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The 2011 IT Business Strategy for TATA Consultancy Services Company

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Table of Contents

 

  1. Briefly about TATA Consultancy Services Ltd (TCS)…………………………….
    1. Introduction: TCS Ltd line of Business………………………………………...
    2. Mission and Vision of TCS Ltd…………………………………………………
  2. The Business Strategy………………………………………………………………
    1. The Strategic Diagnosis………………………………………………………..
    2. The Strategic Options…………………………………………………………..
    3. The TCS Business Strategy for 2011………………………………………….
    4. The Strategic Formulation………………………………………………………
  3. Formulation of the IT Strategy for TCS Ltd ………………………………………..
    1. The TCS IT Internal Environmental study…………………………………….
    2. The TCS External Environmental Study………………………………………
    3. Gap Analysis and Initiatives Portfolio…………………………………………
  4. Portfolio of the IT Projects recommended ……………………………………….
    1. The Support initiatives………………………………………………………….
    2. The Turnaround (high potential)………………………………………………..
    3. The Factory (key operational)…………………………………………………..
    4. The Strategic (support/transform strategy)……………………………………
  5. The IT organization ………………………………………………………………….
    1. Organizational Changes to be made in the TCS IT Division………………. 
  6. The cost and the benefit of TCS IT Strategy …………………………………….
    1. The Initiative Portfolio………………………………………………………….
    2. Recommendations………………………………………………………………
    3. The cost and benefits of the TCS IT strategy initiatives…………………….
  7. Financial Implications………………………………………………………………..
  8. The implementation planning ……………………………………………………….
    1. The Initiatives to be managed by the IT department………………………..
    2. TCS Macro-planning for the 2011 projects……………………………………

9.  References……………………………………………………………………………

Briefly about TATA Consultancy Services Ltd (TCS)

Introduction: TCS Ltd line of Business

TATA Consultancy Services Ltd (TCS) is an information technology (IT) company situated in India, with its headquarter at Mumbai. TCS Ltd deals with IT services, software and hardware engineering, alongside business outsourcing services (BOS) This IT Company is ranked among the best by the Bombay Stock Exchange (BSE, 532540) of India, and in the National Stock Exchange (NSE).TCS Ltd is also one of the largest conglomerates in India, handling businesses in telecommunications, financial services, energy, government, healthcares, manufacturing of chemicals, software and hardware engineering, process engineering and research system (D`Costa, F, 1998, and David, R., 1997).

  1. Mission and Vision of TCS Ltd

The mission of TCS Company is to continuously provide quality and highly profiled products and services to our esteemed clients all over the world. With our dealings in IT products and services, our engagement in governmental economic activities, active participants in healthcare matters, and having established world class manufacturing industries across the Asian continent, TCS still remains a company of choice, providing quality services where they have never been delivered before.

As per the recent Market Stock Report, Tata Consultancy Services is one of the largest Asian BPO market with a growth rate of approximately 27.01 %, and revues of about 33.43 % (D`Costa, F, 1998). Current value of the reports indicated a share of 600 INR.This has, however, been one of the company’s future business strategies, to raise its growth rate and its market share indexes. 

The prime vision of TCS Company Ltd is to be in the top five IT Companies globally. Reaching out for our clients at an enormous and extensive global network interconnection is the one dream TCS is seeking to ascertain. Mutual understanding and benefit between the customers and the Industry are some of the key concern of TATA Company, to ensure that satisfaction and success is achieved through collaborative, productive and consultative relationships. This is a masterpiece reaction to the research findings which indicate that in spite of being a third world country, this Indian IT industry has shown much potential in the growth of its economy in the global market place, therefore attracting more competition, and more business opportunities in the market (Heeks, R., 1996).

  1. The Business Strategy
  1. The Strategic Diagnosis

Competition

Our company is aware of the intensive and ever increasing competition in the IT market. The Asian continent is such an industrious place with so many IT companies operating in the same line of business as TCS.There is thus a stiff competition our company is facing from the other rivaling IT industries like Shaw Wallace Ltd, Dell Computer Company, North American Computer hardware and Software Industries among others. 

Legalities

Since its commencement back in 1968, TATA Consultancy Services Company has had some serious wrangles with the Indian government, before it finally became a fully fledged IT Industry. Problems like delayed licensing, authorizations plus some other prolonged and scrupulous legal frameworks it has to undergo have been a set back to its rapid growth. 

Socio-political factors

Even though TCS Ltd has managed to come up as a strong IT Industry, that is, before venturing into the business outsourcing services (BOS), it still faces a few of the legal problems. The huge taxes demanded by the government and politics from the opposing government leaders who claim that TCS is not doing enough in providing employment opportunities to the Asian citizens are some serious challenges our company is facing lately. 

Technological Opportunities.

As stated by Dr, Hiroshi Tasaka, “It is a characteristic of the world we live that as something becomes more complex, it acquires more properties” (Hiroshi, 2010).It is from this basis that TCS found it necessary to advance on its intranet to get global, as this is becoming a dream of every company across the world, reaching out for the largest number of clients possible.  

