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  • 1. Chapter 1: IntroductionBackground of the StudyPoised to become a US$ 225 billion industry by 2020, the Indian information technology (IT)industry has played a key role in putting India on the global map. The IT & the IT-BPO sectorshave become the most significant growth catalysts for the Indian economy. In addition tofuelling India‘s economy, this industry is also positively influencing the lives of its peoplethrough an active direct and indirect contribution to various socio-economic parameters such asemployment, standard of living and diversity. The industry has played a significant role intransforming India‘s image from a slow moving bureaucratic economy to a land of innovativeentrepreneurs and a global player in providing world class technology solutions and businessservices, according to National Association of Software and Service Companies (NASSCOM)2011 report.In an increasingly globalised economy, significant complexity and uncertainty is getting attachedto the unprecedented economic crisis. The Indian economy has also been impacted by therecessionary trends, with a slowdown in GDP growth to seven per cent. The focus andexponential 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 growthengine for the economy, contributing substantially to increases in the GDP, urban employmentand exports, to achieve the vision of a ―young and resilient‖ India. During the year 2011-12, thesector maintained its double digit growth rate and was a net hirer. This growth has been fuelledby increasing diversification in the geographic base and industry verticals, and in theservice offerings portfolio. While the effects of the economic crisis are expected to linger in thenear term future, the Indian IT-ITeS industry has displayed resilience and tenacity in counteringthe unpredictable conditions and reiterating the viability of India‘s fundamental valueproposition. Consequently, India has retained its leadership position in the global sourcingmarket.Rapid globalization, diversification, and intense competition have resulted in a more dynamicand complex world. Corporations have to increase agility in a way in which their business unitsacross geographies operate and collaborate seamlessly across people, processes and technology.1
  • 2. Definition of Strategic managementStrategic or institutional management is the conduct of drafting, implementing and evaluatingcross-functional decisions that will enable an organization to achieve its long-term objectives. Itis the process of specifying the organizations mission, vision and objectives, developing policiesand plans, often in terms of projects and programs, which are designed to achieve theseobjectives and then allocating resources to implement the policies, and plans, projects andprograms.Strategy can neither be formulated nor adjusted to changing circumstances without a process ofstrategy evaluation. Whether performed by an individual or as part of an organizational reviewprocedure, strategy evaluation forms an essential step in the process of guiding an enterprise.For executives, strategy evaluation is simply an appraisal of how well a business performs. Has itgrown? Is the profit rate normal or better? If the answers to these questions are affirmative, it isargued that firm‘s strategy must be sound. Despite its unassailable simplicity, the line ofreasoning misses the whole point of strategy- that the crucial factors determining the quality oflong term results are often not directly observable or simply measured, and that by time strategicopportunities or threats do affect operating results, it may be too late for an effective response.Thus strategy evaluation is an attempt to look beyond the obvious fact regarding the short termhealth of a business and appraise instead those more fundamental factors and trends that governsuccess in the chosen field of endeavor.Building Support for the Strategic Plan: Aligning Employees with StrategyOne of the most common difficulties companies face in strategic planning is turning their visioninto a reality. To transform your organization into the one you envision takes more than greatstrategy and implementation, you also need to make the strategy an integral part of the very fiberof your organization. When we speak of this idea, we usually use the phrase "strategicalignment". Aligning everyone in your organization with your strategy is one of the mostimportant things you can do beyond formulating and implementing great strategies. Alignmentwill make it much easier for your management team to push the organization in the direction youintend. Without good alignment with the strategy, every step forward will be a struggle.2
  • 3. How do we get this alignment?There are five basic steps that you must take to assure your employees are aligned with yourcompanys strategies.First, employees must have the conceptual tools required for good strategic thinking about theirwork. This is because employees must be capable of making decisions with strategic impact inorder to be aligned with the companys strategy. Anything less than this calls for a strategy thattreats people as machines.Second, employees must understand the strategy, understanding the strategy, can only happen ifemployees have the conceptual tools covered in the previous paragraphs. This is mostlynecessary because good strategy requires focus. There are three main ways to satisfy customers:price, quality (in the broad sense, including product features, technology, packaging and a host ofother value-adding features), and service (again, in a broad sense, including delivery, support,etc.).Third, strategic alignment needs to be built around the structure of the organization.Fourth, strategy must be reflected in the structure of individual jobs - especially those in criticalareas. . Its very important that the way you hire, train, compensate and retain the employees youhave in key strategic areas works with your strategies. If you target commodity customers, forexample, you definitely want all these things to reflect your commodity orientation. For example,in your hiring you want to be hiring people with an eye towards the fact that they might bedriving costs up or down through their skills.Fifth, you must have buy-in to the strategy. If you have an employee who thinks the strategy isntgood, you wont have alignment no matter what you do. The first two items, tools andcommunication, will go a long way towards getting buy-in, but there are people who just wontbuy into some strategies - especially if they are smart.Purpose of the study:The study on the landscape of IT industry gives us a better insight on the competitiveness of ITindustry in India, which has been a major contributor in the GDP. The main purpose of the studyis to analyze the strategy followed by successful IT companies and the drivers which have led to3
  • 4. the success It also helps us to understand how well the employees are aware of their companies‘strategies.Research Objectives:The study has the following general objectives: 1. To study the landscape of IT industry in India. 2. To analyze the perception and level of awareness of the employees about the strategy of the company. 3. To identify the perception and awareness level of the employees about the key factors of success of the company.Scope of the project:The study was conducted at Parinathi consulting. The questionnaire was circulated to theemployees of the market leader in the IT service sector- TCS. The responses of employees atdifferent level in the organization are obtained and it is analyzed. As per the relevance only areaslike generic business strategies, corporate strategies, global strategies and the key factors thatdifferentiates TCS from other IT companies functioning in India are identified and theircontribution to the revenue is studied.Significance of the study:This study gives a better insight towards the IT industry scenario present in India. This Strategyevaluation can take place as an abstract analytic task. Most often it is an integral part oforganization‘s processes of planning, review, and control. As process, strategy evaluation is theoutcome of activities and events that are strongly shaped by the firm‘s control and rewardsystems, its information and planning systems, its structure, and its history and particular culture.This study explores the factors which have led to the success of the company. After reviewingthe existing literature few dimensions were selected, whose impact on the company‘s success ismeasured. Determination of the elements and factors that contribute to the success can help toformulate a model to provide insight to the focus areas for future use4
  • 5. Basic Assumptions: Subjects respond honestly to the questions in spite of potential concerns they regarding confidentiality of responses. Market conditions are very dynamic and hence it is assumed that the key factors for success in the past shall hold good for future also. There is always a risk factor associated in letting out the critical information to the outsiders. Companies‘ top management share their strategies and plans with their employees. There may be some sampling errors.Limitations: There is a possibility that participants may not respond due to the concerns about the privacy or Confidentiality of their responses. Employees may be hesitant to talk about their experience in the company due to the fear of adverse possible consequences Inherent biases may be present. Time is a constraint due to the duration specified in the course curriculum The study will be done on a small scale, with a sample size of 50 due to time constraint. There is a chance of misinterpretation due to the small size of the sample viz-a-viz the population. The sample may not be representative of the entire population.5
  • 6. Chapter 2: Literature ReviewStrategy evaluation is the appraisal of plans and the results of plans that centrally concern oraffect the basic mission of an enterprise. Its special focus is the separation between obviouscurrent operating results and the factors that underlie success or failure in the chosen domain ofactivity. It results in rejection, modification, or ratification of existing strategies and plans.It is usual to view strategy evaluation as an intellectual task. From this point of view, there arefour essential tests a strategy must pass. According to Prof. Richard P. Rurnelt (AndersonSchool, 1999-1.3) the strategy must (1) be internally consistent, (2) provide for consonancebetween the firm and its environment, (3) be based on the gaining and maintenance ofcompetitive advantage and (4) be feasible in the light of existing skills and resources.As per The Science of Strategy Evaluation, TradeStation Technologies., Strategy evaluation isnot an art, it is a science. There is a clear procedure with a definite range of acceptable results.Once you have delineated your acceptable limits for the evaluation, the analysis should becomeroutine. When your results move out of this acceptable range, the strategy becomes suspect.Early detection of a failed strategy is as important to long-term profitability as the design of thestrategy itself.Strategy formulationIt is clear that a poor or vague strategy can limit implementation efforts dramatically. Goodexecution cannot overcome the shortcomings of a bad strategy or a poor strategic planning effort(Hrebiniak, 2006). Several studies mention the fact that the kind of strategy that is developed(Alexander, 1985; Allio, 2005) and the actual process of strategy formulation, namely, how astrategy is developed (Kim & Mauborgne, 1991, 1993; Singh, 1998) will influence the effect ofimplementation. Alexander (1985) believes that the need to start with a formulated strategy thatinvolves a good idea or concept is mentioned most often in helping promote successfulimplementation. As Allio notes, good implementation naturally starts with good strategic input:the soup is only as good as the ingredients (Allio, 2005).The central conclusion of the research of Kim & Mauborgne (1991) is that the procedural justice ofthe strategy formulation process ultimately affects the commitment, trust, and social harmony as wellas the outcome satisfaction of managers in subsidiaries. Procedural justice provides a potentially6
  • 7. useful but still unexplored way to mobilize a multinational‟s global network of subsidiaries. Kim &Mauborgne (1993) point out that a subsidiary‟s top managers want an open process, that is consistentand fair, and that allows for their input to be heard. In the presence of a so-called due (or open)process, subsidiary managers are motivated to implement global strategies. They feel a strong senseof organizational commitment, trust in head office management, and social harmony with their headoffice counterparts. In the absence of such a due and fair process, the effect may be the opposite fromthe intended one (ibid).Relationships among different units/departments and different strategy levelsSeveral studies treat institutional relationships among different units/ departments and differentstrategy levels as a significant factor that affects the outcome of strategy implementation (Walker& Ruekert, 1987; Gupta, 1987; Slater & Olson, 2001; Chimhanzi, 2004; Chimhanzi & Morgan,2005). Walker & Ruekert (1987) divide business strategy behaviors into three types: prospectors,differentiated defenders and low cost defenders. These distinctions are based on the strategycategories introduced by Miles & Snow (1978; prospectors, defenders, analyzers, reactors) andby Porter (1980; overall cost leadership, differentiation and focus). Walker & Ruekert stipulatethat corporate-business unit relationships, inter-functional structures and processes, marketingpolicies and processes may all significantly influence business strategy implementation. Threeaspects of the corporate-business unit relationship are especially likely to affect a unit’s successin implementing a particular strategy: business unit autonomy, sharing programs and synergiesacross SBUs, as well as control and reward systems. In addition, functional competencies,allocation of resources, decision-making participation and influence, inter-functional conflict andcoordination may have vastly different effects on the implementation of different kinds ofstrategies. Walker and Ruekert also assume that decision-making and coordination structures inthe marketing department, and marketing policies and programs within the business unit, affectthe performance of different business strategies in different ways,Chimhanzi (2004) suggests that cross-unit working relationships have a key role to play in thesuccessful implementation of marketing decisions. Implementation effectiveness is affectednegatively by conflict and positively by communication and specifically, interpersonal, notwritten. In turn, these interdepartmental dynamics are affected by senior management support,joint reward systems, and informal integration. Chimhanzi (2004) also points out that the7
