21

Debtors Turnover Ratio 7.19 6.54 6.00 5.66

Investments Turnover Ratio 5,451.66 3,398.94 1,321.77 1,137.21

Fixed Assets Turnover Ratio 4.91 4.74 5.15 5.74

Total Assets Turnover Ratio 1.50 1.52 1.66 1.68

Asset Turnover Ratio 4.91 4.74 5.15 5.74

Average Raw Material Holding 92.90 72.97 93.98 98.28 144.33

Average Finished Goods Held 0.01 0.04 0.07 0.03

Number of Days In Working Capital 111.38 55.58 67.44 71.55

Profit & Loss Account Ratios

Material Cost Composition 0.06 0.10 0.23 0.24

Imported Composition of Raw

Materials Consumed80.35 78.67 79.74 80.43

Selling Distribution Cost Composition 0.05 0.03 0.09 0.14

Expenses as Composition of Total 91.08 92.38 93.01 90.51

41

Sales

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit 42.21 81.61 34.20 35.55

Dividend Payout Ratio Cash Profit 39.40 75.30 31.41 32.26

Earning Retention Ratio 57.73 19.37 70.74 62.47

Cash Earning Retention Ratio 60.54 25.53 72.81 66.11

AdjustedCash Flow Times 0.01 0.01 0.01 0.00

Mar '11 Mar '10 Mar '09 Mar '08

Earnings Per Share 38.62 28.62 47.92 46.07

Book Value 99.53 76.72 136.38 111.43

Objective of internal Benchmarking.

To know weather operating Profit Before Tax is consistently increasing or not.

If the op PBT consistently increasing through various periods in ascending order , it

indicates that the company has implementing the cost effective measures.

When we analyze each of the cost in the benchmarking statement we cal the cost as a

% of the NOI

1. MATERIAL COST

If Increases:-

Due to increases in the Price of Material.

Due to increase in the Quantity of the material.

If Decreases:-

Better Utilization of the material.

Trading activities have increased.

42

i.e Trading activities increases over the manufacturing activities

Note: . If Trading activities increases over the manufacturing activities and still the

cost of material increases that means that Trading activities started but the company

not getting benefits.

May-05 Oct-06 Feb-08 Jul-09 Nov-1071.00%72.00%73.00%74.00%75.00%76.00%77.00%78.00%

77.25%

73.36%

77.25% 77.10% 77.21%

Raw Material

Raw Material

Axis Title

Axis Title

2. EMPLOYEE COST

It depends on Factor of productivity and Way you utilize your people.

If Increases:-

Productivity of employee is low

Wrong persone for the wrong job.

If Decreases:-

Improving the productivity of the employees by better people orientation.

Right person for the right job.

43

Sep-05Mar-06 Oct-06 Apr-07Nov-07 Jun-08 Dec-08 Jul-09 Jan-10 Aug-100.00%

0.50%

1.00%

1.50%

2.00%

2.50%

Employee

Employee

Axis Title

Axis Title

3.MANUFACTURING COST:-

If sales goes up and as well as Material cost goes up that mean Bad Manufacturing

process. And if Manufacturing cost goes down and sales increases that mean

excellent manufacturing process

If Increases:-

Inefficient operations

Increases in carrying cost.

Rising of fuel prices.

If Decreases:-

Efficient operations.

Effective productive process.

44

May-05 Oct-06 Feb-08 Jul-09 Nov-100.00%

1.00%

2.00%

3.00%

4.00%

5.00%

Manufacturing cost

Manufacturing cost

Axis Title

Axis Title

4.SELLING AND ADMIN COST:-

Sales goes up and selling & admin cost also increases which indicates that Product is

not of quality standard. Investment to much in Advertising without getting adequate

return.

If Increases:-

Huge investment on Advertisements.

Quality and feedback of product is not as per expectation.

If Decreases:-

Existing product is in mature state and no new product was launched.

Existing product capture the major market share.