Being an industry that is well positioned in terms of information and communication technology (ICT), providing IT services and doing research in the same line, TCS will easily be able to advance its global network connections by simply developing on its currently well established intranet. 

Developing a real time global interconnection is an exorbitant but an obvious investment for the modern companies. This TCS state of technology is a great advantage it has over the other companies that are seeking to establish their network connects from the scratch, thus requiring for more time to undertake the rather costly investment. It’s a good opportunity to beat the competitors severely in a flat race.

Threats.

Being a third world company operating in the midst of socio-political and economic turbulences, those IT companies operating from the developed states with minimal political interferences or economic instabilities, and which have dominated the top ranks in terms of productivity are the biggest threats to TCS company. As we are looking forward to going global in full force, they already jammed up the global networks, making it a bit difficult to topple the new competitive strategy that is being adopted by companies.

Resources

TCS Ltd is basically funded from the profits it gains by delivering myriads of IT services in the Middle East and to the American and African States. It also depends significantly on donors and well wishers that take to invest in the company and help develop its operations globally. When the economy gets tight, the company seeks the help of loans from the World Bank to enable it continue with its development oriented activities. Most of the raw materials utilized are constantly being imported from the American States and United Kingdoms in exchange for other products and services or money.

Strengths and Weaknesses of TCS Ltd

Our company is yet to come up with a world wide network interconnection that will enable it connect with its numerous clients and suppliers spread all over the world at an affordable cost .Its current intranet network is still underdeveloped and therefore not capable of standing the immense confrontations of the globally networked companies. But with its stable IT background, TCS has been able to stand the pressure of the rapidly evolving information and communication technology that has favored most of the companies in the developed States. 

The Strategic Options

The Value Proposition

By investing in the IT sector, TCS will be more exposed to innovations and the global market. For instance, if the company invests $ 800 million dollars in engineering the IT network projects, it would be expecting that by the year 2011, the money invested into this project would have been redeemed fully besides the advantage of having a world class IT infrastructure fully installed and operational.

The target Markets

TATA Consultancy Services Company is seeking to acquire a wider market by advancing its IT system to accommodate more clients from all over the world.TCS major targets are the upcoming communication industries, research and learning institutions, governmental organizations, and healthcare settings looking for quality services in Information technology. It’s also looking forward to narrow down the service to individual merchants dealing with the computer accessories.

The competitive advantage

As per the observations of Manuel Castells,”information technology is at the core of the new economy, and it present for the modern revolution what sources of energy were for the last time industrial revolution…what is fundamentally new in the current revolution we are experiencing is that information and knowledge are not only catalysts of the societal transformation, but they are the raw material the revolution acts on in an endless and cumulative feed-back loop” (Castells, 2000).

If the position of Manuel is something to go by, then TCS strategy of developing a global network will give it a competitive advantage in the technologically advancing global market. Through this IT system, TCS will be capable of attracting more clients and suppliers by giving them the necessary information that will act as a bonding strategy in this case.

The business Strategy stated

According to (Senge, P., 1994), a business strategy “is about recognizing, creating and using opportunity in a changing environment in order to survive in the market place and achieve corporate goals against competition from other business firms”. This source further highlights that one of the most commonly applied business strategies is the Michael Porter’s model of five forces i.e. existing competitors, suppliers, buyers and new entrance into the market (Senge, P., 1994, and Andrew, M. & Erick, B., 2008).

Therefore, with the help of the Michael Porter’s five competitive forces model, TCS Ltd intends to overcome the stiff competition in the IT world by first becoming part of the technological innovations that are transforming the world. The cost of engineering a global interconnection of networks is costly and time bound. If TCS will achieve this goal in time, it will block out all those companies that are yet to venture into the same line of business. It will also have a competitive advantage over the existing competitors that have not yet gone the global IT way in devolving the products and services. And by introducing new system of reaching out for more clients and customers, TCS will be flexible in toppling the bargaining powers of the supplies and consequently the customers. Porter’s model accomplished as shown in the diagram sketched below.

Introduction of new products and services will add to its competitive advantage by attracting new clients, and maintaining the current ones that may get interested in the new products and services. This strategic business plan is also likely to attract an exorbitant expenditure before its implementation, after which it may make it difficult for new companies to venture into the same. New entrance into the market is thus barricaded. Launching of new products and services will also redefine and reduce significantly the bargaining powers of both the suppliers and the customers. This will drastically pose a competitive challenge to the other companies in the market.

Borrowing from Michael Porter, the presence of products far from the sphere of the common commodities in the market would tend to increase the tendency of customers switching to alternative products in the market (Heeks, R., 1996). Having been a profitable market, as confirmed by a number of surveys and market reports, there is a probability that the IT market would draw many companies to venture into the business. Such a phenomenon pointed out by Porter, is likely to trigger new entrances into the market. This would imply that the market competition would be more intensified, due to many new entrants, which will eventually stifle the profitability scale of the TCS Company. It’s only through blocking or barring of new entrances into the market that the TATA Company will survive the challenge of competition and any go-down of the industry’s incomes. Porter noted that profit rates would tend to drift to the side of a competitive level in the market (Porter, 1979, p.188).

