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TATA GROUP: The Giant Stays on Top

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DQI Bureau
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The Giant Stays on Top

There's no central group-level IT business strategy, nor a group CIO or tech committee. Yet it's India largest IT group, one of its top tech users, and a telecom powerhouse


For TCS, the winner was the e-business practice which alone brought in Rs 1,963 crore, over a third of annual revenues. The practice was started in 1999 with just 10 people and is now the second largest contributor
CMC has begun exploiting the offshoring model with success. The offshore development activity for exports business grew 31%
Tata Infotech turns around: revenues grew 33%, TIL posted Rs 608 crore in revenue. Profits from manufacturing grew 50% whereas profits from systems integration registered a record rise of 133%.
Tata Elxsi's bet on visual computing pays off. Bags two major projects from prestigious Hollywood studios. Revenues grew 41%, while profit after tax surged 50% to Rs 18 crore

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Group
Revenues

Revenue Break-up
Ratan
Tata


Chairman, Tata Groups
Ramadorai
CEO,
TCS
S
Mahalingam
Chief
Financial Officer, TCS
Madhukar
Dev
CEO,
Tata Elxsi
PR
McGoldrick
MD,
Tata Technologies
FK
Kavarana
Chairman,
Tata Infotech
JM
Varma
President,
Nelito Systems
Ramanathan
Ramanan
MD,
CMC
Sanjaya
Sharma
CEO,
Tata Interactive Systems
1968-1987-Decade
1 and 2


Tata Consultancy Services and Tata Unisys Ltd herald the
group's IT ventures to serve domestic and global market



1988-99-Decade 3

Newer companies set up to target specific niches:
design, manuacturing, e-learning and multimedia. Leads IBM
into India, then gives up stake



1999-2004-Decade 4 running

Tatas buy out majority stake in Govt-owned CMC. TCS
becomes the largest India's largest IT company. TCS
overall revenues grow over fivefold-from Rs 1,066 crore
to Rs 5,827 crore. TCS files for IPO

Ask the Tata Sons the simplest IT question today, and you can expect days to
go by while lawyers scan each word of the draft responses. It's the run-up to
the TCS IPO. So something as deep as "Is there an IT business strategy for
the group?" is sure to throw the system into a tizzy. The answer might even
be Dilbertesque: "Every company of the Tata Group in the IT sector pursues
individual business strategies in an effort to fulfill its commitment to
stakeholders and maximize shareholder value."

In short: there's no Tata "IT group" strategy. This is a virtual
group created by Dataquest; there is no such group defined at Tata Sons. Yet it's
the largest IT group in India, thanks to its billion-dollar star. But while TCS
is king, most others are kind of small, and not always consistent. Even Tata
Infotech has been floundering, has only in the past year been seen on the
rebound. The past year, in fact, was a good one across the group.

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This 'IT group', thus, is best described as a federal structure but with
a continent-sized state surrounded by tiny islands. TCS far outweighs the rest
of the companies put together in sheer size and scope of activities.

Sans an IT champion at the group level, Ramadorai, as the CEO of TCS, plays
an influential role with respect to IT business strategy. After all, he has
proved himself, growing the company more than eleven times over since he took up
the reins at TCS in 1996. Other influential people are likely to include Ishaat
Hussain, the finance man who worked on the IPO, could also be considered to be a
key influencer on the group's IT strategy. And overall the Tata group
executive office (GEO)-Ratan Tata, Ishaat Hussain, R Gopalakrishan, Arun
Gandhi, Alan Rosling, and Kishore Chaukar-is the powerful strategy body at the
top.

The group's IT business portfolio totaled Rs 7,734 crore during 2003-04,
registering an accelerated growth of 23%, seven percentage points more than the
previous year. At the head of the list is TCS which stood at Rs 5,827 crore. The
year also saw TCS and the Tata Group stepping up stakes in various companies. On
the BPO front, TCS initiated plans to consolidate all its operations under one
umbrella.

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From the rest of the companies, it has been mostly glad tidings. CMC turned
out revenues of Rs 764 crore growing 24 per cent over the previous year, while
net profits rose to Rs 48 crore. The company has been closely aligning and
adapting its processes and business practices with those of TCS.

In Search of some Synergy

The group, with IT flagship TCS helped along by other smaller entities
pursuing separate niches, is reportedly planning to explore better fitment and
matches in its software capabilities, among its various tech businesses, to
handle specific emerging market opportunities. For instance, TCS, TIL, Tata
Elxsi, and Tata Technologies could all come together to grab a share of the $1
bn global automotive telematics market. While there's no clear plan that the
group acknowledges, it has precedents in, for example, its Telecom Entetrprise
Business Unit (TEBU), which fronts enterprise sales for VSNL, Tata tele, and
others.

The objective is to make the Group more vibrant and aggressive, more amenable
to change than ever before. This is perhaps a reflection of the kind of
businesses it is pursuing. Take the case of senior management or even
directorships at Tata Sons. You will, unusually, find non-Indians on the board.
Alan Rosling, who was the chairman of Jardine Matheson India, is now an
executive director of Tata Sons. To tap the global automotive market, Tata
Technologies roped in another seasoned executive, Detroit-based auto executive
Jeffrey Sage, who led the team that designed the award-winning Mercedes Benz
M-Class. Sage, as the chief operating officer (COO) of Tata Technologies, is
expected to lead the organization into new areas using his global network. Sage
along with his friend and former colleague at Stanford University will create a
cell to 'get people to do things differently'.

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The TCS IPO is slated to be India's largest ever public issue. With the
proceeds of the IPO, the group plans to foray into and make significant presence
in emerging fields like biotechnology, life sciences and financial services.

The group would forever be indebted to the information technology industry
and the opportunities it continues to present. It is time for Air India Bldg to
pay back Bombay House, in ample measure.

Iishwar Daas Nair

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