  • 8. marketing and R&D interface remains the most extensively researched dyad within the specificcontext of the new product development (NPD) process. Chimhanzi provides a multitude ofreferences to such studies in his 2004 article. Other relationships that have received empiricalattention, albeit to a lesser extent, include marketing, and accounting, finance, manufacturing,engineering, quality, and sales. There are also those studies, according to Chimhanzi, that havenot focused on dyadic and multiple relations, but rather on marketing as the only one of manydepartments within a network of relationships. Chimhanzi & Morgan‟s (2005) findings indicatethat firms devoting attention to the alignment of marketing and human resources are able torealize significantly greater successes in their strategy implementation. Specifically, thesefindings imply that marketing managers should seek to improve the relationship with their HRcolleagues by emphasizing two of the process-based dimensions: joint reward systems andwritten communication.ExecutorsExecutors are comprised of top management, middle management, lower management and non-management. Effectiveness of strategy implementation is, at least in part, affected by the qualityof people involved in the process (Govindarajan, 1989). Here, quality refers to skills, attitudes,capabilities, experiences and other characteristics of people required by a specific task orposition (Peng & Litteljohn, 2001). Viseras, Baines, and Sweeney (2005) group 36 key successfactors into three research categories: people, organization, systems in the manufacturingenvironment. Their intriguing findings indicate that strategy implementation success dependscrucially on the human or people side of project management, and less on organization andsystems related factors. Similarly, Harrington (2006) finds that a higher level in totalorganizational involvement during strategy implementation had positive effects on the level ofimplementation success, firm profits and overall firm success. Next to these overall findingsregarding the ―who‖ of strategy implementation, we will now review the individual groups ofstrategy executors at different hierarchical levels.CommunicationForman and Argenti (2005) rightly note that, ―although an entire discipline is devoted to thestudy of organizational strategy, including strategy implementation; little attention has beengiven to the links between communication and strategy.‖ But Forman and Argenti also note that8
  • 9. business communication researchers have become increasingly interested in the contribution ofcorporate communication to a company’s ability to create and disseminate its strategy in thelast decade. However, very few authors have investigated the link between corporatecommunication and strategy, and – when they have – their focus has primarily been on howcorporate communication affects the firm’s relationship with its various stakeholders. At least,numerous researchers have already emphasized the importance of communication for the processof strategy implementation (Alexander, 1985; Rapert & Wren, 1998; Peng & Litteljohn, 2001;Heide & Grønhaug & Johannessen, 2002; Rapert & Velliquette & Garretson, 2002; Forman &Argenti, 2005; Schaap, 2006). That research in this area is needed is emphasized by an olderfinding by Alexander from 1985: Based on interviews with 21 presidents and 25 governmentalagency heads, Alexander (1985) points out that communication is mentioned more frequentlythan any other single item promoting successful strategy implementation. The content of suchcommunications includes clearly explaining what new responsibilities, tasks, and duties need tobe performed by the affected employees. It also includes the why behind changed job activities,and more fundamentally the reasons why the new strategic decision was made firstly.Rapert and Wren (1998) find that organizations where employees have easy access tomanagement through open and supportive communication climates tend to outperform thosewith more restrictive communication environments (cited in Rapert, Velliquette and Garretson,2002).Also the findings of Peng and Litteljohn (2001) show that effective communication is a keyrequirement for effective strategy implementation. Organizational communication plays animportant role in training, knowledge dissemination and learning during the process of strategyimplementation. In fact, communication is pervasive in every aspect of strategy implementation,as it relates in a complex way to organizing processes, organizational context andimplementation objectives which, in turn, have an effect on the process of implementation.Communication barriers are reported more frequently than any other type of barriers, such asorganizational structure barriers, learning barriers, personnel management barriers, or culturalbarriers. Heide, Grønhaug and Johannessen‟s (2002), for example, indicate that there are varioustypes of communication problems (without specifying what they are). These communication issuesmay be influenced to some extent by the organizational structure. According to Heide, Grønhaug and9
  • 10. Johannessen, they constitute the key barrier to the implementation of planned strategic activities.Rapert, Velliquette & Garretson (2002) state that communication and shared understandings play animportant role in the implementation process. In particular, when vertical communication is frequent,strategic consensus (shared understanding about strategic priorities) is enhanced and anorganization’s performance improves. They explore vertical communication linkages as a means bywhich strategic consensus and performance can be enhanced.The study of Schaap (2006), which was conducted in the casino industry within the state of Nevada,shows that over 38 percent of the senior-level leaders do not communicate the company‟s directionand business strategy to all of their subordinates. This study also reinforces findings that frequentcommunication up and down in organization enhances strategic consensus through the fostering ofshared attitudes and values.The corporate communication function is the department or unit whose purpose is facilitate strategyimplementation through communication (Forman and Argenti, 2005). This department can also serveas the „antenna‟ of an organization, receiving reactions from key constituencies to the strategy of thefirm. Forman and Argenti (2005) find that the alignment between the corporate communicationfunction and the strategic implementation process was particularly visible in those companies thatwere going through fundamental strategic change: ―All of the firms studied were involved insignificant efforts in internal communications and felt that IT was central to the success of thefunction, particularly in terms of implementing strategy and building reputation‖ (Forman andArgenti, 2005).Implementation tacticsNutt (1986, 1987, 1989), Bourgeois Ш & Brodwin (1984), Lehner (2004), Sashittal & Wilemon(1996), Akan & Allen & Helms & Spralls Ш (2006) research the effects of implementationtactics on strategy implementation. Nutt (1986) identified four types of implementation tacticsused by managers in making planned changes by profiling 91 case studies: intervention,participation, persuasion, and edict. The study found a 100 percent success rate when keyexecutives used an intervention tactic, but observed this tactic in less than 20 percent of thecases. Both the persuasion and participation tactics had 75 percent success rates; persuasion had thehighest frequency of use, 42 percent, and participation the lowest, 17 percent. Implementation byedict had a 43 percent success rate and a 23 percent frequency of use. Nutt (1987) explains the four10
  • 11. tactics as follows: Intervention refers to strategy adjustments during the implementation stage byintroducing new norms and practices. Participation consists of articulating strategic goals andnominating a task force that develops and proposes corresponding implementation options.Persuasion consists of the tactic of using the involved parties to convince employees about thedecided course of actions. The main mechanism for implementation in the edicts tactics (that relieson power and is characterized by absence of participation) is the issuing of directives. In anotherstudy by Nutt (1987), intervention, participation, persuasion, and edict were found to describe over90 percent of the tactics used by strategic managers. The analysis revealed that these fourarchetypical tactics were used almost exclusively. An „interventionist‟ approach had the best results,but was used in only one case in five. „Persuasion‟ and „participation‟ were the next most effectivetactics, whereas „edict‟ was least effective one. Nutt (1989) set up a contingency framework thatuses situational constraints, such as a manager‟s freedom to act and need for consultation. It wasdeveloped to select among tactics preferred by practitioners. Case studies of strategic planning wereused to test the framework, finding that a high proportion of failures applied implementation tacticsthat differed from those recommended by the framework. A 94 percent success rate was observedwhen recommended tactics were used, compared to a 19 percent success rate when non-recommended tactics were used. The framework seems particularly useful in identifying conditionsunder which participation, persuasion and edict tactics could be profitably used.Bourgeois Ш and Brodwin (1984) examine five process approaches used to advance strategyimplementation: Commander model, Change model, Collaborative model, Cultural model, Crescivemodel. The first approach addresses strategic position only, and should guide the CEO in charting afirm‟s future. The CEO can use economic and competitive analyses to plan resource allocations toachieve his goals. The change model emphasizes how the organizational structure, incentivecompensation, control systems and so forth can be used to facilitate the implementation of a strategy.The collaborative model concentrates on group decision-making at a senior level and involves topmanagement in the formulation process to ensure commitment. The fourth approach tries toimplement strategy through the use of a corporate culture. The final approach draws on managers‟inclinations to want to develop new opportunities as see them in the course of their day-to-daymanagement. The first three models assume implementation as after-the-fact. This implies that thenumber of strategy developers is few and that the rest of the organization is somehow manipulated orcajoled into implementation. For the latter two models, most of the energy is used for strategy11
  • 12. formulation and the strategy requires relatively little effort in its implementation. Lehner (2004) takesimplementation tactics as genuine organizational behavior based on the assumption thatimplementation in general is dependent on the environment, and various strategic and organizationalvariables. He views the study of Bourgeois Ш and Brodwin (1984) as the first attempt to explicitlylink behavioral patterns to the context of strategic management. These patterns are referred to asimplementation tactics. However, Lehner (2004) believes that Bourgeois Ш and Brodwin did notsuccessfully link their concept of tactics to other conceptualizations of organizational behaviors,especially with regard to organizational leadership, nor did their framework lead to any empiricalstudies. On the basis of the study of Bourgeois and Brodwin (1984), Lehner (2004) proposes fiveimplementation tactics: command, change/politics, culture, collaboration and crescive/market.Command and politics/change are both somewhat autocratic. They can be subsumed under the label―tell/sell‖ (a term borrowed from Locke/Latham, 1990 cited in Lehner, 2004). In contrast, bothcollaboration and the market as implementation tactics utilize participation to a high degree and in away which gives subordinate groups a strong voice. It also gives them the possibility to influence theselected courses of action. Only culture as an implementation tactic remains as a single category,which forms an independent dimension by being close to transformational leadership (Bass, 1985,cited in Lehner 2004).CommitmentShared understanding without commitment may result in ―counter effort‖ and negatively affectperformance (Wooldridge & Floyd, 1989, cited in Rapert, Lynch and Suter, 1996). Some authorstake shared understanding as a commitment. MacMillan & Guth (1985) and McDermott & Boyer(1999) all think that the shared understanding of middle management and those at the operationallevel to the top management team‟s strategic goals is of critical importance to effectiveimplementation (Rapert & Velliquette & Garretson, 2002). Strategy implementation efforts mayfail if the strategy does not enjoy support and commitment by the majority of employees and middlemanagement. This may be the case if they were not consulted during the development phase(Heracleous, 2000). Alexander (1985) thinks obtaining employee commitment and involvement canpromote successful strategy implementation (on the basis of telephone interviews with CEOs). SomeCEOs believe that one way to accomplish this is to involve employees and managers right from thestart in the strategy formulation process. Involvement and commitment should also be developed andmaintained throughout the implementation process. If middle and lower level managers and key12
