Tata Consultancy Services SWOT and PESTEL Analysis

Tata Consultancy Services bone and PESTEL AnalysisTata Consultancy Service (TCS) is the worlds leading globose Information technology consulting firm and product line outsourcing organization that envisaged and forged the espousal of the flexible global business practices, which nowadays facilitate organizations to manoeuvre more professionally and force more value.The IT industry was not has it is now when TCS started in the year 1968. TCS was started as the Tata Computer Centre a dissection of the Tata conclave whose chief business was to turn computer services to other concerns. TCS marked a trem prohibitous emersion with marking its presence in 34 countries crosswise 6 continents, with a dictatorial range of services across diverse industrial fields. TCS ranked in top ten in the fortunes rank list for the year 2009. The concern do consolidated income of US $5.7 billion for economic year ended 31 March 2009 and is listed on the Bombay Stock Exchange and National Stock Ex change in India.TCS expanded into China, Hungary, Brazil, and Mexico in fix to incarcerate the opportunities in pecuniary services and services worry Remote Infra organise management and BPO in those countries, TCS always set uped a unique manner to its global customers by positioning its brand in the worldwide market. The zenith of all these lead to the concerns contributions of TM international Network talking to Model(GNDM) across Europe, China, India, US and Latin the States as tumefy as in incorporated full overhaul offerings, all backed by the promise of certainty of acquaintance for customers. By 2007, the value enunciation of Experience certainty was officially initiated, ac associationd and authenticated by global customers.As the Indian financial system keep up to grow in the new century, the necessity for technology to constrain comprehensive augmentation became part of national schema. TCS, which had been spending numberitional, time in domestic IT from the tim e when its start-off was well located to assist the National Government at the central and state level, in its inventive proposals. TCS, by its own initiative shaped a digitized delivery system. In a manifestation of the companys ground-breaking spirit and with an aspiration to extend the benefits of the IT upraise across the country. TCS aptitude to convey high-quality overhauls and re resolvents atomic number 18 matchless. It is the worlds first organization to put downd an enterprise-wide Maturity Level 5 on both P-CMM and CMMI, using the most meticulous assessment methodology SCAMPISM. TCS Integrated Quality Management System integrates process, man and technology maturity through various ascertained framewhole kit and boodle and traditions including ISO 90012000, IEEE and SW-CMM, CMMI, 6-Sigma and P-CMM.For maximum flexibility, speediness, and competence, a vigorous IT dodge is essential. TCS contribution facilitates companies to construct the most of their IT investments from providing system testing solutions, operation development, management services, and integration solutions.COMPANY BACKGROUNDTCS has the wide spread economical boundaries around 36 countries with seven physical centres of operations around the world. TCS was founded by Tata group which was established by jamstji Tata in 1868 an oldest and respected group of companies in India. The First chairman was Jahangir Ratanji Dadabhoy fol baseed by Nani Palkhivala. The first general manager was F.C. Kohli.TCS first assigned to offer punch card services to a sister corporation, Tata Steel (TISCO). It later bagged the nations first domestic soft fighte labor, the Inter-Branch Reconciliation System (IBRS) for the Central Bank of India. It has in any case provided bureau services to Unit Trust of India as a dissolver TCS became one of the first companies to offer BPO services. In the early 1970s Tata Consultancy Services in full swing exporting its services. TCSs inaugural global piece came from Burroughs, one of the first business computer manufacturers. TCS was assigned to write code for the Burroughs machines for numerous US-based leaf nodes. This knowledge helped TCS to bag its first onsite project the Institutional Group Information Company (IGIC), a data hub for ten banks, which served to two million clients in the US, TCS was assigned to affirm and upgrade its computer systems. TCS holds the credit to set off the first softw ar research and development centre, the Tata Research Development and Design Centre (TRDDC) in 1981and in 1985 the first client committed offshore development centre was established for Compaq.Early 90s was golden era for the Indian IT industry they grew tremendously due to the Y2K computer virus and the introduction of Euro. TCS lead the way for industrial unit replica for Y2K conversion and built-up software tools which undertook the automatic conversion process and facilitated third-party developers and customers to use. In 1999, TCS fortified the opportunities in outsourcing the E-Commerce and the connected solutions and set up its E-Business division with ten people. In 2004 it