BPO Rankings: 4 | TCS BPO: Platform for Growth

TCS entered the BPO game much after others like HCL, Wipro and
Infosys did. That was not the issue for a company like TCS, as it is the most
comfortable among Indian IT services firms to take big inorganic decisions.
While the first phase had marked the typical strings of pearl routewhen it
took control of AFS, its own JV with SwissAir, and Phoenix Global Solutionseveryone
was expecting something big. There was a time when each BPO services firm up for
sale, was rumored to be going to TCS, and that included GEs captive unit, now
Genpact and United Utilities subsidiary, Vertex.

But TCS also had the late-mover advantage. By the time it made
its moves, the voice space was already getting overcrowded, putting pressure on
margins. It was natural for TCS to avoid those and decided to focus only on
areas where its IT strength could make a defining difference. The Pearl
Insurance deal it closed in FY 06 was the right opportunity. An $847 mn deal
spread over twelve years, it provided TCS the right opportunity to help the
insurance firm find the exact difference between cost and revenue per policy,
and minimize the cost. TCS is doing that a mix of platform consolidation (moving
disparate platform to its proprietary platform, IIMs) and offshoring, the latter
starting only from year two.

Platforms are key to TCS BPO strategy. Apart from IIMs, it is
using TCS banking payment processing platform, QUARTZ and is developing a
SAP-based platform in payroll processing. BPO services based on platforms today
provide close to 25% of TCS revenue. While TCS plans to push platform BPO, it
will have a profitable proposition in it, only when it can move significant part
of the contract to transaction-based pricing. TCS admits that even today, large
part of the contracts are FTE-based.

TCS plans to continue its twin strategyplatform-based
approach and inorganic (ideally customer asset transfer kind) growth. BPO is one
of the few areas where TCS is not #1. If and when it becomes #1 is something
that will determine the answer to another big question: who dominates,
pure-plays or multi-services firms. DQ