  • 13. subordinates are permitted to be involved with the detailed implementation planning, theircommitment will be likely to increase. Guth & MacMillan (1986) suggest that there are threefundamentally different sources of low to negative individual manager commitment to implementinga particular strategy: low perceived ability to perform successfully in implementing that strategy; lowperceived probability that the proposed outcomes will result, even if individual performance issuccessful; low capacity of the outcome to satisfy individual goals/needs. Middle managers with lowor negative commitment to the strategies formulated by senior management create significantobstacles to effective implementation.Noble & Mokwa (1999) put forward three dimensions of commitment that emerged as centralfactors which directly influence strategic outcomes: organizational commitment, strategycommitment and role commitment. Organizational commitment is defined as the extent to whicha person identifies with and works toward organization-related goals and values (e.g., Michaelset al., 1988, cited in Noble and Mokwa, 1999). Strategy commitment is defined as the extent towhich a manager comprehends and supports the goals and objectives of a marketing strategy.Role commitment is defined as the extent to which a manager is determined to perform hisindividual implementation responsibilities well, regardless of his beliefs about the overallstrategy. The primary dependent variable in Noble and Mokwa‟s (1999) study is implementationsuccess, which they define as the extent to which an implementation effort is consideredsuccessful by the organization. At the individual level, role performance is a critical outcomewhich they define as the degree to which a manager achieves the goals and objectives of aparticular role and facilitates the overall success of the implementation effort. Noble andMokwa‟s findings suggest that an individual manager‟s implementation role performance willinfluence the overall success of the implementation effort. Both, strategy commitment and rolecommitment, were shown to influence role performance. However, the most commonly studieddimension, organizational commitment, showed no relationship to role performance in either oftheir samples. Their results highlight the complexity of the commitment construct and stress thatthe study of commitment to an organization alone does not explain this complicated variable fully.13
  • 14. Fig 2.1 : The strategy implementation framework by Okumus (2001)Key * New implementation variable1. The characteristics of and developments in, the external environment influence the strategiccontext and force the companies to develop new initiatives2. The problems and inconsistencies in the internal context require new projects3. The project is implemented in the internal context and the characteristics of, and changes in,the context variables influence the process variables14
  • 15. 4. All the process variables are used on a continuous basis5. (a) The characteristics of, and changes in, the external and internal context have impacts onthe outcomes; (b) The characteristics of the process variables, and how they are used, determinethe outcomes of the project implementationCommunicating Your Strategic Plan with Employees Robert W. BradfordIts critically important that employees understand your strategy. Employees who understandyour strategy will be able to make better day-to-day decisions that will support your vision. But,while most of us understand this — at least intellectually — we often have difficulty effectivelycommunicating our strategies to people outside of the strategic planning team. This may beespecially difficult if you feel that parts of your strategy are sensitive and should not be sharedwith people outside of your management team. In addition, it may be undesirable to loademployees with the task of thoroughly understanding all of your strategic planning documentswhen many employees only touch on one small operational area. How can we reconcile thesedifficulties?In Bradord‘s experience, companies that share their strategy with their employees get far greateralignment with their vision. This makes implementation much easier, and helps to give yourvision a life of its own. If you want to get all of your employees — and not just your planningteam — helping to move your vision forward, try communicating your strategy with them thisweek!Robert Bradford is President of Center for Simplified Strategic Planning, Inc.Align Employees with the Corporate StrategyAs your business emerges from the recession, it should have a measurable competitive advantagestrategy in place. And dont forget to enlighten your workersBy The Staff of the Corporate Executive BoardIn the wake of economic uncertainty, many companies are re-inventing their businesses to notonly survive the downturn, but to emerge with a measurable competitive advantage in therecovery. In many companies, products suites are rethought, brand identities are unmistakablychanged, go-to-market strategies are redesigned for greater efficiency, resources and funding areslashed, and the workforce is restructured for streamlined operations.15
  • 16. For some companies, these strategic changes in response to the broader economic environmenthave represented major shifts in the way they do business, while others have experienced moremoderate tweaks to their strategy. Yet there are virtually no organizations with the luxury ofremaining untouched by the economic turmoil.How can companies gain a competitive advantage when their employees are focused on changesand productivity is on the decline? CEB has identified that companies need to align theiremployees with the corporate strategy. Progressive companies that successfully align employeesto their corporate strategy are realizing the competitive advantages originally targeted inorganizational transition.• Refocusing on the customer? Companies in the service industry are realizing 10% gains incustomer satisfaction.• Launching new products? Measurable levels of innovation have been documented to improveby 15%.• Trying to be more nimble in the market place? Employee perception of organizational speedhas been cited to increase by upwards of 35%.• Aligning employees to the corporate strategy—helping them understand their new call toaction—is a critical driver of success in todays market.16
  • 17. Chapter 3: Research methodologyResearch QuestionsThe main questions that this research hopes to answer are: 1. What is the perception and level of awareness of the employees about the strategy of the company? 2. What are the key factors of success of the company based on the perception and awareness level of the employees?Research ApproachThe first phase was descriptive, which was used to collect data and gain an in-depthunderstanding of the IT industry in India, strategy of the market leader TCS from the availabledata.The second phase was exploratory and quantitative, involving the analysis of survey data to testthe research hypotheses. A qualitative research approach can be particularly helpful ininterpreting the results by explaining the causes behind related variables.Exploratory research is conducted to clarify and define the nature of the problem. It is used todiagnose a situation, screening of alternatives and discover new ideas. With the companyexecutives were also conducted to obtain the details about their awareness level on the company.ReasoningThe study uses Deductive reasoning, to verify the data collected on the environment and thecompatibility of the employees with the organization environment.Data Collection The study was conducted among the group of employees of TCS, Bangalore Primary data is collected mainly by sending the questionnaires to their email id and their responses were recorded. Secondary data on the strategy followed by TCS is collected from published journals, articles, websites, and annual reports. The sampling size for the engagement survey was 50. The sampling techniques used to obtain participants for the survey were:17
  • 18. -Snowball sampling: Participants in the survey were asked to recommend other employees from their respective departments to take part in the interview. -Convenience sampling: Based on factors such as work schedule, availability and proximity of work location, employees were selected for the survey interview.Questionnaire designIn the questionnaire, positive organizational language was used in place of negatively wordedquestions in order for the items to measure engagement and not burnout. The questionnaire wasdivided into three sections:Section 1: The purpose of this section was to obtain demographic and work-life details of theparticipants such designation, vertical of the company they are working in, tenure with thecompany, and department.Section 2: The second section consisted of 10 questions to check their awareness level on thestrategy, concepts like MBO, and communication channels in the organization.Section 3: This section aims in finding key success factors of TCS.Analysis of Data:First of all thorough literature was reviewed about the IT industry in India, starting from its entrytill the present scenario and future trends based on Industry reports and other reports. Based onthe market share in IT industry based on revenue, sales, no of employees, TCS emerged as themarket leader and it was selected for analysis. The strategy of TCS was studied based on itsannual reports, corporate sustainability reports and chairman‘s message of over 3 years. Then aquestionnaire was designed to check to check its awareness level among the employees and itwas circulated. After gathering sufficient data about factors causing the employee awareness onthe strategy of the company and the contextual data around each factor. The data is categorizedand produced a relative importance rating for each factor resulting in employee awareness andcausing satisfaction to work in the company18
  • 19. Survey Administration:The instrument used to collect data was a questionnaire (Appendix A), which was administeredsent to their emails. The questionnaire consisted of The questionnaire consisted of statementsbased on the dimensions to be studied, rated on a fivepoint Likert scale from Strongly Agree toStrongly Disagree, along with other closed ended questions.Framework of the study: Study the IT industry scenario in India Identify the market leader Study the strategy followed and analyze it Check the awareness level in the employees Find out the key success factors of the market leaderSource: Research data19
  • 20. Chapter 4: Introduction to the IT industry:History of the industryThe birth of the software industry in India began in 1970 with the entry of Tata ConsultingServices (TCS) into the domain of outsourced application migration work. In the late 1960s, theTatas (name of a large conglomerate of companies) created TCS as a central service center forTata Group companies. A few young MIT-trained Indian professionals were recruited, and alarge computer system was imported. With IBM having been thrown out of India, the concept ofoutsourcing application development work had become a necessity for Indian companies.Utilizing its excess computer capacity, TCS began doing outsourced application work fororganizations such as Central Bank of India and Bombay Telephones. Within a few years TCSbegan sending young Indian engineers to a joint venture partner in the United States, Burroughs,for training. The trainee engineers excelled at doing platform conversions, and TCS startedearning conversion assignments for its engineers in Germany and elsewhere.Later a new company named Tata-Burroughs was formed. Tata was keen to exploit the personnelplacement or ―bodyshopping‖ opportunities whereas Burroughs was interested in sellinghardware to the Indian market. After a few successful years the partnership was broken at thebehest of Unisys which had by then acquired Burroughs in the United States and the companywas rechristened as Tata Information System Limited. A U.S.-trained Indian electrical engineertook over management of TCS in 1969. He used his influence in the Institute of Electrical andElectronics Engineers to further promote TCS and founded the Computer Society of India withfellow scientists and professionals from the Tata Institute of Fundamental Research. Many ofthese professionals later moved to government and became very influential policymakers. Theseearly networks played a very useful role in overcoming severe administrative and proceduralconstraints in India‘s otherwise closed economy during the 1970s and 1980s. Following thesuccess of TCS, many other companies were set up in India.Beginning in the 1970s, a growing shortage of engineers for the expanding computer industry inthe United States and Europe, an oversupply of Indian engineers relative to domestic demand,and a growing international reputation for the skills of Indian engineers, provided an opportunityfor bodyshopping in which Indian firms such as TCS sent Indian engineers overseas to do20