illustrated a vigorous development of contributing half a billion US dollars to TCSs total revenue.In the year 2004, TCS was ranked under public sector, though much later than its competitors much(prenominal) as Infosys, Satyam and Wipro. TCS entered into a brand new area of IT services (Bioinformatics). The neighboring two years that fol get-goed TCS aced a huge growth in progress both nationally and internationally.TCS assists some of the worlds major MNCs to take up the accurate technology-enabled solution that helps themOptimize business recitalDecrease product progress timeGet better product differentiationSmooth the progress of arrangement of business with technologyJoin their extensive supply chainsOffer real-time business handyLesser functioning costs.Tata Consultancy Service ProfileType communalplace BSE 532540Founded 1968HeadquartersTCS House, Rave line Street, Fort, Mumbai 400 001 IndiaKey peopleRatan Tata, (Chairman of the Board, TataGroup)S Ramadorai, (CEO and ManagingDirector)Jobhi Mahalingam, (Executive Directorand CFO)N Chandra, (Executive Director, COO, CEO MD Designate)Phiroz Vandrewala,(Executive Directorand Head, globose Corporate Affairs)Ajoy Mukherjee, (Vice President andHead, world(a) military personnel Resources)K Anantha Krishnan, (Vice President andChief Technology Officer)ServicesInformation Technology Consulting, ITServices, Outsourcing, BPO, SoftwareProductsProductsTCS Bancs, Digital Certification Products,health care Management Systems.Revenue US$ 6.019 billion (in FY 2009-10)Net income US$ 1.128 billion (in FY 2009-10)Employees 150,000 (As on 1 April, 2010)Website http//www.tcs.comFINANCIAL POSETCS financially persists to demonstrate the steady get up in the top position of Indian IT firms. As the IT outsourcing market records more rapid growth pace, TCS expressed a stead y growth rate in 2008-09, whose consolidated revenue grew by 23% to 27% which helped TCS to cross the $6 billion revenue milestone. TCS operating margins improved to 23.73% by 109 basis points.TCS arrest to a fault increased its dividend share to Rs.14 in the last financial year. The TCS directors have also recommended an issue of bonus shares in 11 ratio and it was the second bonus issue since 2004. TCS completely thinksinged in helping their customers relationship with them simultaneously adding fresh customers and penetrating in novel market segments and emerging verticals which make them to add 163 new customers internationally in the then(prenominal) year. TCSs foremost market North America crossed new high point of revenue above $3 billion and grew 26% in 2008-09 in spite of recession, While Europes branches faced a express growth of 38.5% during the same year. It is very signifi fuckingt for an organization to admit the differentiation of its revenue stand and to uphold its augment impetus.TCS always delivers that the 143,000 TCS employees are the supreme assets of all which includes 50,000 global associates from 67 countries and TCS trained 93,000 software professionals of which, 22,000 college graduates in the past academic year which was tremendous growth. TCS is incessantly investing to unlock new markets and services which made them to invest in emerging markets like Asia-pacific, Middle East, Africa and Latin America. The firms gigantic team of human resources is serving the TCSs panorama not only in business but also its contact on the community. TCS made an impelling evolution in corporate sustainability.TCS persists to be a pioneer of growth for the reason of its established ability to reinvent the business and organisation. The concern is placed to use in collaborative mode, significant assessing all that TCS does. TCS holds a strong position in the future IT global market.ORGANIZATIONAL STRUCTUREA basic structure distributes responsib ilities among the members of a company. Its purpose is to contribute to the successful implementation of objectives by allocating people and resources to necessary tasks and designing responsibility and authority for their control and coordination The three levels of organizations are adept level, managerial level and the community level. (Mullins, 2008) The organizations are differentiated based on the task, the employees work and the nature of company and its HR policies and conditions. A hierarchy is handled in tack together to treat people equally in companies Treating equal is just that they are literally equal, In rank to extract best from an employee, the person above him volition treat them as one and the same to extract the maximum and best work from them Functional organization,matrix organization, andline organizationare three common sheaths of organizational structure (Mullins, 2008). The main intention of organizations is to distribute the tasks the main aspect is to preserve the relationship between employees of different stages in order to drive them towards the champion task and to monitor the progress of the assigned task. The TCS have a very well designed organization.The organizations can be classified into two main divisions they areCentralization.Decentralization.CentralizationA simple and effective