Sep-05 Mar-06 Oct-06 Apr-07 Nov-07 Jun-08 Dec-08 Jul-09 Jan-10 Aug-100.00%1.00%2.00%3.00%4.00%5.00%6.00%

S&A

S&A

Axis Title

Axis Title

45

5. INTREST:-

If Increases:-

Investment through Borrowing

If Decreases:-

Debts were paid off.

Investment

Sep-05Mar-06Oct-06 Apr-07Nov-07 Jun-08 Dec-08 Jul-09 Jan-10 Aug-100.00%

0.10%

0.20%

0.30%

0.40%

Intrest

Intrest

Axis Title

Axis Title

6. DEPRECIATION:-

If Increases:-

New asset has been purchased.

Re-invested on assets.

If decreases :-

No new assets has been purchased.

Assets has become obsolete.

46

May-05 Oct-06 Feb-08 Jul-09 Nov-100.00%

1.00%

2.00%

3.00%

4.00%

DEP

DEP

7. PBT:-

If Increses:-

Increases in other income.

May-05 Oct-06 Feb-08 Jul-09 Nov-100.00%

5.00%

10.00%

15.00%

20.00%

OP PBT

OP PBT

Axis Title

Axis Title

47

EV/EBITDA ratio of Tata Consultancy Services and its peer group for

financial analysis

Analysis

The EV/EBITDA ratio is a relevant ratio for financial analysis. Tata Consultancy

Services shows a EV/EBITDA ratio of 14.32 for the next 12 months, which is

significantly higher than the median of its peer group: 7.61 according to this financial

analysis Tata Consultancy Services valuation is way above its peer group's.

this ratio is significantly higher than the average of its sector (Computer Services)

Tata Consultancy Services Peer group: (Ratio is based on Dec 2011

Tata Consultancy Services Peer group

Enterprise Value(in

thousands USD)

EV/EBITDA Relevance   Score

2012 next 12

month

Tata Consultancy

Ser...

43 136 481 13.81 14.32

Cognizant Techno

Sol...

18 734 470 12.20 12.32 100%

Infosys Ltd 27 040 168 11.54 11.98 96%

Computer Sciences

Corp.

4 821 826 2.17 2.32 82%

Hewlett Packard

Co

78 406 351 4.73 4.70 77%

IBM 246 410 950 8.86 8.88 71%

Wipro 19 102 677 11.78 12.22 67%

6.79 according to this financial analysis Tata Consultancy Services valuation is way

48

above its sector.

TCS V/S OTHER OFFSHORE PLAYERS

Among the top four Indian IT companies, Infosys has highest total score in ADM

space (on the back of very high score in strategy), followed by TCS -having highest

score in current offering and market presence (as can be seen in the table given

below). Considering its strengths in ADM space TCS is expected to maintain the

lead among offshore players going forward.

\Globally

TCS Lead

49

In China, TCS has entered into Joint Venture (JV) with 3 Chinese parties (Beijing

Zhongguancun Software Park Development Company, Uniware Company and

Tianjin Huayuan Software Area Construction and Development Company), which

are supported by National Development and Reforms Commission (NDRC)- a

Chinese government organization. TCS stake in JV is 72..22%, whereas that of

Chinese parties is 27.78%. JV has entered into agreement with Microsoft, as a

result Microsoft will join the JV by March 2008 and its stake will be 10%. The

share of TCS will come down to 65% after the entry of Microsoft in JV.

At present the employee strength of the JV is 1,100 plus (92% local recruits),

which it plans to increase to 5,000 people by FY11. Whereas in revenue terms,

the Company expects to touch $ 35 mn in FY08. TCS has head start against other

Indian IT players in China, in terms of both revenues and employee strength.

Company’s Chinese operations serve both local customers (i.e. Chinese

companies) as well as global clients, share of which is 50:50. Some of its major

win from Chinese market includes $100 mn deal from Bank of China- to provide

IT solutions

ADVANTAGES OF TCS OVER ITS COMPETITORS

Key strengths of TCS as compared with its listed peers Infosys and Wipro are:

Strong vertical presence: TCS derived nearly 60 per cent of its revenues in 2003-04

from BFSI (banking, financial services and insurance) and manufacturing. These two

sectors — BFSI and manufacturing — together account for 50 per cent of the global

IT spend.