  • 21. software programming onsite, mostly in American firms for limited, billable projects.During the first phase (1968–84) of exports, four types of companies interlinked in direct andindirect ways to facilitate bodyshopping (Xiang Biao 2002). 1) There were establishedcompanies in India such as TCS and Infosys Technologies which supplied programmers to largemultinationals in IT and non-IT sectors primarily in the United States. These multinationals alsorecruited programmers through local U.S. companies such as Mastech (now iGate) andInformation Management Resource established by Indians living in the United States. Suchcompanies in turn recruited manpower through local search agents (small companies run byIndians in the United States). These agents, from several states in the United States, wouldcontact local agents in India from a multitude of small companies and operators. Theresponsibility of collecting resumes, forwarding them to U.S. placement agents, preparing visaand contract finalization with the programmers was done by the agents in India. Theprogrammers were paid low wages. Commissions were charged by different members of thesupply chain. Sometimes there were subagents spread in different towns and cities in India.There was an interesting network among revolving players. Programmers who returned to Indiaafter a stint overseas would join the pool of software engineers who could be hired by theestablished companies in India. Often, programmers sent onsite by large Indian companies wouldmove laterally to another assignment in the United States through a local U.S. agent to prolongtheir U.S. experience. Later they would return to India and be in the market for local Indianagents to hire them. The Indian Diaspora had played a key role in the bodyshopping exports.Arora and others (2001) also report several instances where Indian immigrants in the UnitedStates helped U.S. buyers to locate Indian suppliers. Field interviews with U.S. customersreported that the impetus for outsourcing to India came from employees of Indian origin.The development of body shopping links between firms in the United States and India was duemainly to the large Indian Diaspora in the United States, many of whom worked as professionalsin the American IT industry. They promoted and facilitated connections between U.S. firms andfirms or agents in India who could supply programmers for onsite work in the United States. Thesuccessful growth of bodyshopping was due to the skills of Indian entrepreneurs and the steadysupply of low cost and trainable Indian engineers. Bodyshopping was and continues to be an21
  • 22. attractive strategy for new entrants into the industry, requiring nothing more than knowledge andestablished relations with a few potential clients.The severe shortages in skilled technical labor for the growing IT industry in the West and theliberal immigration policies of the United States fueled the emergence of bodyshopping. Forexample, in the 1990s annual growth of IT expenditures on equipment in the United States was24 percent and in Germany and Britain just under 20 percent. At the end of the 1990s theshortage of programmers, systems analysts, and computer engineers was estimated at about346,000 in the United States and 30,000 in Canada.The growth of IT industry:Over the course of its history, the Indian IT industry has been through a number of phases (seeFigure below starting with extremely low value-add body-shopping work to doing high-endconsulting today. Currently, the industry is characterized by the presence of a few very largecompanies with a couple of billion dollars in turnover, each employing in excess of 50,000people. The majority of these companies provide outsourced services to their overseas clients.These services include maintenance of existing software, development of new software, remoteinfrastructure management, product design and development and increasing amounts of IT andbusiness consulting . Fig 4.1: Phases in Indian IT sector22
  • 23. The Indian IT sector has been the subject of many studies that have attempted to identify some ofthe several factors responsible for the incredible growth of this sector. Rafiq Dossani has tracedthe origins and growth of the industry. The most comprehensive treatise of the sector‘s growth,aptly titled ―The Long Revolution‖ has been chronicled by journalist Dinesh C. Sharma. Some ofthe key factors that many of these studies have listed out are:Demographic factors. India is possesses a demographic advantage over other nations by virtueof its very large pool of English speakers large pool of scientists and engineers, young populace entering the job market, cost benefitsGovernment Policy Reforms Despite many assertions to the contrary, the sector has receivedsubstantial help from the government both by easing-up on regulations as well as other measures(tax-exemptions) which have gone a long way.Economic Liberalization The sector has also benefited from the larger opening up of the Indianeconomy, for example, de-regulation of the telecom industry, easing of FDI norms, reduction ofduties on computers and electronic devices etc.The era of outsourcingWhile initial development of Indias software industry was based primarily on bodyshoppingwork onsite at U.S. firms, in recent years the trend has been increasingly for Indian firms toconduct software development for U.S. clients ―offshore‖ in India. This shift was the result of amaturing of Indias software industry and its international reputation in the last 15 years, and thedevelopment of necessary infrastructure and communications technologies in India that has madeoffshore work possible.As the Indian software industry matured, increasing client confidence in Indian capabilities andquality standards enabled Indian firms to move their work offshore. With maturity has come agoal to move up the value chain. Many new companies were set up in the 1980s by entrepreneurswith ambitions of creating world-class software development centers. Firms which had startedprimarily as subcontractors for technical manpower gradually shifted to managing complete parts23
  • 24. or phases of projects, and then to delivering complete solutions from India. During this phase,most companies made significant efforts to assimilate good practices in project management andquality and to acquire internationally recognized quality standards certification. NASSCOMplayed an aggressive role in promoting the India brand abroad. In some ways, during this period,India was building a launching pad for the eventual take off of its software service industry.In this period the Indian government played a facilitating role in advancing the industry andenabling offshore work in India. Recognizing the growth potential of the software industry, thegovernment in the 1980s took key policy actions to open up the sector. Further policy reformsenacted since the late 1990s have facilitated development of telecommunications and otherinfrastructure required for offshore work. A policy change in 1998 that effectively ended amonopoly on internet service provider (ISP) gateways, allowed India‘s private sector to offerneeded bandwidth to the growing industry. Two years ahead of the World Trade Organization(WTO) commitment, India liberalized international long distance in 2002. In 1990 thegovernment created software technology parks (STPs) in 39 locations across India to providesoftware companies with access to high speed data communications and single-windowclearance for regulatory compliance. While few of the larger firms have made use of the STPs,they have provided opportunities for new firms to launch, and smaller firms to grow, with littleinvestment.Table 4 shows the shift in the last 15 years from client sites overseas to ―offshore‖ business inIndia. The revenue from services provided in India increased from only 10 percent in 1988, to 33percent in 1995, to more than 60 percent by 2003–04.Table 4.1. Comparison of Indian software export revenue by delivery location (percent) 1998– 1999– 2000– 2001– 2002– 2003– 2004– Type 1988 1995 99 00 01 02 03 04 05 Delivered at overseas client site 90 66 54.4 57.4 56.0 45.2 43 36 29 Delivered in India 10 33 44.4 43.6 44.0 55 57.3 64 71Compiled from Kumar (2001: 4,280) [[page 4,280 YES?]] and NASSCOM (2005: 58)The Indian software industry is now in its third phase – that of take off. Today, most leadingcompanies are operating in the high-end software services business and are also making efforts24
  • 25. to enter the products segment. New breeds of companies, led by second generation softwareentrepreneurs, are setting up product-oriented companies. The industry has weathered ups anddowns in the global market, maintaining a high rate of growth. The industry moved center stagein the domestic media because of its visibility in the United States, high market capitalizationand wealth creation for its employees. It is a source of national pride, and as a consequencecontinues to attract disproportionate government attention. The government set ambitioussoftware export targets and has provided the policies to enable the industry to achieve thosetargets. Software companies are increasingly being recognized for their leadership in adoptingbest practices in management by the media. Indian companies have fine-tuned the ―offshoremodel‖ and project their brands as service companies. Companies have moved further up thevalue chain, improving productivity, targeting new geographies, vertical domains and businesses.Tackling the manpower issue: firm-level effortsHuman resource development is critical in software companies where 95 percent have formaltraining divisions and learning needs analysis programs. Minimum training per employee is 40hours. This covers both technical and behavioral training and the proportions vary betweenmanagerial and technical positions.A 2003 survey by Hewitt Associates and NASSCOM provides insights into recruitment andtraining practices (NASSCOM 2004: 189–191). A large proportion of companies spend aboutseven percent of total employee costs on recruitment. Nearly 26 percent of the total manpowerrequirement is met through campus recruitment of fresh graduates. In fact, nearly 44 percent ofsuch companies source campus recruits from engineering institutions only. Nearly 17 percent ofthe companies also recruit from management campuses. Most companies run large lateral hireprograms which are based on written aptitude and technical tests followed by interviews.Statistics reveal that among innovations in the software industry, the most significantinterventions have taken place in human resources. For example, nearly 60 percent ofcompanies have formal employee suggestion systems from which 28 percent of suggestions areactually implemented. Another study (Bhatnagar and Dixit 2004) of two large organizationsreports how special attention is paid to organizational innovations that meet the challenges ofexternal and internal imbalances. They suggest that current software service activity has built-inincentives to innovate up the value chain toward more complex services, software products andhardware-software integrated products.25
  • 26. In terms of rewards and recognition, a majority of companies uses market data to determinebasic pay. Employment and wages in the software sector have increased over the last decadebut not enough to erode India‘s competitive advantage. The differential between clientcountries and India remains very high (table 8). In terms of competition, countries comparableto India in overall cost/quality/delivery metrics have significantly higher wages than India.Moreover, expanded capacity of Indian engineering colleges will ensure that the supply isadequate for the likely demand in the next five years.With the entry of many multinationals in the Indian market, there is competition for the besttalent. The top 10 companies reportedly have retention rates over 90 percent indicating a fairlystable environment. It is interesting that Indian companies are neck-and-neck withmultinationals in these surveys (Dataquest, August 31, 2003), indicating the highly professionalnature of the HRD function in the industry. Table 4.2 India and her competitors compared Philippine Parameter India Canada Ireland Israel s China Russia Export Industry 9,500 3,780 1,920 900 640 1,040 165 Size (US$ million) Export focused 195,000 45,000 21,000 15,000 20,000 26,000 5,500 professionals IT employee 5–12,000 36,000 25–35,000 25,000 7,000 9,600 7,000 costs (US$ per year) Number of 60 NA 0 0 NA 2 3 CMM-5 certified companies Quality of IT High High High to High Moderate Low High labor force Moderate quality quality Infrastructure Average Good Good Good Good Average Poor Unique Abundant and Near shore, Large MNC Large English Large IT High26
  • 27. positives skilled (English, highly presence, product skills and workforce quality highly qualified, compatible early start development cultural engineers exposed to culture with (shrink compatibility clients) the United wrapped) workforce, robust States and experience project United management Kingdom experience Main negatives Ordinary High costs High costs Regional Lacks Lacks Unstable infrastructure unrest project project economy managers managers Source: NASSCOM (2004)Governments facilitating roleAlthough the story of the Indian software industry is a story of private initiative, the governmentplayed a supporting role with public funding of a large, well trained pool of engineers andmanagement personnel who could forge the Indian IT industry into a world class treasure in ashort time. Early government support came from a few visionary civil servants who championedthe cause and helped the industry find its way through a labyrinth of regulations, makingexemptions wherever possible. Later, policies that encouraged local firms and direct foreigninvestments were introduced.Government targeted software exports once the market identified the industry’s potential andcreated the necessary institutions. As early as 1972, the Department of Electronics introduced apolicy to permit duty-free imports of computer systems, if importers would promise to exportsoftware and services worth twice the value of the imported computers within a specified time.This policy helped a number of leading companies in their inception stage. In the 1980s theDepartment gave software developers a further boost by initiating software export friendlypolicies. It formed a software export promotion council and liberalized import rules for materialsneeded for the industry. Software was explicitly targeted as a key sector for export promotion. Inthe late 1990s, the government created four major taskforces comprising chief executives of27