execution of policies for an entire organization.Gives a reliable memory access over the organization.Makes trouble-free organization and administration control purify employ of specialization including better amenities and paraphernalia.DecentralizationFacilitated verdict is to be nearer to the operational level of work.Amplified receptiveness to local conditions.It persuades inspiration and confidence of the staff. rite progress in compliment and more supple structures.TCS offers services in eight areas of service Business process Outsourcing, Business Intelligence and performance Management, initiative Solutions (CRM, ERP, and SCM) I T Consulting, Application Development and Maintenance, Engineering and Industrial Services, IT Infrastructure services, Testing and quality Assurance. TCSs are divided in following divisions Financial Services, Energy and Utility, Banking, Life sciences and health care, Insurance, Securities trading system, Retail and Consumer franks, Telecommunications, Government and Transportation.TCS follow a standard organizational growth which helps them to organize the vast team under single get on of directors the type they follow is matrix organization.The matrix organization is a combination of functional departments which provide a stable base for specialized activities and a permanent muddle for staff and units that integrate various activities of different functional departments on a project team, product, programme, geographical or systems basis (mullins 2007).(www.tcs.com)DISADVANTAGESADVANTAGESMore involvement can generate aggravation and uncertainty among team members.Adequate meeting makes this type more time consuming.A detailed understanding is needed in order to be a part else result in bad performance which affects the total team work.A very good ability is needed in order to perform better and draw attention.Distribution of possessions is supple among the organization.Facilitates in intricate verdicts and appropriate for recurrent transformations occurs in unbalanced atmosphere.To meet demands from customers and helps to make unity inside the team.Provides an opportunity to extend both practical and product skills.ORGANIZATIONAL CULTUREEven though the organizational nicety volition look like a similar saying its really solid to describe and elucidate as the word culture is derived from anthropology. In simple it can be described as the reflection of fundamental works virtually the way by which the work is performed.The collection of traditions, policies, value, attitudes and beliefs that comprises an invasive framework for everything we do and be lieve in an organization (Mullins, 2008).The corporate cultures can be categorised by two influential factors,The degree of threat coupled with the organizations mannersThe pace at which organisations and their employees obtain comment on the success of verdict or strategies.If the customs are adopted by the employees, it amplifies the supremacy and rights of management in three ways.Categorizes themselves with their organization and consent to its decree when its the be fascination to do.To integrate the organizations worth when they are right.Enthused to accomplish the organizations objectives.The types of Organizational culture are Power culture, Task culture, Person culture, Role culture.A well-built organizational culture lies on eight strong pillars of OCTAPACE referring to authenticity, confrontation, autonomy, openness trust, proactive, collaboration and explicitness. Organization cultures can be categorized into strong and weak cultures. The organizational culture of TCS i s translucent in stipulations of pay and its HR policies. There is a towering level of employee engagement as the concern pay structure stimulates and supports employees to achieve better to receive an comminuted sum of their recital pay. There is an incessant improvement and growth of workforce through different modus operandi like the T model. It is a proficiently managed organization with client fulfilment as its top most precedence.Workforces are given lofty sum of respect and everybody is addressed as an ASSOCIATE to make them believe that their stimulant really matters. But there are some minorities who believe that TCS follows a cold culture, by cold they signify that persons are not concerned about others. Few think that TCS has an energetic culture and there are lots of communal performance which the concern takes on to help the underprivileged and poor. One much(prenominal) initiative is the TCS Maitree, it is a non-profit auxiliary of TCS which utilize the employees to speak to further on and educate the under privileged children or seize a camp in a countrys rural area to educate them regarding the knowledge on computers. PS T Model is new software intended by TCS, all the workers entropy pertaining to his possession, competencies, skill set, etc are fed and then the software gives the three best domains where the employee would best be suited. This model when launched will help in smooth inter- departmental relocates. TCS values are ethical, in which TCS have its own set of rules, policies, values