Tata Consultancy Services Limited: The Pioneer in the Indian IT Industry
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Case Code : BSTR125
Case Length : 22 Pages
Period : 1990 - 2004
Organization : TCS
Pub Date : 2004
Teaching Note : Available
Countries : India
Industry : Information Technology, Software
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
TCS' efforts in recent years in aggressively pursuing its growth strategy helped it script one of India's greatest success stories and earned the company worldwide recognition. TCS successfully passed through the global technology meltdown in the late 1990s.
Its success could be judged from its improving financials and from the fact that it continued its recruitment drive in the beginning of the new millennium when several other IT companies stopped new recruitment. For the fiscal 2003-04, TCS' revenues amounted to Rs. 59.395 bn, an 18.85% growth over the previous fiscal year. With exports of $ 1.2 bn in the fiscal 2003-04, TCS was ahead compared to its competitors - Infosys ($ 1 bn) and Wipro ($ 854 mn). Though most of India's leading software companies, including Infosys, Wipro and Satyam had a large clientele; TCS led the pack (Refer Table IV for the number of clients of top Indian IT companies). In June 2004, TCS formally announced its decision to launch its initial public offering (IPO)...
The Challenges Ahead
Notwithstanding TCS' rapid growth in the past, analysts expressed doubts whether this momentum could be maintained in the future. The company was witnessing declining revenue growth since the late 1990s. Its growth rate of revenues had decreased from a high of 56% in the fiscal 1998-99 to 19.97% in 2002-03 and further down to 18.85% in 2003-04.
Analysts commented that TCS had witnessed high revenue growth in the late 1990s partly due to the depreciating Indian currency as compared to the US dollar. TCS was viewed by analysts as a company which was aggressive in pricing, but very slow in decision making. It was also considered to be conservative, especially in disclosing its future plans to the media and general public. TCS was described by media as 'India's best kept secret.' However, analysts felt that after the IPO, the company had to bring in more transparency in its operations. TCS had several issues to address. A serious challenge which the company faced was the business process outsourcing (BPO) backlash in the US. Several states in the US had been bringing legislations to ban outsourcing, primarily to protect the interests of local citizens...
Exhibit I: TCS - Consolidated Statements of Income (2001-04)
Exhibit II: TCS - Statement Of Assets And Liabilities (2001-04)
Exhibit III: TCS - Organizational Structure
Exhibit IV: E-Business Solutions of TCS
Exhibit V: International Sales and Marketing Network of TCS
Exhibit VI: Business Segments of TCS
Exhibit VII: Key Acquisitions by TCS (October 2001 - July 2004)
Exhibit VIII: A Note on the Indian Software Industry