  • 28. leading software companies to study the sector and recommend actions, and then acted on mostof the recommendations.8 At that time the Department of Electronics became the Ministry ofCommunication and Information Technology. This was followed by the IT Act to address a largenumber of issues. In addition to these federal interventions, many states promoted local softwareindustry by improving infrastructure, IT education, and provision of more facilitatingenvironments.With the beginning of economic reforms in the early 1990s, efforts were , made to attract foreignas well as domestic investment. Foreign companies were permitted to establish fully ownedsubsidiaries in the electronics export processing zones. Within the Ministry of Finance there wasgreater recognition of India‘s comparative advantage in the sector, as it abolished entry barriersfor foreign companies, made available fast, low-cost data connection facilities, and reduced andrationalized duties, taxes, and tariffs.The Reserve Bank of India adopted several measures to support the IT industry. These included:simplification of the filing of Software Export Declaration Form (SOFTEX); acquisition ofoverseas parent company shares by employees of the Indian company; companies whosesoftware sales were over 80 percent could grant stock options to nonresident and permanentresident employees; foreign exchange could be freely remitted for buying services; andcompanies which executed contracts in ―computer software‖ abroad could use income up to 70percent of contract value to meet contract-related expenses abroad.Tax holidays were given on company profits, although the government is progressively phasingout these deductions. Tax breaks from corporate income and tax on profits was available to unitsin any free trade zone, any software technology park, or any special economic zone to the extentof 100 percent of the profits derived from the business. These deductions will not available fromFinancial Year 2009–2010 onwards.Indian direct investment in joint venture (JV)/wholly owned subsidiaries (WOS) abroad wassimplified and a fast track window is available for large investments. IT software and servicescompanies in India can acquire companies overseas through American Depositary Receipt/Global Depository Receipt stock swaps without prior approval for up to $100 million or tentimes the export earnings of the previous year.While the government has enacted significant reforms in the area of intellectual property rights(IPRs), and has joined the World Trade Organization and Trade-Related Aspects of IPRs, the28
  • 29. reforms have so far not led to a surge in patents in the Indian software industry, nor have IPRsbeen perceived as effective in protecting innovations in the Indian software industry (Gupta2004).Several policy reforms in the telecom sector helped accelerate the domestic and export industry.In 1998, a national telecom policy was announced to clarify the role of the regulator, transitionfrom license fee to a revenue sharing model and open domestic long distance to privateoperators. The ISP gateway monopoly ended in 2000 and permitted private companies to set upinternational gateways. In 2002, international long distance was liberalized two years ahead ofWTO commitments and competition increased in cellular markets. As a result, India‘steledensity, the number of phones per 100 people, increased to five and cellular penetrationovertook the land line penetration.Recognizing the growing need for manpower in the software industry the Ministry of HumanResources Development took the following actions: Helped create and expand computer science departments in existing engineering colleges. Eased policies in order to enable private sectors to open educational institutions without public funding. A large number of engineering colleges were opened in the private sector. Introduced quality control systems for engineering colleges and other IT training institutions, such as the All India Council for Technical Education and an accreditation system run by professional bodies such as the Computer Society of India to monitor private training institutions.Moving up the value chainThe leading firms have moved up the value chain in software services, developing organizationaland managerial capabilities that enable them to offer more comprehensive services than merelylow cost programming. One sign of maturity is that the industry increasingly procures fixed pricecontracts, rather than the time-and-materials contracts of earlier years. With the greater risk offixed price contracts comes flexibility in organizing work, greater management control, and anopportunity to earn higher returns as efficiency improves.Revenue per worker is increased, indicating a move up the value chain – from an average of$9,000 in 1995–96 to $20,500 in 2000–01 – but revenues are still lower than what they are inproduct-based companies.29
  • 30. In order to build client value, companies have expanded their capacity to service a wider range ofsoftware development tasks, as well as to move into new services such as product design andInformation Services outsourcing. Software development includes analysis and specification ofrequirements, software design, writing and testing of software, and delivery and installation.Indian companies are trying to move beyond only writing and testing, which require the leastskill and account for only a small portion of the overall project costs, to higher skill levels thatrequire deeper business knowledge of the industry for which software solutions are beingdeveloped.In their quest to climb the value chain, Indias software firms ensured product quality andreliability by adopting internationally recognized standardized work processes. An increasingnumber of firms have met international certification requirements for key quality standards. Formany, this was an exercise in brand building, but the processes and procedures put in place lefttheir hallmark on the quality of software products and services.The reasons for the success of the quality improvements can be grouped in three categories –people based, business related, and management related (Jalote 2001). The Indian softwareindustry primarily delivers services, which globally has embraced software process improvement(SPI) more than those who deliver products. As Indian companies serve worldwide clients whodemand that their vendors adopt standards such as ISO and CMM, companies were motivated tocertify their credentials and used these frameworks to also deliver real software processimprovement. As companies moved to an offshore model, SPI became a necessity to succeed.Managing subcontracted work typically requires monitoring structures to contain risk. Thisimposes a degree of formality at the interface between the users and developers – something thatis generally hard to achieve with in-house development.For most organizations software development is their core competency which must becontinually improved. Their high growth trajectory required the infusion of a large number ofnew engineers every year. Without tightly controlled processes, it would have been impossible toabsorb new recruits into the development process quickly. Since the cost of manpower was notvery high in India, it was possible for most companies to dedicate a team for its SPI effort. Asurvey of high-maturity organizations in India indicated that most companies had dedicatedmanpower for SPI equal to about 1–2 percent of their engineering manpower (Jalote 2001).Most of the software companies in India are very young. Being followers in the software30
  • 31. development process, they could exploit the collective knowledge and experience oforganizations the world over in implementing SPI. Most companies introduced quality systemsvery soon after they were formed. This ensured that the company had work standards to whicheach new entrant had to conform. After that, the company, people and quality systems allmatured together. As the people in the company have contributed actively to the SPI movementsfrom the early days, it induced among the practitioners a sense of ownership for the qualitysystem.Software companies attract the best of talent from engineering schools. Some of the CMM leadassessors have observed that the scores on the Myers-Briggs personality tests conducted as partof the capability appraisals often indicate that Indian engineers are different from theircounterparts in the United States. Indian employees are ambitious and look for improvement inthe way the organization works, which creates a need for process orientation. The average age ofthe Indian engineers is in 20s and that of managers is late 20s to early 30s. Younger professionalsare more receptive to change, as they have not invested in traditions and indeed want changes.Indian culture is more family-oriented rather than individualistic. This prompts people toconform to established frameworks and systems. Professionals do not mind being measured.There are fewer privacy concerns and in-house surveys have indicated that most engineers aremore concerned about the nature of work and the overall work environment, and not so muchabout being measured. The software background of top managers helps to secure backing fromsenior management for SPI initiatives.Most of the facilitating factors are based in more general and societal context. Such factors arehard to emulate once the context changes. Government had little role to play in this movement.India does not have centers along the lines of the U.S. or European Software EngineeringInstitutes. The Ministry of Information Technology in India did bring in the world‘s bestSoftware Testing and Assessment of Software Maturity through licensing arrangements withSoftware Engineering Institute at Carnegie Mellon University. Under this agreement, the IndianStandardization, Testing, and Quality Certification (STQC)31
  • 32. External Analysis:Fig 4.2 Current Position of IT/ITES in IndiaSegments of the Indian IT sector: IT Services: It is of the market size of USD 46.0 billion during FY2011. Over 73 percent of the revenue comes from the export market. Banking, Finance, services and insurance has been the major sector in this segment Business Process Outsourcing (BPO): It is of the market size of USD 17.3 billion during the FY 2011. US accounts for over 60 percent of the export market. Around 81 percent of the revenue comes from the export market. Engineering design and product development: It is of the market size of USD 12.9 billion during the FY 2011. Over 70 per cent of the revenue in the segment comes from exports. Hardware: Market size of USD 11.8 billion during the FY 2011. Over 80 per cent of the revenue in the segment comes from domestic market. Domestic market is seeing good growth as penetration of personal computers is rising in India.32
  • 33. Trends of the market:Indian IT-BPO IndustryFY2012 is a landmark year – while the Indian IT-BPO industry weathered uncertainties in theglobal business environment, this is also the year when the industry is set to reach a significantmilestone – aggregate revenue for FY2012 is expected to cross USD 100 billion, exports at USD69 billion. Aggregate IT software and services revenue (excluding hardware) is estimated atUSD 88 billionFig 4.3 IT-BPO revenues Within the global sourcing industry, India was able to increase its market share from 51 per cent in 2009, to 58 per cent in 2011, highlighting India‘s continued competitiveness and the effectiveness of India-based providers delivering transformational benefits. Software and services revenues (excluding Hardware), comprising nearly 87 per cent of the total industry revenues, expected to post USD 87.6 billion in FY2012; estimated growth of about 14.9 per cent over FY2011 Within Software and services exports, IT services accounts for 58 per cent, BPO is nearly 23 per cent and ER&D and Software Products account for 19 per cent The industry continues to be a net employment generator - expected to add 230,000 jobs in FY2012, thus providing direct employment to about 2.8 million, and indirectly employing 8.9 million people. While the global macroeconomic scenario remained uncertain, the industry exhibited resilience and adaptability in continually reinventing itself to retain its appeal to clients.33
  • 34. Embracing emerging technologies, increased customer-centricity, deepening focus on new markets, adopting new business models are some successful growth strategies followed by the industry.Domestic IT-BPODomestic IT-BPO revenue (excluding hardware) is expected to grow at almost 17 per cent toreach Rs 918 billion in FY2012. Strong economic growth, rapid advancement in technologyinfrastructure, increasingly competitive Indian organizations, enhanced focus by the governmentand emergence of business models that help provide IT to new customer segments are keydrivers for increased technology adoption in IndiaFig 4.4 Trends of Total Indian Domestic MarketDomestic customer base comprising the government, large, micro, small & medium enterprisesand household consumers, represent unique set of requirementsDirect employment within the domestic IT-BPO sector is expected to grow by 7 per cent overFY2011 to cross 600,000 employees with the industry creating immense job opportunities in TierII and Tier III citiesIT ServicesOver the years, Indian IT service offerings have evolved from application development andmaintenance, to emerge as full service players providing testing services, infrastructure services,34
  • 35. consulting and system integration. The coming of a new decade heralds a strategic shift for ITservices organizations, from a ‗one factory, one customer‘ model to a ‗one factory, allcustomers‘ model. Central to this strategy is the growing customer acceptance of Cloud-basedsolutions which offer best in class services at reduced capital expenditure levels.IT services exports is the fastest growing segment, growing by 19 per cent in FY2012, to accountfor exports of USD 40 billion.Fig 4.5 Indian IT Service ExportsConsiderable traction in traditional segments – custom application development, applicationmanagement, IS outsourcing and software testing. Increased acceptance from mature segmentssuch as BFSI, US, and large corporations, and emerging segments such as retail, healthcare,utilities, SMBs, Asia Pacific . Emerging technologies – cloud computing, mobility, social mediaand big data/analytics unleashing new opportunities for the industryIT services is the fastest growing segment in the Indian domestic market, growing by 18 per centto reach Rs 589 billion, driven by increasing focus by service providersBPOIn the last few years, the BPO segment has been focusing on re-engineering itself in order todeliver transformational impact to customers. A ‗Verticalised‘ approach has been a keymarketing strategy – developing in-depth capabilities across the entire value chain in specificverticals. BPO firms are also increasing their onshore and near shore footprint to enable35