which is called TATA Code of Conduct which was explained by HR with immense efforts during induction process, in gentle words it can be described as that TCS is not doing business from people but doing business with the people. The TCSs culture is dynamic and favourable for vigorous growth and antagonism.THE NATURE OF ORGANIZATIONAL CHANGEChange is persistent manipulate. It is an una vanityable part of both social and organizational life and we ar e all subject to incessant change of one form or other (Laurie j Mullins 2008)There are factors which are substantial to the organization change areGlobal ostentation and economic meltdown.Non-availability of resources.The limitations on products lifecycle due to frequent revises in technologies.Very high competition in escalating and capturing new market places.BUSINESS STRATEGIESTCS names its business divisions as Industry Service Practice. TCS has it maximum revenue from Banking Financial Services and Insurance Sector.GENERIC BUSINESS STRATEGYLow outlay of Global delivery 24X7 model.Delivery with the help of established release and excellence framework-IQMS in time.A whole focus on customer retention and client relationship in order to uphold the business revenue which is 95.6%Distinguished in low end services in both capital and priceA solid testimonial from the money fluctuations with currency prevarication.Owing to its tough knowledge management system and resource expertn ess, TCS has been triumphant in get hold ofing the cost leadership in the Industry.In fresh years TCS has been following a further resolute strategy where they are moving towards the requirements of customer and the nature of business as like Middle East, Europe, and Asia-pacific. TCS focus much on customers and the area rather than being broad.A full focal point on the centres of Excellence(CoE) to strengthen potential in order to build the state-of-art miniature in particular technologies such as testing, virtualization and architecture. The high end skills and scale will help TCS to embark upon huge projects aimed at converting clients, IT applications and Infrastructures.GLOBAL STRATEGIESWhen the global strategy of TCS is being closely observed, it will illustrate an influencing labour cost in South America, China and some parts of Europe. Employing overseas experts into the post of Directors in order to obtain the frequent changes in the business is also can be referred as one of the key strategies of TCSClayton M Christensen(HSB Professor, joined TCS in 2006)Dr. Ron Sommer (former chairman of the board of management of Deuteshce telecom AG, joined TCS in 2006)Laura M cha (Member of Executive Council of the Hong Kong special Administrative Region(SAR) and Non-Executive Chairman of HSBC investment, Asia ltd)TCS have a keen view in aspect US and UK for the Business Revenue markets and India for the skilled employees. TCS is very keen in establishing global delivery centres outside India which can demonstrate TCS as a Global company. TCS was the first one to set the global delivery centre in China which distinguished TCS from other corporate companies. In recent years TCS was often changing its approach towards global market recently TCS reconstructed its structure towards its global operations to implement a Customer centric and integrated approach which is anticipated to assist in avoiding the risk factors arising from the Economic Meltdown in wester n countries. TCSs operation units are mainly divided into five main divisions.The well established markets are North America, U.K and Western Europe and the new markets are Latin America, Middle East, India and Eastern Europe. The new restructured plan was considered as the very good change by the TCS as it is attaining impetus in Europe and other markets, which is obvious in the companys marked growth rate of 40% every year. The operations In Middle East and Latin America had also seen a substantial growth. TCS had built new delivery and offshore centres in Latin America like Uruguay, Mexico and Brazil.STRATEGIC ALLIANCESTCS is always keen in upholding the strategic relationships with various International technology vendors. These relations are distinguished in various magnitudes such as service provider, customer, supplier, and alliance partner. The relationships with the international technology vendors have made TCS to maintain a holistic. TCS made a pin gage with these vendo rs on joint research influencing each other strengths to research and to develop the best breed offerings.Joint advancing engagements.Significantly new or improved solutions.Joint go-to-market strategies for the solutions. attainment STRATEGYTCS is concentrating the growth in two ways the organic means and inorganic means. The Inorganic way is in the course of acquisitions of companies which craft business sense experience to TCS. The concerns should adjoin great value to TCS. The Business with CMC is assisting TCS taking a very sharp gaze to the domestic Industry. Both companies have synergies in the government sector. They made various agreements with various companies some of them are the agreement with