Date post: | 24-Oct-2014 |
Category: |
Documents |
Upload: | sunil-sony |
View: | 142 times |
Download: | 2 times |
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