In telecom also, the company's presence is quite strong. In each of these sectors, TCS

is bigger than its largest domestic competitor. In revenue terms, the BFSI practice of

TCS is about 35 per cent higher than that of Infosys; in manufacturing and, in the

telecom vertical, it is comparable to Wipro. Even in newer verticals — life sciences,

for instance — it has ramped up quite sharply.

50

Good spread of service offerings: In service offerings, TCS has its presence across

the gamut, ranging from bread-and-butter application development and maintenance

to testing, engineering services and infrastructure management.

In terms of revenues in 2003-04, the package implementation segment took the lion's

share, as it is almost 1.5 times bigger than those of Infosys, Wipro and Satyam. Over

the next year or so, it will increasingly compete in large deals with multinational

vendors in the area of systems integration, infrastructure management and consulting.

Client count and profile: The success of TCS in scaling up its clients is evident

from its $20-million and $50-million clients which, at 16 and 4 respectively, number

more than its billion-dollar peers. However, Infosys and Wipro have been adding $1-

million and $5-million clients faster than TCS over the past year.

TCS has had a string of enduring relationships with clients. Names such as GE, P&O

Nedlloyd and SegaIntersettle fall in the 10-20 year bracket, while clients such as

AIG, HP, Prudential, Standard Chartered and Target fall in the 5-10-year bracket.

Fixed-

GPRV

The Growth Score for Tata Consultancy Services is 5.9 /10. The Growth Score for it's

peer group is 5.3 /10. This means that Tata Consultancy Services has higher growth

than its peers.

The Profitability Score for Tata Consultancy Services is 8.4 /10. The Profitability

Score for it's peer group is 7.8 /10. This means that Tata Consultancy Services is

more profitable compared to its peers.

The Value Score for Tata Consultancy Services is 1.5 /10. The Value Score for it's

peer group is 2.1 /10. This means that Tata Consultancy Services is slightly more

expensive that its peers

51

The Value Score for Tata Consultancy Services is 1.5 /10. The Value Score for it's

peer group is 2.1 /10. This means that Tata Consultancy Services is slightly more

expensive that its peers.

52

HUMAN RESOURCE PLANNING (HRP)

Model of HRP System:

53

Manpower Planning

Recruitment & Selection

Training & Development

Performance Appraisal

Promotion, Transfer, & Demotion

Welfare Activities

Area of Recruitment:

Consultant

- CRM / SCM/ ERP / JDE

- Enterprise Security

- Testing Services

- Legal / Law

- Wireless Services / Switching

Systems

- Independent Verification &

Validation

- Enterprise Application

Integration (EAI)

- Banking / Finance / Securities

/ Insurance

- TISP Solutions – OSS / BSS

Human Resource / Recruitment/ Training

- Finance/ Accounts / Auditing

- Marketing /Sales / Business

Development

- Microsoft, Mainframe &

Internet Technologies ,Functional & Domain

54

PROCESS OF RECRUITMENT:

Round 1: Written test

Verbal: This section will have 15 questions related to synonyms, antonyms,

Analogies, SC, Prepositions and reading comprehension.

Aptitude: These sections will have 15 questions related to aptitude topics like Time

& Work, Time & Distance, Blood Relations, Series Completion, Puzzles, Calendars,

Clocks, Percentages, Ratio proportions, Ages, Pipes and Cisterns etc.

Technical: This section will have 20 questions related to basic technical concepts

from C, C++, Java, Linux, UNIX, DBMS, SQL, Programming fundamentals,

Hardware, Software Engineering, Micro Processors etc. Candidates are informed to

brush up their technical skills which were covered in their regular academic

curriculum.

Round 2: Technical Interview

This is a major elimination round. Candidates should be thorough with their basic

technical skills to clear this round. Candidates are here by informed to be prepared

with their core subjects.

Round 3: HR Interview

Candidates can expect basic HR interview questions like Tell me about your self,

Why should I hire you, Why only WIPRO, What is SIX sigma level. Candidates will

be tested in their communication and vocabulary during technical and HR interviews.