the citi group to transfer 12,000 employees in banking sectors for cash and external support in IT. Tata InfoTech Limited (TIL) was united in early 2006. It was also a software service company like TCS which have branches around the world like America, Europe and Australia. Comp arable to the financial venture made greater than, TCS yet again prolonged its banking commodities and shared its European operations after attaining a 75% equity wager in its Switzerland-based partner, TKS-Teknosoft. TKS was the merchandise representative for TCS in Europe.TCS CO INNOVATION NETWORK (COIN)TCS is following a coin strategy in order to face the competition as the globalisation has created a elevated competition among the IT companies. It is necessary for the IT companies in order to follow an innovative technology thus resulted in the Advanced Information and Communication Technology which made practicable for companies to collaborate and perform Globally Distributed Network (GDN). Disorderly improvements are not the consequence of a solitary technology pretended by the minority of people but the combination of similar technologies may result in getting a combined innovative technology which will be much more effective and useful for the companies to perform globally . This concept of innovation network is not novel classically it was the technology releasing body e.g. IBMs set Innovation Networks and Googles Gartner Innovation networks are already been in existence, for TCS it is the customer driven innovation network where the participants are delivery rudiments and explorations.SWOT ANALYSISSWOT analysis is a prearranged loom to calculating the strategic position of a business by identifying its strengths, helplessness, opportunities and threats. SWOT offers an uncomplicated way of analysing the results of marketing review. Internal strengths and weakness are abridged as they communicated to external opportunities and threats. (Jobbers 2007)It analysis the complete strategy of the company based on policies and the business method which they follow. This pictures the companies advantages and disadvantages in companies perspective.The SWOT for TCS is as follows,(S)TRENGTHSwidespread universal reachStrong economic presentationHuman management skillsInnovative lab systemThe Fame of the founder(W)EAKNESSESMomentous publicity to financial service markets.Deficient in level of consulting operations.(O)PPORTUNITIESExpansion in worldwide IT servicesFocus on SMB segmentExpanding maneuvers in countries like chinaFocus on high end business and consulting(T)HREATSThe Hike in Employee costsPowerful competition from overseas firms like Accenture, IBM etc.Merge in the end marketsCurrency gratitudeIncrease in competition from low wage.(S)TRENGTHSThe popularity and the reach all over the global markets made TCS a reputed and known firm in the Global IT Market. The TCS had launched the branches all over the world which can be considered as the primary strength for the TCS. TCS made clear and strong economic presentations around the globe which makes its clients a financial confidence about the company. The International base of TCS, India is known for its skilled employees in IT field which naturally made TCS very strong in Human resour ce. TCS is also skilled in the management skills as its board of directors are from overseas countries in order to adopt the strategies from all the parts of the world. TCS have a very good infrastructures and innovative labs with all the latest technologies which help TCS employees to update the latest technologies and to make research in various fields. The fame of the founder is also an added strength for the TCS.(W)EAKNESSThe excess exposure on the financial service markets which usually need to be kept confidential is considered as the main weakness of TCS. TCS is also wishing in effective consulting team which show a strong reflection of decline in the growth cycle of the TCS, Being a company which works on Outsourcing projects usually needs a very good effective consulting team which acts as the bridge between the clients and company. TCS really lacks in that.(O)PPORTUNITIESTCS being a fast growing IT firm is very keen in establishing and expanding its business to almost all the parts of world right from India, China, Latin American countries, Asia-pacific and etc which opened up a great business opportunity for TCS. The Focus in the SMB segments is also lays a very good business opportunity for TCS. Expanding the global branches to void countries like china, Asia-pacific will extend the business opportunities of TCS in future. TCS have a very good opportunity in high end business and consulting in the future if they rectify their weakness in consulting service.