  • 36. customer entry into local markets; firms have also been actively implementing non-linear growthinitiatives that ensure higher realizations for service providers, while controlling costs,facilitating faster time-to-market and improving satisfaction at the clients‘ end.BPO exports expected to reach USD 16 billion in FY2012, growing by over 12 per cent overFY2011.Fig 4.6 Indian BPO Exports and EmploymentEngineering & R&D Services (ER&D)The engineering design and products development segments generated export revenues of USD10 billion in FY2012; growing by about 14 per cent, driven by increasing use of electronics, fuelefficiency norms, convergence of local markets, and localized products. The Indian IT-BPOindustry has invested significantly to strengthen their customer outreach and build engineeringcapacity and capability not only across new and existing verticals but also across the fullspectrum of product development value chain.36
  • 37. Fig 4.7: Engineering & R&D Services(ER&D)SME firms in ER&D ingraining the ‗innovation mindset‘; exploring growth opportunities byaddressing whitespaces across various verticalsSoftware ProductsThe past few years have witnessed a noticeable shift in the Indian software product businessecosystem which has helped create an enabling environment for the growth of Indian softwareproducts. These include acceleration in software product business activity in India;improvements in the talent and support ecosystem, innovations in software product technology,delivery/business models, and changes in the Indian economy that are helping catalyze thedevelopment of the domestic market for software products. Increased adoption of IT byenterprises, especially among SMBs, and home-users is driving growth in this segment.Increasing IT adoption in India has also helped in creating a sizeable product business marketopportunity locally.37
  • 38. Fig 4.8: Indian Software Product Exports Software product exports to reach USD 1.5 billion, y-o-y growth of 13 per cent, driven by mobility and cloud applications, SMBs Domestic software products segment is set to grow to Rs. 180 billion in FY2012, a growth of ~13 per cent over FY2011 driven by the need to replace legacy systems, technology advancements around cloud, mobility, etcOffshore Software Product Development (OSPD)India‘s Outsourced Software Product Development (OSPD) exports market crossed the billiondollar mark in FY2011. Despite its small base, the OSPD market has consistently experienceddouble-digit growth rates over the last five years.Fig 4.9: Indian OSPD Exports In FY2012, OSPD market is expected to grow faster than industry average at 17 per cent to cross USD 1.2 billion in exports Demand drivers : The rapid proliferation of cloud, mobile and social media technologies, strategic importance of mining customer data for differentiating market insights and the urgent need to focus on core business markets to tackle ever increasing competitionGlobal In-House CentersGlobal In-House centers (GIC) have played a key role in the IT-BPO sectors phenomenal growthstory, establishing ‗proof of concept‘ and branding India as a global sourcing destination. The38
  • 39. segment, miniscule till 2003, has witnessed tremendous development in the last 7 year‘s –growing at a CAGR of 22 per cent, employing close to 4 lakh people and contributing to 1 percent of India GDP. Their impact on India extends beyond revenues and employment- playing aleading role in developing an R&D and product culture, spearheading initiatives to developaffordable products for emerging markets and creating entrepreneurship opportunities.Fig 4.10:Captive Revenue across categories There are over 750 IT-BPO MNCs captive centres in India in FY2010, 28 per cent of them with multiple locations and employ almost 4 lakh people. GIC contribute to 22 per cent of IT-BPO export revenues and 21 per cent of employees The industry has significantly grown over the last 5 years and currently has representation from most of the verticals like Aerospace & Defence, Automotive, BFSI, Bio-Technology, Chemicals, Computer Hardware, Education, Electronic/Electrical Equipment, Energy, Healthcare, Industrial, Semiconductors, Software/Internet, and Telecommunications, etc. North America and Europe happen to be the largest investors in the captive space; together they contribute to more than 90 per cent of the captives in IndiaFuture OutlookDespite 2011 ending in a difficult economic environment, some geographic regions and servicesare expected to circumvent the situation in 2012. Global GDP, after growing by 2.7 per cent in2011, is expected to grow 2.5 per cent in 2012, with developing economies growing thrice asfast as the developed economies. Better economic conditions in the second half of the yearsignifying return of consumer confidence and renewal of business growth, is expected to driveIT spending going forward.39
  • 40. Fig 4.11: Indian IT-BPO Revenues Global technology related spend expected to grow by 5 per cent in 2012 Global sourcing to continue growth trend as organizations aim to cut costs, access local market and innovation and sourcing requirements Indian IT-BPO services exports expected to grow by 11-14 per cent while domestic services to grow by 13-16 per cent (in Rs terms) India accounts for less than 5 per cent of global technology spending – tremendous untapped potential for growth of Indian IT-BPO sector, in both core as well as emerging opportunities To achieve this growth, the sector has to continue to re-invent itself – through new business models, global delivery, partnerships and transformative focus Prevailing global megatrends presents new opportunities and risks for the industry, which will shape the technology industry landscape IT-BPO sector will need to build on its strengths and address challenges around competition, talent, security and business environment In the future, the industry to drive transformation, innovation and inclusivity in business and IndiaImpact on Indias Growth:IT-BPO sector has become one of the most significant growth catalysts for the Indian economy.In addition to fuelling India‘s economy, this industry is also positively influencing the lives of itspeople through an active direct and indirect contribution to the various socio-economicparameters such as employment, standard of living and diversity among others. The industry hasplayed a significant role in transforming India‘s image from a slow moving bureaucratic40
  • 41. economy to a land of innovative entrepreneurs and a global player in providing world classtechnology solutions and business services. The industry has helped India transform from a ruraland agriculture-based economy to a knowledge based economy.Influence of the factors on the industry over 3 yearsWith the market size of USD 76billion in the year 2011, a number of factors show that India hasan advantage over other countries in the field of IT. Some of them are:1. Growing demand: Strong growth in export demand from different verticals like Banking, Finance services, Insurance etc. Growing economy of India drives the rise in local demand.2. Competitive position: India has 60-70 percent cost saving over source countries like US, UK etc. India is already the leading destination for IT&ITeS, and the market share is still rising. Presence of a huge talent pool of engineers and other graduates gives it a competitive position.3. Global Footprint: Indian IT firms has delivery centers across the world. The number of global delivery centres of Indian IT firms has crossed 250 centres in over 60 countries as of 2009.Industry is well diversified across verticals like Banking, Finance services, Insurance, telecom, retail.4. Policy support: Tax holidays extended to IT sector saves a lot of cost to the IT firms increasing their revenues. SEZ scheme since 2005 has benefited the IT companies with single window approval mechanism, tax benefits etc.Key Success factors: IT sector to be driven by strong demand and Indian expertise. Talent Pool: Availability of skilled talent has been a major reason behind India‘s emergence as global outsourcing hub. Every year nearly 3.7 million additions to talent pool from across the country. There is strong mix of young and experienced professionals in India. Growing talent pool of India has the ability to drive the R&D and innovation business in the IT-BPO space Domestic growth: Computer penetration is expected to increase inside the country. Increasing affluence of domestic consumers, globalization of key segments expected to41
  • 42. enhance the domestic spend on IT services. Number of sectors in India are expected to outsource higher percentage of their non core work giving boost to IT-BPO sector. Government is expected to become a major contributor to domestic demand by 2013-14. Infrastructure: Robust IT infrastructure across various Indian cities such as Bangalore, Chennai, Pune has Delivery centers spread across various countries. Policy support: Tax holidays for STPI and SEZs Procedural ease and single window clearance for setting up facilities. SEZs to drive Indian IT sector; Tier II cities are emerging as new centers. IT-SEZs have been initiated with a view to creating zones that lead to infrastructural development, exports and employment. During FY10, 94 per cent of total IT exports were accounted for by STPI units. 43 new tier II/III cities are emerging as IT delivery location. This could reduce pressure on leading locations The cost in newer cities is expected to be lower by up to 28 per cent than the leading cities. Over 50 cities already have basic infrastructure and human resource to support the global sourcing and business services industry. Some cities are expected to emerge as regional hubs supporting domestic companies. Global demand: Global IT offshore spending expected to grow at CAGR of 6.2 per cent during FY08-13.Global BPO spending expected to grow at a CAGR of 9.1 per cent during FY08-13. Strong demand is expected from emerging countries which currently account for only 20 per cent of global IT spending.42
  • 43. Market share of the industry:Indian IT market is dominated by a few companies with the presence of large small and mediumcompanies.Fig 4.12 Market Share of Indian IT Industry Market share TCS 8.5% Wipro 7.9% Infosys 6.9% Cognizant 5.2% HCL Tech 65.1% 4% Tech mahindra 1.2% Mahindra Satyam 1.2% Others43
  • 44. Porters 5 force model for IT industryFig 4.13: Porter Framework for IT Industry44
  • 45. Market leader analysis: 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 (TCS) is an information technology consulting, solutions and services Organisation.The Company is a part of one of India‘s most respected business conglomerates the Tata Group.TCS started its operations in 1968, and pioneered the IT services industry out of India. It has been the largest Indian IT services company ever since its inception. The company offers business process outsourcing (BPO), enterprise systems installation, offshore software development and systems integration services.TCS also provides product and industrial process engineering services as well as strategic consulting and project management services. These services are provided to a spectrum of industries such as banking, financial services, insurance, telecom, manufacturing, media and entertainment, retail and consumer goods, transportation, health care and life sciences, energy and utilities. 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.45
  • 46. 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 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 ProfileMission reflects the Tata Groups longstanding commitment to providing excellence:  To help customers achieve their business objectives by providing innovative, best-in- class consulting, IT solutions and services.  To make it a joy for all stakeholders to work with us.Values: Leading change, Integrity, Respect for the individual, Excellence, Learning and sharing.Leadership in IT Outsourcing: TCS is the largest IT consulting company in Asia with 143,000of the worlds best trained IT consultants and an acknowledged pioneer, innovator and thoughtleader in the IT space, having literally coined the term ―Offshore Development‖. It is also aglobal consulting, IT services and systems integrator with a 40-year track record and world classprocesses and methodologies. TCS has won many accolades for its significant contribution to thematurity and visibility of the Indian IT services worldwide46
  • 47. Trusted Partner: TCS is part of one of Asias largest conglomerates - the TATA Group. Thegroup, with annual revenue of more than USD 72.5 billion+ (Feb, 2009), spans across diversifiedindustry segments such as consumer package goods (CPG), energy, telecommunications,financial services, chemicals, engineering & materials. The TATA Group, a symbol of trust inIndia, is known for its pioneering spirit and the brand stands for business excellence andintegrity.HeadquartersTCS is headquartered out of Mumbai, India.LocationTCS is operating in 47. TCS has 50+ delivery centers in India across 15 cities; 15+ developmentcenters outside India. TCS‘ employees are spread across countries. Thus, Global presence helpsin country availability of competencies for any technical assistance mission or applicationproject. Also, TCS deputes the associates on long term and short term basis to the local countriesfor specific engagements.TurnoverTata Consultancy Services Limited (TCS) is a leading and India‘s largest provider of ITServices, Business Solutions and Outsourcing with revenues of USD 6 Billion during FY08-09.Number of customersOver 985 active clients; 6 out of Top 10 US Fortune companies are TCS clients.47
  • 48. Fig 4.1: Organization Structure Of TCSFig 4.2: TCS By numbersSource: TCS Corporate Sustainability report 2010-1148
  • 49. 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. 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 49
  • 50. 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. Fig 4.3: Operating Structure of TCS 50