Round 4: Placement

Upon Joining, the incumbent shall be given an employee code number by

Manager(HR) and he shall fill up the joining forms and shall submit the same to the

Manager(HR) for further course of action. Wipro recruit 40% employees from

55

campus recruitment. Another popular source for Wipro’s Recruitment is the Online

Placement through NSR (National Skill Registry).

TRAINING

The term training refers to the acquisition of knowledge, skills, and competencies as

a result of the teaching of vocational or practical skills and knowledge that relate to

specific useful competencies.

TCS TRAINING MODE

Types of training:

TCS basically provide training for technical employees where for management

trainees, they provide development programmes.

TCS conduct 10 weeks of training which is divided into 4 parts

1. FRP(fundamental readiness programme) 3 weeks

2. PRP(project readiness programme) 7 weeks

3. CRP(corporate readiness programme)

4. RLL(real life lab)

Apart from that there is some common training which come under induction is called

“College to corporate”.

They took assessment of all training that consists of 70 MCQ questions

After the test, your score will be calculated and your salary is reviewed

SCORE= (30%FRP) + (50%PRP) + (20% RLL)

If the score is 60-70, least slab will be awarded

If the score is 70-85, middle slab will be awarded

56

If the score is 85+, highest slab will be awarded.

DEVELOPMENT

TCS Leaders’ Qualities Survey, which started in 1992, is one of our oldest leadership

development initiatives. It has successfully contributed in our endeavor to nurture top

class business leaders in Wipro. Wipro has developed an approach for Life Cycle

Stage Development Plan. Training and development programs at various stages have

been designed by mapping the competencies to specific roles. Competencies specify

the Specific success behaviors at every role.

Entry-level program (ELP) - The program covers the junior management

employees with the objective of developing managerial qualities in the employee.

The target group is campus hires and lateral hires at junior level.

New Leaders’ Program (NLP) - It is popularly known as NLP and aims at

developing potential people managers, who have taken such roles or are likely to get

into those roles in the near future.

Wipro Leaders’ Program (WLP) - This program is for middle level leader with

people, process, business development and project management responsibilities.

These leaders are like the flag bearers of Wipro values and Wipro way of doing

business.

Business Leaders’ Program (BLP) - This is for senior leaders with business

responsibility. At this level, people are trained up for revenue generation; and Profit

& Loss responsibilities. The program covers commercial orientation, client

relationship development, and team building and performance management

responsibilities among other things.

Strategic Leaders’ Program (SLP) - This program covers top management

employees. The focus is on Vision, Values, Strategy, Global Thinking and Acting,

57

Customer Focus and Building Star Performers. Wipro ties up with leading business

schools of international repute to conduct this program for Wipro leaders.

PROMOTION:

A promotion is the advancement of an employee's rank or position in an

organizational hierarchy system. Promotion may be an employee's reward for good

performance i.e. positive appraisal. Before a company promotes an employee to a

particular position it ensures that the person is able to handle the added

responsibilities by screening the employee with interviews and

Tests and giving them training or on-the-job experience.

BASES OF PROMOTION

1. Seniority:-

Seniority simply depends upon how long the employees is doing job with the

company. The length of service and talent are both interrelated with each other. It is

based on the tradition of respect for older people. It creates a sense of security among

employees and avoids conflict arising from promotion decision.

2. Merit:-

Merit implies the knowledge, skill and performance records of an employee. It helps

to motivate competent employee to work hard and acquire new skills. It helps to

attract and retain young and promising employees in the organization.

58

EMPLOYEE WELFARE

According to the Oxford dictionary, employee welfare or labour welfare means “the

efforts to make life worth living for workmen.” Labour Welfare means anything done

for the comfort and improvement, intellectual or social, of the employees over and

governmental, which is not a necessity of the industry.