(T)HREATSThe rapid growth and development in India and other global areas, A common demand for employees arise which result in the increase of cost for employees. TCS has to face a very high competition from overseas and well established companies like IBM, Accenture and etc. The complete merge in the End markets is also a biggest threat for TCS. The advantage on rupees always stands as the biggest threat to all IT companies in general. Increase of competition from low wages is another threat. The similar Indian firms like Wipro, Infosys are also at their full phase of capturing global markets. TCS has to face a cold war against the threats which the company faces. As all the competitors of TCS are equally strong and effective in which TCS cant ignore the supple one.PORTERS ANALYSIS ON TCSPorters tool will help to analyse the main five competitive factors which affects the companys growth(www.emeraldinsight.com)Being TCS itself is an supplier, it do not have problem with the suppliers, the other four forces which are tough to TCS are the threat of new entrants, the bargaining power of customers, the threat of substitutes and the spirited rivalry between the existence.In the untimely days the software exports, the software sell market was overlooked by very few massive like Accenture, EDS and IBM, where the Indian concern were outlined as small level companies in result the TCS and other Indian software companies competed themselves in the lower end of the business, whic h resulted TCS and other organizations to choose small projects and tasks which are simple to do.TCS also faced a customer market that was conquered by the insurance companies and huge banks. While TCS keenly hunted for alliances with larger sellers as a competitive strategy, TCS most successful approach was to honestly loom clients and admit the minor charges that its competitive pose dictated.The entry of new companies have reduced rapidly as the huge companies like TCS, Infosys and Wipro have developed and grown huge in their market share, size and reliability with their customers. Though, the companies struggle to decrease their straight rivalry through demarcation of manufactured goods, in every market there has been enormous competitors.TCS has to work seriously upon reducing the bargaining power of customers. TCS can prevent price strategy in merge up with purchase decision. It means that TCS should bring more than undifferentiated indoctrination by moving up the cost sequen ce. Such approach might be unwieldy in the software outsourcing business as the clients have an in-depth domain enterprises and rights of inclination to hold on to the work allocated under considered consulting. The clients very well know that the complete bargaining power lies in the strategic consulting outsourcing that may reduce their bargaining power. TCS have to build up enough knowledge so as to construct outsourcing these errands a convincing worth plan. Of course, it is exactly in this empire that the multinational outsourcing firms such as Accenture, IBM, and EDS are the most vicious customers.Falsifying groupings are often viewed as a superior approach to offset clients bargaining command. Though, constructing alliances with companies functioning in clients sites have to be low-priced as this would advance focus on TCS in application progress. On other side, the attainment of a medium-sized US firm with sturdy customer relations and domain expertises could offer a striki ng opportunity. Even if expenses per employee would increase, the go up would be minute since workers needs are lesser for higher value-added short letters.The main anxiety for TCS is opposition from existing companies like Wipro, Infosys and CTS as it has produced rivalry for active dealings and twisted noteworthy pricing stress. Internationally, Companies like EDS have sited themselves as competent of handling huge, turnkey ventures which can distinguish themselves from contestants such as Accenture and IBM that spotlights on superior value-added jobs such as consulting. This proposes an organically-driven expansion strategy for TCS as TCS should persist to do the similar sort of job that it presently do, but should attempt to arrest a better section of the value-addition by accepting huge projects. Although it has exhibited a potential in distant project management, TCS would be requisite to increase the same capability.But, there are also few risks which prevail in this strateg y. TCSs huge dimension implies that it might have already exploited wealth to amount in applications improvement. Adding to that, the strategy may tender the latent for huge growth since it essentially engages elevated value-added actions. Before, this was hard, partially owed to the technical complexity in rejecting the value-chain away from the modularization of appliances programming. In recent years, though, systems design, manufacturing services, and systems integration job have increasingly been outsourced suggestive of that, if the abilities are at hand, those works could be completed in India.The threat of substitutes are mainly from the China, Philippines and eastern Europe which emerge as a biggest threats to the Indian IT companies, which is mainly due to the low cost. The companies from these countries quote very low price for the same quality of products as the Indian Companies do, which creates a great impact on medium to long term projects. It is difficult for TCS be ing operated from India to attain the organic growth.As the globalization