  • 51. TCS‘ organization restructuring in April 2008 was one of the major moves in last decade to adapt toexternal environments. Having an organization structure that would respond to customer demands ismost efficient way to lay down your business strategies. TCS did it little late but just in time.Strategy for long-term growthTCS‘ revenue growth comes from following a multi-pronged strategy built around(I) expanding our addressable market by geography, by industry and by service-line and(ii) Deepening our client relationships.Fig 4.4: Five point Strategy for long term growth Customer Centricity Non-Linear Full Services Business Strategy for Capability Models Long-term Sustainable Growth Strategic GNDM AcquisitionsSource: TCS Corporate Sustainability report 2010-11 1. Customer-centricityThe Company‘s strategy is to be a trusted business partner to large global corporations. TCS hasbuilt a customer-centric organization structure which puts customers at the center of its operatingunits and teams. The Company‘s promise of certainty resonates with customers as it offers themreal business results through optimal IT design and deployment. TCS‘ ability to solve thecustomer‘s most challenging business problems is the core business need around which ourofferings and services evolve.51
  • 52. 2. Global Network Delivery Model TMTCS has established a unique Global Network Delivery ModelTM (GNDMTM) that allows theCompany to deliver services to customers from multiple global locations in India, China, Europe,North America and Latin America. The GNDM™ enables the Company‘s delivery centers tocollaborate on projects and leverage all its assets in order to ensure ‗One Global ServiceStandard‘. 3. Integrated Full Services OfferingsTCS continues to build on its ‗Full Services Play‘ that offers its global customers an integratedportfolio of services. This includes a comprehensive range of (1) IT services capabilities in theareas of Application Development, Application Management and Enterprise Solutions (2)Business Process Outsourcing services (3) Infrastructure management services with a strongfocus on ‗Remote Infrastructure Management‘ and transformation (4) Engineering services witha focus on Enterprise Asset Management, Industrial Embedded Systems, Plant AutomationServices and Product Engineering (5) Assurance and Validation services (6) TCS‘ own productbased solutions, primarily in financial services area with its TCS B_NCS suite of offerings and(7) Global Consulting capability that brings strong skills in program management, changemanagement, process management and architecture. This suite of integrated full servicesportfolio presents a compelling value proposition for global corporations and continues toincrease traction in the market place, as customers look for opportunities and partners who canbring transformation solutions which include innovation, optimization and time to marketcompetitive advantage for their businesses. This integrated full services offering strategycaptures the entire value chain of IT - from consulting and design to products and solutions andfrom implementation to support. 4. Strategic AcquisitionsIn addition to sustaining strong organic growth, the Company continues to closely look atacquisitions that are strategic in nature. Through inorganic means the Company may look tostrengthen gaps in its services portfolio, enter new geographies or market segments as well as in-source domain and technology expertise. The strategic acquisitions done over the years havecreated new capabilities within the Company and these acquisitions continue to yield synergisticgrowth.52
  • 53. 5. Non-Linear Growth StrategiesThe Company is focused on a set of strategic growth business initiatives to drive non-lineargrowth opportunities, in addition to its continuing focus on improved productivity and processenablers for its current business lines. TCS continues to invest in nonlinear growth initiatives thatwill allow it to drive revenue growth without commensurate growth in the number of people.TCS pursues three initiatives - Software Products, Platform based BPO services, and iON – anIT-as-a-service solution for Small and Medium Business. Cloud based software services,‗Managed Services‘ and ‗Accelerated Solutions‘ bring non linearity to the mainstream IT andITES businesses of the Company.Business Strategy:1. Low cost Global delivery 24X7 model.2. Focus on customer relationship management, customer retention (for repeat business revenuewhich 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 beensuccessful in getting the cost leadership in the industry.8. Since last decade, TCS has been following a more focused strategy where they are going asper local needs of customer and their nature of business. E.g. Middle East, Australia. They arebeing 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, andvirtualization. These high-end skills and scale will help TCS to tackle larger projects aimed attransforming clients‘ IT applications and infrastructures.Other global strategies Since last few years TCS is successfully leveraging labor cost in Eastern Europe, SouthAmerica and China.53
  • 54.  Getting big foreign names on board of directors is also one of the key strategies for TCS. Thecurrent 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, joinedin 2006) & Laura M Cha (member of the Executive Council of the Hong Kong SpecialAdministrative Region (SAR) and Non-Executive Chairman of HSBC Investment Asia HoldingsLimited) 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 businessesin global markets including India. Recent acquisitions in Ireland and Latin America demonstrate its ambition to create deliverycenters of respectable size outside of India. TCS was the first one to set up a delivery centre in Chi a. nCorporate StrategyTCS is a firm believer in ‘organic growth’ and acquire only those companies which are inline with TCS’ strategic long term goals.Diversification StrategyIn February 2008, TCS restructured its global operations to adopt an integrated, customer-centricapproach, 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 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) andOrganizational Infrastructure.TCS‘s diversification plan seems to have worked since the company has been gainingmomentum in Europe and other emerging markets, which is evident in the company‘s markedgrowth rate of 40% year to year in its FY08‘s European operations. The firm‘s operations inLatin America and Middle East have also seen considerable expansion. In order to deepen itspenetration, TCS has established delivery and offshore centers in countries like Brazil, Uruguayand Mexico.54
  • 55. 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 onBFSI‘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 widergap between the demand and supply of IT consultants. This can be traced to the fact that hiredemployees lack required skills or fail to deliver their expertise, but still seem to be demandinghigher wages.Strategic AlliancesTCS has strategic relationships with various global technology vendors. These relationships arein various dimensions such as Customer, Service Provider, Supplier, and Alliance Partner.Extending collaborative research to several global technology vendors has made relationshipswith them more holistic. TCS and these technology vendors collaborate on joint researchleveraging 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 anintegrated business model to customers. Some of the strategic alliances are listed below.Intel: Intel and TCS provide information technology products and services that complementeach other. The companies are engaging in a technology alliance model in which the twoorganizations collaborate on research and develop solution offerings to deliver customer-specificsolutions to the marketplace.This alliance has matured over the last two years of collaborative work, with the companiesimplementing 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 solutionsThe companies have completed two significant virtualization and balanced compute researchprojects with these objectives: Virtualization: Demonstrate server consolidation through virtualization using multi-coreIntel® Xeon® processors and Intel® Virtualization Technology on a real-life customerapplication to reduce total cost of ownership.55
  • 56.  Balanced Compute: Demonstrate and validate balanced compute model usages in real end-user scenarios, showcasing central manageability and client side computing using a combinationof 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. Thepartnership with SAP has been a long-standing one and multi-dimensional. Leveraging andextending this existing partnership to collaborate for joint research and innovation was a logicalnext step for both SAP and TCS.Senior Research Scientists of SAP and TCS initiated this collaboration setting the objectives anddefining the modus operandi for carrying out research in a collaborative manner. And theycommitted to cause by undertaking the responsibility to be Executive Sponsors in the respectiveorganizations.Collaboration with SAP Research was initiated after detailed discussions and exchange ofresearch interests from both SAP and TCS. Identified areas include Model-driven Architectureand 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 NextGeneration Data Center. Some of the potential research initiatives could also involvedevelopment of market-specific offerings based on value-added services, using products andsolutions from HP.EMC2: With TCS being an IT solutions and services provider, EMC2 and TCS haveconceptualized IT solution architectures for specific industry-domains integrating products fromEMC2 and software platforms from TCS.Acquisition StrategyTCS is looking at growth from two ways –first through organic means and second through theinorganic way. The inorganic way of growth is through acquisitions of those companies thatmake business sense to TCS. The companies should add great value to TCS. Like for instanceTCS acquisition of CMC is helping it taking a sharper look at the domestic IT business. Both thecompanies have synergies in the government sector, since both the companies are well knownfor doing work for the government.56
  • 57. TCS as part of its strategy to look at growth options has set up an internal team which will focusonly 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 andBPO 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 cashpayment, 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 longerhave direct responsibility for managing an offshore delivery centre in a market becomingincreasingly competitive, and they have significantly reduced their overall headcount. Feb 2006: Tata InfoTech (TIL) Limited was merged into TCS Limited. TIL was a softwareservices company like TCS with operations in the UK, U.S, and Australia among others. Themerger gave TCS a broader customer base and deeper penetration into key geographies. Theacquisition was touted as providing TCS more ability to provide full-service to customers inaffected markets. March 2006: TCS, through its subsidiary, Diligenta, acquired a basis in part of UK‘s PearlGroup. 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 inboth IT and BPO services in that market, and now Spanish language capability. Experiencegained 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 bankingproducts and consolidated its European operations after acquiring a 75% equity stake in itsSwitzerland-based partner, TKS-Teknosoft. TKS was the marketing agent for TCS in Europe.TCS Joint venturesTCS went for a joint venture (JV) in Feb 2007 with three Chinese partners and is billed by thecompany as a "role model‖ for the Chinese IT industry. The TCS joint venture, in whichMicrosoft took a 10 per cent stake, planned to employ over the next five year at least 5,000people that would represent a considerable scaling up from the companys then present strength57
  • 58. of 800 employees in China. The Chinese software industry remains fragmented and lacks scale.Only about 10 Chinese IT firms among some 8,000 employ more than 1,000 people. The TCSjoint venture will thus be one of the largest software companies in China once it reaches its5,000-employee target. The new venture is widely expected to enable TCS to finally break intothe $30-billion domestic Chinese IT market, a market that has in the past proved elusive forIndian IT companies.Another JV is between TCS and SBI (State Bank of India) in Nov 2005 to cater advancedtechnology solutions and domain consulting for the banking and financial services sector. Thejoint 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. Thejoint venture was to offer transformational capabilities to banks and financial institutions in Indiaand other markets by helping them to use technology as a competitive tool in the market placeusing bureau services and service platforms. "In three to five years, we hope the company createsniche services in the national and international stage, said Mr. Ramadorai.58
  • 59. Chapter 5: DATA ANALYSIS:This chapter deals with the analysis of the collected data from primary and secondary sourcesand the findings that come out of such an analysis. The survey is conducted on TCS employees.The analyzed data is shown in the form of bar charts and pie charts.Total response rate = Total number of Responses / (Total Number in Sample – Ineligibles)=42 / (50-0) = 84%Summary of Survey Participants Category Sub-category Total PercentageJoined TCS as a Fresher 29 69 Lateral Hire 13 31Vertical of the company BFSI 18 42.5 Telecom 18 42.5 Health 6 15Tenure in the company Less than 1 year 15 36 Between 1 to 3 years 16 38 More than 3 years 11 26Designation Consultants 6 15 Software Engineers 18 43 HR executives 6 15 Marketing Executives 5 11.5 IT analysts 2 4 Regional Managers 5 11.5Table 5.1 Summary of Survey Participants59