Education Facility

Medical allowances

Housing facility

Canteen in the campus

Sports ground

Club membership

Insurance policy

59

Self Competency Mapping For Compatibility Check

Basic requirement to hire management trainees for Wipro (2010 data)

PARAMETERS REQUIRED PRESENT

AGE: 21-27Years Fulfilled

Education: PGDM/MBA with 60% Fulfilled

Marks Range: 60% through out the Academia Fulfilled

Experience: 0-2 years in IT field Partially Fulfilled

Mobility: Anywhere in India Partially Fulfilled

Technical skills: MS Office, MIS reporting Partially Fulfilled

Human skills: Excellent

communication/interpersonal

skills, Team player

Partially Fulfilled

Work environment: Official / Voice processing Fulfilled

Mandatory skills: Mathematics/ statistics/physics /

computer science

Fulfilled

Work shift: Day/Night Partially Fulfilled

Work load: 9 hours with 1 hour break Fulfilled

60

ALTERNATIVE CAREER PATH

RECRUITMENT PROCESS OUTSOURCING:

Recruitment Process Outsourcing (RPO) is a form of business process outsourcing

(BPO) where an employer outsources or transfers all or part of its recruitment

activities to an external service provider.

Outsourcing the human resource (HR) processes is the latest practice being followed

by middle and large sized organizations. It is being witnessed across all the

industries. In India, the HR processes are being outsourced from nearly a decade

now. Outsourcing industry is growing at a high rate. Human Resource Outsourcing

refers to the process in which an organisation uses the expert services of a third party

(generally professional consultants) to take care of its HR functions while HR

management can focus on the strategic dimension of their function. The functions

that

are typically outsourced are the functions that need expertise, relevant experience,

knowledge and best methods and practices. This has given rise to outsourcing the

various HR functions of an organization.

The non-core recruitment processes such as database searching, job advertisements,

head hunt research, internet mining, etc. involve 50 - 60% of the recruiters time,

energies and costs. Outsourcing the non-core recruitment process creates additional

efficiencies, while simultaneously allowing for a focus on building relationships with

candidates and clients. Major consultancy firms are predicting a big boom for HR

outsourcing as a whole. According to Gartner, McKinsey and others the outsourcing

market is expected to touch US$ 78 billion by 2004. Gartner predicts that the

worldwide HR outsourcing market will grow from $21.7 billion in 2000 to $58.5

billion in 2005 1. HR outsourcing is expected to be the fastest growing segment in the

outsourcing market. 80 percent of companies now outsource at least one HR activity,

61

and the number is growing fast. Though some analysts argue that by outsourcing

major HR activities, the number of HR jobs is decreasing, others feel that on the

contrary by outsourcing these kinds of repetitive and administrative jobs, higher-level

HR professionals get the time they need to tackle strategic workforce challenges.

With the growing market there are a number of vendors available who cater to the

diverse needs of various markets and provide HR services, including staffing, payroll,

benefits administration, training, employee relations, and compensation.

Consequently, what started in the 1980s as a simple payroll outsourcing has exploded

into a $32 billion a year business involving all facets of HR. In just four years, one

HR services provider-Exult-has grown from a start-up with a handful of people to an

established company with 1,500 employees and more than $400 million in annual

revenues. Other big players include Accenture HR Services, ADP, Fidelity, Hewitt,

and Convergys.

HR OUTSOURCING AT MA FOI MANAGEMENT CONSULTANTS

Chennai based Ma Foi is a perfect example of a company that has profited by

effectively tapping the HR outsourcing market. The firm which initially began just by

providing outsourcing services in recruitment is moving into other areas like

compensation management, psychometric evaluation, training exit interviews, and

outsourcing of personnel including sales staff and manual labor. The firm is a public

limited company with revenues of $10.2 million for the financial year ending 2003.

Such is the potential of the HR outsourcing market that if handled with expertise and

integrity can be a highly profitable market. The company has identified that its

potential markets range from pharma to FMCG. Its major clients include Coca Cola

62

India, Thomson Electronics, Madura Garments, Alstom group and a major

Healthcare recruiter in the UK. The firm recently launched three products, MRMS

(Ma Foi Resume Management Systems), HRMS (Ma Foi Human Resource

Management Systems, and DAREM (Daily Activity Reporting and Expense

Management). According to Rajiv Krishnan, the director and CEO of the Ma Foi,

these products will considerably reduce the time that corporate spend on regular

transactional work. For example, the MRMS offers tracking, complete word-by-word

search facility, automated e-mail notification, user-friendly interface, total security

and consolidated reports. A major software company can get one lakh resumes and

this can be a useful tool for tracking these resumes.

