Tata Consultancy Services Limited: The Pioneer in the Indian IT Industry

 
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Case Details:

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.



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Introduction Contd...

TCS introduced the concept of Offshore Development Centres, where TCS engineers based in India worked on projects for clients abroad and saved costs for both TCS and its clients. By consistently undertaking and performing good quality jobs for clients at a fraction of the cost they would otherwise have incurred, TCS put India on the global map and became a premier IT outsourcing destination for companies in the West, particularly the US. Crediting TCS with bringing glory to the Indian IT industry, Nandan Nilekani, CEO of TCS' competitor, Infosys Technologies said, "TCS pioneered the Indian software industry and has played a seminal role in the global acceptance of the Indian software capabilities."5

Background Note

TCS was established in 1968 with its headquarters in Mumbai. It was formed as a division of Tata Sons Limited (TSL), one of India's largest business conglomerates. FC Kohli was appointed as the first CEO. The purpose of establishing TCS was to enable Indian companies manage themselves better, through effective use of IT. During its early days, TCS, with a staff of 10 consultants and 200 operators, undertook IT consulting assignments with other Tata Group companies. For instance, TCS managed the punch card operations of Tata Iron and Steel Company (TISCO). When the entire initial money invested by TSL was exhausted, TCS started looking for outside clients to sustain its operations. In 1969, TCS bagged the first banking software project - the Inter Bank Reconciliation System (IBRS)6 from the Central Bank of India (CBI), one of its earliest clients.

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The successful implementation of the IBSS at CBI enabled TCS to get similar orders from 14 other banks. In the next couple of years, TCS also executed orders for municipal authorities and telephone companies in India.

In the 1970s, TCS felt the need to equip itself with improved technological capabilities. The company believed that this could be achieved by serving foreign clients, as they demanded high quality standards. By executing their orders, TCS felt that it could upgrade its technology. TCS' first international order was from Burroughs Incorporated.7 After the positive response from Burroughs, TCS started seriously concentrating on the US market. The company obtained its first big foreign order from the Institutional Group & Information Company (IGIC), a data centre for ten banks, which catered to 2 mn customers in the US. TCS was assigned the task of maintaining and upgrading IGIC's computer systems. This was TCS' first full-fledged on site project, where its engineers worked in the premises of IGIC...

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5] Shivanand Kanavi, "Megasoft," Business India, June 07, 2004.

6] The IBRS offers a dynamic mode of matching entries, which reduces the matching-time cycle by achieving a higher percentage of matches within a shorter time frame. The IBR system consists of as many distinct databases as there are zones in the bank, with one database for inter-zonal entries. The database for each zone processes all the entries of that zone and segregates all inter-zonal entries in an inter-zone data store, which can be downloaded at a suitable frequency and uploaded to the inter-zonal database for further processing. The product evolved over the years since it was first implemented in 1968.

7] Headquartered in Detroit, US, Burroughs produced billing machines, typewriters, virtual memory computers, etc. The company was later renamed as Unisys Corporation.

 

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