At the recent TCS AGM, Ratan Tata announced plans to merge some of the IT companies in the group with the behemoth TCS, barring niche standalone businesses like Tata Elxsi (animation). Since this is in line with the Tata Groups policy of merging smaller group companies in the same line of business with the flagship, one expects the exercise to be completed pretty soon. It might not have the greatest business implications or cause tremors in the bourses, but even as an academic exercise, it makes sense to explore the synergies these companies share with TCS. Interstingly, in the target markets of TCS like the US and Europe, the software powerhouse is more commonly known as simply Tata.

Though talks about merging various Tata IT companies into TCS have been doing the rounds for years now, the issue has never been one of topmost priorities for Bombay House. The fact is TCS is too large to be concerned even if the other entities function independently, unless they start posing a serious conflict of interest. That was the case to a certain extent with Tata Infotech and it was taken care of following its merger into TCS two years back.

On the other hand, the smaller companies could very well lose their identity if merged into TCS. That would explain why it makes sense to keep out niche players like Tata Elxsi out of the merger gameplan (actually its Mumbai-based animation and VFX business arm, Visual Computing Labs). Include e-learning major Tata Interactive Systems (TIS) into the same category; it makes little sense for TCS to delve deeply unto these businesses whose dynamics are completely different. Nevertheless, a lions share of TIS domestic projects comes from TCS.

CMC, though technically a TCS subsidiary, is still a listed company and therefore a separate legal entity. Its merger into TCS would perhaps be the logical conclusion of the drive that started two years ago when group companies like AFS, ASDC and TIL were merged. With TCS gaining serious ground in the e-Gov space in the last two years thanks to the capabilities and contacts brought to the table by CMC, a complete merger might be a good thing, especially if brand assimilation is completed without a hitch.

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