TATA CONSULTANCY SERVICES: Billion-dollar Giant


CEOS.
Ramadorai
Startup-Year1968
Products
& Services
IT
Consultancy and Software Services
Employees23,854
Branches107
AddressAir
India Building, 11th Floor, Nariman Point,
Mumbai – 400 021
Tel56689999
Fax56689999
Websitewww.tcs.com
 

S.
Ramadorai
CEO

S.
MAhalingam

Chief Financial Officer

S Padmanabhan
Corporate V-P (OD)

Phiroz
Vandrewala

Executive V-P

As with other top players, TCS
faced severe bottomline pressure. Near-shore delivery centers will help fight this
Two new overseas delivery centers set up in
China and Japan–taking the total up to 9
Much-awaited IPO expected any time now
Sheer size and decades of standing makes it an easy choice as vendor for longer-term, larger projects–especially in the US market
With CMC under its wings, it has a strong presence in the domestic marketplace
Presence in the BPO space is not strong enough, despite a strong JV with HDFC and AFS
Onsite share of revenues a high 65%, and needs to be brought down closer to industry average of 40%

Leadership involves finding a parade and getting in front of it,” said
John Naisbitt, the 20th century American futurist…

You can do that. Or you can create the parade. TCS created it, and walked in
front. From its 1968 beginnings, to last year, where it crossed $1 billion in
revenues–the first Indian technology company to do so.

In 2002-03, TCS grew nearly 20% to Rs 4,915 crore. But the story behind this
number was one of hardship.

Growth slowed down–15 percentage points below last year’s number.
Clearly, this was beyond the effect of an increasing base, suggesting a
significant impact of the inclement global IT services market on the company.
For one, 2002-03 was bereft of major announcements of project wins, compared to
the year before when TCS delighted the industry with its salvo of multi-million
dollar deals. TCS did sign new deals, with customers like AT&T Wireless,
Toyota Financial Services, Societé Generale and others, but the excitement and
celebration were missing. In terms of pure growth, the domestic market offered
better promise–TCS grew by nearly half in the domestic market, whereas exports
grew by less than a fifth. Domestic revenues stood at Rs 369 crore, fattened by
revenue realization from the SBI order for core-banking and trade finance.

In all, 2002-03 was the toughest yet for TCS–with massive pressures on
billing rates, client acquisition, productivity and profitability. With nearly
65% of the revenues coming from onsite projects (industry average was 40%),
these pressures will only exacerbate. Herein, the presence of nine near-shore
delivery centers will help, the ones in China and Japan having been set up this
year.

TCS’ goal of making it big in high-value areas like consulting remains
distant–nearly 81% of its revenues came in from application development and
maintenance in traditional and e-business solutions.

And TCS has not yet fully played out its BPO foray. Intelenet, its joint
venture with HDFC and AFS, the Swissair BPO subsidiary it bought out in 2002-03,
does not provide it ample footprint in this market. In the coming year, TCS may
take some significant steps in this direction. And the much-awaited IPO, when it
happens, assures all glory for the year.

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