TCS Services Supremo

A
bedrock of earnings for Tata Sons, Tata Consultancy Services clocked a revenue
of Rs 2,034 crore in the last fiscal, a growth of 23% over the previous year’s
Rs 1,652 crore. But there has been a definite slowdown in the company’s growth
rate when compared to the previous year’s 55%. It continued to be the largest
software exporting house in the country, with Rs 1,820 crore of its total
revenue coming from exports.

TCS has nearly doubled its turnover
over the last two years. And the target for 2000-01 is Rs 3,000 crore.
Strategies envisioned by TCS founder
FC Kohli seem to have paid off. He recently stepped down from TCS’ day-to-day
operations after three decades.

The company played a dominant role in
the domestic arena as well. Eleven percent of its total revenues, amounting Rs
214 crore, accrued out of the domestic business.

Overall,
services remained TCS’ strength, garnering 98% of its total revenue, while the
rest came from packaged software. A large base, along with the transition from
the traditional applications area to ecommerce, has definitely made a dent on
its top line. But it is the ecommerce wave that TCS hopes to cash upon to
bolster its top as well as bottom lines. Sixty-five percent of its software
exports revenue came from onsite work, with more and more ecommerce clients
being added to its base. Onsite development is also one of the reasons for the
drop in margins. But given that ecommerce projects will be earning good returns
in the long run, this should not be a cause of worry. The US continued to be the
prime destination for the company’s exports, contributing 63% of its earnings.
Europe sent in 27% while 10% came from the rest of the world.

TCS spent $25 million on enhancing
hardware and software infrastructure. In India, it acquired over 1.5 lakh Sq ft
of office space for development activities. Abroad, it plans to open overseas
development centers (ODCs) in the US as well as in Europe.

TCS started R&D centers in the US
on emerging software and technologies, including Linux. It embarked upon several
business and R&D relationships with global firms like General Electric for
providing high-end engineering analysis to technology centric solutions for the
railway industry, and for modeling and development of control systems. It also
embarked upon tie-ups with healthcare portals and insurance companies, and did
an equity participation and technology support in e-Mecklai, a
business-to-business portal that provides decision support tools to companies
carrying risk in non-liquid markets.

TCS also undertook economic value added
(EVA) initiatives. Seven of TCS centers were assessed at SEI-CMM Level 5 in the
last fiscal, with over 5,000 consultants working at Level 5. With changing
business models, TCS also tried to make people aware of its work and create
visibility through a branding exercise.

This fiscal will see the company externalizing the
intellectual assets, get into new areas of software engineering, and bring out
products in the Linux space. It will continue to play its role in the domestic
market and with the growth of IT-enabled services, even get into providing the
software, automation technology and domain expertise. DQ