Rank-1 : A Global Brand

With a total revenue of more than $70 bn close to hundred operating
companies, and presence in more than eighty countries, the Tata Group is Indias
most well-known name in business. It is also Indias most well-known global
brand; in fact, close to two-third of its group revenue comes from outside
India.

Information Technology (excluding telecom) accounts for close to 10% of the
total revenue of Tata Group. It accounts for an even higher share of the groups
international revenue. In fact, the only two businesses that are bigger than IT
are its traditional businessesmaterials and engineering.

As much as five of the IT companies from the Tata Group feature in the DQ Top
250 companies. While it is led by TCS, at #1, another group company, Tata
Technologies too features among the Top 50 IT companies in India. The others
which are profiled and analyzed by Dataquest include Tata Elxsi, Tata
Interactive and Nelito Systems. A company that, in pure revenue terms, should
have featured but has not been profiled by Dataquest, because of the fact that
it is majority owned by TCS, is CMC, a separate listed entity that used to be a
public sector entity a few years back. In fact, if TCS pioneered IT services
exports out of India, CMC pioneered the services and systems integration market
within Indiathough it was largely restricted to government projects. Till date,
it continues to be one of the biggest services player in the government space.

Rank - 1 : Tata group
	Ratan N Tata, chairman, Tata Group
TCS still accounts for the lions share of the revenue. But increasingly, others are establishing themselves as specialists in areas such as engineering, design, and learning

Finding the Synergy

The Tata Group has not traditionally been known for close cooperation among
group companies, largely because of its fairly loose federated structure and the
fact that unlike many family owned companies, professional managers actually ran
the Tata Group companies. So, the corporate mandated cooperation was not really
there. The only thing the group strictly reinforced is sharing of certain common
values. There was very little leverage of each other on the ground, when it
comes to actual business.

The IT business, initially, was no exception. But in the last few years
however things have been different. Interestingly, it is less of corporate
mandate (though that has also been there) and more of a market reality that has
prompted the entities to leverage each other.

The leverage has been multi-faceted. At the most basic levels, it entails the
serving of key executives of companies in each others boards, so as to gain
from their experiences. It also means using the expertise of each other at the
back-end creating a better (sometimes more end-to-end) solution for the
customers. A more evolved approach of this is a joint go-to-market. Using group
companies for procuring products and services is yet another approach. Fairly
recent approaches have been leveraging the Tata brand more effectively. And
finally, minimizing overlaps. While the last is still not publicized and openly
mandated, we will not be surprised if that kind of rationalization happens in a
big way in the next few months.

Serving of key people in different companies boards is nothing new. S
Ramadoai, the chairman and ex-CEO of TCS has been serving as the chairman of not
only its subsidiary CMC, but also as the chairman of Tata Technologies since
2001. In September 2009, he was also appointed as the chairman of Tata Elxsi.
So, in effect, Ramadorai serves in the boards of the three largest IT companies
in the group. Patrick McGoldrick, the MD of Tata Technologies, is also in the
board of Tata Elxsi. These executives help in ensuring that at the broader
strategic level, there is leverage of each other.

The cooperation on the ground is a fairly recent phenomenon. And it is not
restricted to just intra-segment cooperation. The engineering design division of
TCS as well as Tata Technologies are now leveraging the trend of many customers
looking at end-to-end outsourcing of product developmentfrom concept to
manufacturing. Three years back, TCS roped in TAL Manufacturing Solutions to
deliver a product to an Italian aerospace company. It designed and project
managed the development of a tool while TAL did the manufacturing. The client
got an end-product at a competitive rate. Now there are multiple instances of
this trend manifesting itself which TCS and Tata Technologies are trying to
leverage. In case of JLR, now a Tata company, TCS, Tata Technologies as well as
Tata Elxsi, all have worked on different projects. In case of another large
automaker, TCS and Tata Technologies actually proposed swapping of the deal
between themselves and the client saw the rationale. A project from ArvinMeritor
was won jointly by the two companies.

Leveraging the Tata brand is something that these companies are doing more
consciously now. Take the example of Tata Technologies. It started as a
subsidiary of Tata Motors to focus on the engineering IT and engineering design
work of the parent. Soon it realized the potential of going third party. But at
that time, few were interested in coming to an Indian company for engineering
complex products. So it acquired INCAT, an established engineering design
company overseas. While the company was still called Tata Technologies, it
started branding itself as INCAT. But with Tata Nano making headlines, brand
India and brand Tata had suddenly arrived in the world engineering scene. It
decided to go back to Tata brand a year back. And since it had worked on the
Tata Nano, now it has even developed a framework, which is a standardized
approach to value engineering. Called Tata Innovation Value Framework (TIVF),
the company is going to market with this framework. When the engineering world
is so enchanted by the charm of frugal engineering (see analysis of engineering
services exports), it seems a potential winner.

Also, Tata Elxsis Visual Computing Lab has worked on all the advertisements
of Tata Indigo Manza, for all markets. And this has been an internal mandate.

While the group has still not made any public comment on rationalizing the
offerings, there is a seemingly conscious effort to achieve that, to an extent.
Ramadorai, after taking over as the chairman of Tata Elxsi, has been fairly
active in finding out which are the areas that the company should pursue
aggressively and which are the areas it can vacate, especially as the company
targets to grow to Rs 1,400 crore in the next three years. He has focused on
restructuring the companys business, actually shedding areas that were
unprofitable. It has already exited the traditional IT services space and is
focusing on product design creating IP. While TCS and Tata Technologies work on
the left-brain things, Visual Computing Lab of Tata Elxsi would continue to
expand its strength and reach in the right brain design. As the product design
space sees more complete outsourcing, a studio to design a product would
tremendously add to the engineering capabilities of Tata Technologies and TCS.

In addition, other Tata Group members are being encouraged to use TCS and
CMCs services in IT.

Shyamanuja Das

shyamanujad@cybermedia.co.in