The second product, HRMS, encompasses a wider spectrum of employee HR needs.

It helps capture, track, store, and modify all information concerning an employee in

an organization. It has the ease of use for multiple user access and helps in integrating

employee information. The third product DRAM helps companies to keep a track of

the daily activity reporting.

HR Outsourcing Human Resource Outsourcing: Scope for India

One very important trend in the recent times has been the growth of human resource

outsourcing. HR outsourcing is the outsourcing of peripheral but necessary

administrative tasks such as payroll, benefits, education/training, recruiting

personnel, administration, to realize economies of scale and achieve standardization

of services. However, the future seems to be very promising. It's set to become a $

51 billion market worldwide in 2005, representing 39 per cent of the total business

process outsourcing revenue. Estimates show that the latent size of HR outsourcing in

63

India is about $ 2 billion with a current market of $ 27 million and it is growing at an

alarming rate of about 50 per cent. India has immense potential as more than 80% of

fortune 1,000 companies are discussing HR outsourcing as a way to cut costs and

increase productivity. Right now, India is barely skimming the surface of the HR

outsourcing market potential. Indian life Hewitt (ILH), FIDELITY, EXULT and

MAFOI are some of the prominent HR outsourcing services providers in India and

the clients include giants of manufacturing, software and service industries like GE

Capital,

Ford Motors, Hyundai Motors, Satyam Group, Infosys, Enron, Haldia Petrochemicals

and HSBC, to name a few HR outsourcing has a huge potential for employment also.

Nasscom numbers are a million software jobs by 2008; HRO would be about a 25 per

cent of that.

THE FUTURE AHEAD

The future of HR outsourcing in India is poised to be very effective because of its

intrinsic advantages such as low cost, ready pool of English speaking manpower and

geographic positioning is emerging as a viable destination for HR outsourcing

companies to set up their businesses. While currently there are only a few major

players (table 1.2) the trend seems to be catching up as companies are showing

marked interest to improve on services such as pay roll benefits as well as complete

HR delivery. Companies are looking to outsourcing the complete range of HR

64

delivery and designing products on policies, compensation, structure, and

recruitment. Indian companies are not only providing services for the clients abroad

but are also catering to the local market. Moreover these players are moving up the

value chain. Mafoi has emerged as a major HR outsourcing center. It is estimated that

currently the organized sector of HR is catering to only 5% of the whole market .

This is the right time for the players to tap this emerging market.

65

CONCLUSION

At the end of the project it can be said that there is an ample opportunity for TCS to

grow and be the top most company in the world business scenario. If we see the

overall performance of TCS it is very much satisfactory in terms of employee

engagement & Contribution to the Indian GDP. It is also found that WIPRO is one of

the market leaser in Indian IT Segment by innovation new dimension of services and

technology. They remain successful to tie up with Microsoft Ltd. for consecutively

Two years for project work outsourcing. Therefore, we can also say that TCS is the

leading name of Globalization. They also provide the equal opportunity to employees

by which they are going to be the pioneer of employee retention and talent

management. On the social point of view, this company contributes a lot to the socio-

economic sectors, NGO, Education, Poverty reduction by its corporate social

responsibility. Further more it is my own belief that the company will be able to bring

the reformation of Indian Business sector.

66

BIBLIOGRAPHY

Annual Report of TCS Limited for Financial Year 2004-05, 2006-07,2007-08,

2008-09, 2009-10.

Tata Consultancy Services www.tcs.com (Investors section)

Forrester reports www.forrester.com

Gartner reports www.gartner.com

IT-ITeS Market & Opportunities – IBEF (India Brand Equity Foundation)

report

Tata Consultancy Services – A Company Profile – www.datamonitor.com

Newspaper Mint – www.livemint.com

http://www.infinancialsanalytics.com/freegprv/en/financial

Annexure

67

68

69