  • 60. Categorization of EmployeesEach question was rated on a Likert scale with 5 options: strongly agree, agree, neither agree nordisagree, disagree and strongly disagree. Strongly disagree was coded as one point, whereasstrongly agree was coded as five points.Therefore, the minimum possible score was 11 and the maximum possible score was 55.Employees were categorized based on the spread or dispersion of employee awareness scoresaround the mean of 31. One standard deviation value viz 4 (4.28 approx) above and below themean was used to designate limits for the three categories into which the employees weregrouped- less aware, moderately aware and highly aware.The 42 employees interviewed for the survey were categorized as shown in the table below:Table 5.2: Awareness level of the employeesAwareness level Awareness score No of employees PercentageLess Aware Less than 21 5 12Moderately Aware 27 to 31 15 38Highly aware More than 31 22 53Objective 1: Ranking the Key Success Factors of TCS:From the literature review these factors are found as key success factors;Each question was rated on a Likert scale with 5 options: strongly agree, agree, neither agree nordisagree, disagree and strongly disagree. Strongly disagree was coded as one point, whereasstrongly agree was coded as five points. Therefore, the minimum possible score was 5 and themaximum possible score was 30. Its Brand name Its ability to provide end to end services We have a large number of business partners We offer high quality and maximum service There is a lot of innovation that we do We have a global reach which other don‘t have60
  • 61. 25 20 15 Rank 1 10 Rank 2 5 Rank 3 0 Rank 4 Rank 5 Rank 6 Figure 5.1 Key Success Factors Giving the weight age Strongly agree 5 points, agree 4, neutral 3, disagree 2 and strongly disagree 1, ranks were given from 1 to 6. And the key success factors stand in this order 1. Global Delivery model- 2. Brand Name 3. Integrated full service provider 4. Collaboration with multiple stake holders 5. High Quality and Maximum service- 6. Innovation Network Objective: Awareness of the company strategy by the employees Hypothesis between awareness of strategy and tenure of the company employeesNull Hypothesis: Tenure in the company is independent of awareness of company strategy.Alternate Hypothesis: tenure in the company is not independent of awareness of companystrategy. 61
  • 62. Fig 5.3: Cross Tabulation for tenure and awareness of company strategy less than 27 27 to 31 more 31 less aware moderately aware highly aware Total Less than a year 1 7 7 15 Between 1 to 3 years 3 5 8 16 More than a year 1 3 7 11 Total 5 15 22 42Level of Significance ( ) = 0.05; Degrees of Freedom = (r-1) (c-1) =4dfI.e. the strategic awareness and tenure in the company are independent.Fig 5.4 Table Of expected Frequencies:2 5 8 152 6 8 161 4 6 115 15 22 42 2The Chi Square ( ) value is arrived at from the following formula 2 = (Oi – Ej)2 / Ei(Summation from i to n, where n is the number of categories)Oi = the observed number of cases in the ith categoryEi = the expected number of cases in the ith categoryThe Table of Expected Frequencies is given above. Now we need to subtract these ExpectedFrequencies from the Observed values, square them and then divide by the Expected value forthe ith row. Then we need to sum the values got for all the I rows, which then gives us the value 2 2of . We need to compare this value with the value of at significance level of 0.05 with 4dfi.e 5.991 2After applying the chi square test the calculated value of at 0.05 level of significance is 2.495,which is less than the table value 9.49, Hence Hypothesis is accepted Hypothesis between awareness of strategy and designation of the company employeesNull Hypothesis: There is a significant correlation between the designation of employees and theawareness of strategy62
  • 63. Alternate Hypothesis: There is no correlation between the designation of employees and theawareness of strategyFig 5.5: Cross tabulation for designation and strategic awarenessDesignation moderately less aware highly aware Total awareConsultants 1 3 2 6Software 3 7 8 18EngineersHR executives 0 2 4 6Marketing 1 2 2 5ExecutivesIT analysts 0 1 1 2Regional 0 0 5 5Managers 5 15 22 42CorrelationPearson‘s coefficient of correlation describes the strength of the relationship between two sets ofinterval-scaled or ratio-scaled variables. The correlations between the designation and theawareness score helped to determine which factors impact employee awareness to the greatestdegree.On calculation coefficient of correlation r, comes as +0.51, which shows there is a positivecorrelation with a magnitude of 0.51 between designation and awareness.Probability error comes out to be 0.06 and hence the limits of the correlation in the population dbe 0.45 to 0.51.Test of significance:The calculated value of ―t‖ comes out to be 1.15, which is less than table value at 0.05 level ofsignificance i.e 1.93.63
  • 64. Hence the null hypothesis can be accepted. Hypothesis between awareness of strategy and business verticalNull Hypothesis: There is a significant correlation between the employees of business verticaland the awareness of strategyAlternate Hypothesis: There is no correlation between the employees of business vertical and theawareness of strategyFig 5.6: Cross tabulation for designation and strategic awarenessBusiness moderatelyVertical less aware highly aware Total awareBFSI 2 6 10 18Telecom 2 7 9 18Health 1 2 3 6Total 5 15 22 42Pearson‘s coefficient of correlation describes the strength of the relationship between two sets ofinterval-scaled or ratio-scaled variables. The correlations between the designation and theawareness score helped to determine which factors impact employee awareness to the greatestdegree.On calculation coefficient of correlation r, comes as -0.41, which shows there is a negativecorrelation with a magnitude of 0.41 between business vertical and awareness.Test of significance:The calculated value of ―t‖ comes out to be 0.45, which is less than table value at 0.05 level ofsignificance.Hence the null hypothesis can be accepted.64
  • 65. Summary Of responsesThe questions in the form of Likert scale is converted into the form of yes/no/don‘t know formsto get a clear idea on percentage of people aware. Strongly agree and agree are considered as yes,disagree and strongly disagree as no and neutral as others. 1. The company’s induction explained TCS’s vision and mission 0 Yes[42] No[0] 100 Source: Survey data Fig 5.2Company‘s induction explains about TCS vision and mission. 100% respondents have answeredpositively. 2. Awareness of the company’s mission/ vision statement 5 Yes[40] No[2] 95 Source: Survey data Fig 5.3 95%respondents have answered positively and are aware of the company‘s vision and mission. 3. Supervisors helps the employees to understand the significance of work65
  • 66. 24 Yes[32] No[10] 76 Source: Survey data Fig 5.476% respondents have said their reporting manager/supervisor helps them understand theimportance of work. But still most believe it depends on their manager. 4. Employees understand the alignment of their work with the organization’s vision/mission83% of the respondents feel their work is in alignment with the organization‘s mission/vision.This implies a good number of people are aware of the present scenario and the plans of the toporganization. 17 Yes[35] No[7] 83 Source: Survey data Fig 5.5 5. Employees have sufficient support in terms of the technology, and other enablers to make this contribution66
  • 67. 10 Yes[38] No[4] 90 Source: Survey data Fig 5.690% of the respondents feel there is good support in terms of technology which keeps themupdated with decisions taken by the management, changing polices and the future plans. 6. I am sufficiently empowered to contribute to the company’s visions/mission 17 Yes[35] No[7] 83 Source: Survey data Fig 5.783% respondents feel they are sufficiently empowered to contribute to the company‘svision/mission. Good support is given by the management to make their contribution. 7. I feel I am supported by other departments in achieving the organization’s vision67
  • 68. 30 25 25 20 15 11 10 % Respondents 6 5 0 Always Sometime Never Source: Survey dataFig 5.725 respondents feel there is lack of proper support given by other departments to achieve theirgoal. Interdepartmental relations are not very good. 8. I feel it is extremely easy in our organization to get my thoughts across to senior management 26 Yes[11] No[31] 74 Source: Survey dataFig 5.874% respondents feel there is difficulty in getting across their thoughts to senior management. Itindicates proper communication channels have to be maintained to have better employeerelations. 9. My supervisors/boss consulted me while setting the goals that am out to achieve68
  • 69. 10 19 Yes[8] No[30] Others[4] 71 Source: Survey dataFig 5.971% repondents have answered that their boss do not consult them while setting the individualgoals. This indicates lack of proper MBO implementation in the organization.69
  • 70. Chapter 6: Discussion and conclusionInterpretation of Results 1. IT industry in India have emerged as a major contribution to GDP also providing very high employment opportunities, making use of the available talent and government friendly policies. 2. TCS is the first IT firm in India, and have made use of being the first entrant in the industry. Being a market leader in revenues it has grown not just in India but worldwide, hence strategic analysis of TCS gains importance. 3. Most of the employees have a feeling of TCS works as a Government institution. With specific rules and very less freedom. 4. Analysis shows that all the employees are made aware of the company mission during their induction program. Still a few employees are not aware of it and do the work for the sake of it. 5. Majority of Respondents say their managers make them understand the significance of work and provide sufficient support to achieve their goals. 6. There is a good correlation between the tenure of the employees in the company and awareness of the strategy. The tenure is independent of awareness of company vision. But still, Employees with more than 3 years of experience have good knowledge about the strategy. 7. The correlation of business vertical and awareness of strategy is low. 8. There are enough tools, to create awareness about the strategy, policies and decisions taken by the company. But interdepartmental support is less and departments focus more on their specific goals. 9. Communication channels are closed and there are mostly downward communication channels. 10. Supervisors don‘t usually consult their subordinates before assigning the individual goals. Hence MBO is not actually practiced in the company. 11. Global delivery network stands as the top key success factor of the company, 43% of the respondents voting for it. Hence the revenue is mainly due to the global operations.70
  • 71. 12. This is followed by the Brand name. Employees with less than a year experience consider it a great place to work as the brand name gives good weight age and helps in future. 13. Innovation is given less importance and it stands as a last key success factor with 53% of respondents agreeing with the 6th rank.Recommendations: 1. TCS has a reputation of a very rigid organization among its employees. Opening up the communication channels and encouraging ideas from them can make the employees to add value to the organization. 2. Strong alignment of the strategy with the employees is very much necessary for its successful implementation and communication is the only key. 3. Proper training sessions and awareness programs can keep them updated with ongoing events and future plans.Scope for further study: 1. Strategy is a very vast and a wide topic. For a huge organization like TCS there are various factors and topics which could be studied. 2. Further study could include HR policies, crisis management policies etc. 3. This study was cross-sectional. Past three years data was taken and analyzed. Strategy implementation could be reviewed.71
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  • 75. Appendix 1: QuestionnaireI currently work for TCS a. Yes b. No―If Yes‖1. I have been working for - A: <1 year B: between 1 to 5 years C: More than 5 years2. I joined TCS as a: a: a fresher b: lateral hire3. I w ork in the ________________vertical of TCS4. My Designation in the company is:__________________-5. The company‘s induction explained TCS‘s vision and mission – Yes/No6. I am aware of the company‘s mission/vision statement Yes/No7. My immediate supervisor helps me understand the significance of my work – Yes/No8. I understand the alignment of my work with the organization‘s vision/mission – Yes/No9. I am sufficiently empowered to contribute to the company‘s visions/mission – Yes/ No10. I have sufficient support in terms of the technology, and other enablers to make this contribution – Yes/No11. I feel I am supported by other departments in achieving the organization‘s vision Yes/no12. I feel it is extremely easy in our organization to get my thoughts across to senior management – Yes/No13. My supervisors/boss consulted me while setting the goals that am out to achieve Yes/No14. My works contributes directly to TCS as a brand Yes/no15. I think TCS stands out from other companies competing with us given its in the following order: Its Brand name Its ability to provide end to end services We have a large number of business partners We offer high quality and maximum service There is a lot of innovation that we do75
  • 76. We have a global reach which other don‘t haveI would rate TCS on the following as:No Please rate the following Strongly Agree Neither Disagree Strongly agree agree nor disagree disagree1 We are different from others low cost players2. TCS Focuses on customer relationship management, customer retention3. Timely delivery with the help of proven delivery & quality framework – iQMS.4 Our ability to deliver what is promised on time5 Our ability to offer high end consulting in niche space6 Our ability to internally manage projects well7 We have grown not just with our own strength but also acquiring critical companies8 TCS has strategic relationships with various global technology vendors is a main KSF.9 SAP as a leading technology and product vendor is one of the key partners of TCS76
  • 77. 10 The merger with TIL gave TCS a broader customer base and deeper penetration into key geographies11 JV 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.Any comments/suggestions/issues for improvement Thanks you for taking your time. Your responses are extremely valuable to us.77