In its future organizational strategies, basically aimed at standing the constant changes in the market, TCS Ltd has put in place a long strategic plan for introducing more employment opportunities among its IT departments i.e. the Co-Network Research Lab, and software engineering department. This is perceived significance as it will boots on the number of TCS IT research and engineering personnel, thereby enabling it to be well versed with innovative ideas and technical “know-hows” in the IT world.

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The IT Strategic planning and Implementation

In order to achieve its 2011 goals, TATA Consultancy Services embarked on the implementation exercise by first familiarizing its stakeholders on the visions and objectives to be achieved by the company come 2011.Contributions of the employees into the business strategic plans was put into much concern, knowing that without engaging its employees and other stakeholders in the company, the IT business strategy to be accomplished by 2011 could be prone to jeopardy, hence failure. It’s apparent that when others are ignored when formulating the business strategy, or otherwise not informed on the pending future plans, they will feel uncomfortable and perceive the move as deceitful and not in any way to the best of their interest (Apte et al, 1995). TATA Consultancy Services Company noted this aspect of management clearly in planning to implement its strategy. And through an effective communication processes, all the stakeholders have been kept up to date and well informed on the new changes and upcoming plans of the industry, so that none is caught unaware or in the midst of confusion on what is taking place within the industry.

Purcell, Kinnie and Hatchison, business and economic researchers, emphasize that successful strategic planning also requires an active involvement of the stakeholders, the employers, employees, managers, and the executives (Apte et al, 1995). It does not matter “whether the strategic planning is only taking place at departmental level, or even affecting the entire firm”. It is the responsibility of the managers and or the executives to guide, support and assess the outcomes of the business strategies and its implementation processes (Purcell, JP Kinnie, NL and Hatchison, SK, 2003).One of such methodologies that were employed by the TCS Ltd in assessing and evaluating its future achievements was the Business Score cards .

Business score cards are communication equipment “used to tell a story of how value is created for an organization or a company”. This communication tool is attributed to “Drs Robert Kaplan and David Morton of Harvard business School”. The strategy has widely been used in aligning business activities concomitant to the visions and goals to be ascertained by the business firm (Andrew, M., and Erick B, 2008).TCS Ltd was not exceptional in applying the same strategy.

Under the porters and SWOT analyses, the degree of rivalry in the market would help the Industry, in this case TATA Consultancy Company, to comprehend the magnitude to which the Industries efforts towards better performance can easily be thwarted by the rivals, that is, if it fails to monitor its strengths in relation to the other competitive IT companies in the global market already. Understanding the nature of the five forcers is thus indispensable so to speak.

Porter, SWOT and other competitive business models further elaborate that rivalry is not the only competition quagmire in the market, there are also the issues of new entrance into the market, buyers and suppliers bargaining powers and the threat of substitutes of products in the market which they emphasized was responsible for determining the market profitability scale (Lawrence, P, and Lorsch, J,1967).TATA Company is hence faced with all these forces and it has to be well versed and prepared enough in coping up with the rapid technological development of the other industries.

 The IT industry, TCS Ltd, is obliged to seek for understanding of the nature of the markets, the competition environments and how the global market is affected relatively by the five forces as proposed by Michael Porters and others. This move would help the industry in achieving the future business strategies and objectives. The Industry has also devised ways of making it very difficult for newly emerging IT companies to enter into the market. It has formulated strategies so to cub competitions from rivalries, threats of substitute products in the market and the bargaining powers of suppliers and customers on a long-term basis (Arora et al, 1999).

Strategic Management System and Performance Evaluation

We are living in a dynamic world, a world where everything seems to be taking a new course of change. It’s difficult imagining a static business world, in an environment of technological innovations and dynamic economic ideologies. Nation-states, societies, organizations, individuals and notably, business industries have to constantly evolve to cope up with the dynamic world; otherwise you will be left lagging behind time. In a nut shell, change is a must, and managing change is even mandatory (Armstrong, M and Baron, A, 2002).

Technological innovations have significantly been the major factors in bringing global changes. How the changes are implemented is hence a vital aspect of development, particularly in the business world today. It should strategically be planned. And taking note from (Armstrong, M and Baron, A, 2002), the methodologies employed in bringing about change are as important as the success of the business strategy. 

Conclusion

Change can be positive or negative. Positively, a change would comprise of the establishment of enhanced conditions, and forthcomings opportunities availed by new technological innovations. On the other hand, negative elements of change would encompass destruction of the familiar trends of operations, the repercussions brought about by change due to lack of understanding of the strategic system , rejection by the majority and isolation of the minority because of distrust and fear of the uncertainties that the change may bring (Bannerjoe, A., and Duflo, E., 1998).

Management strategies are concerned with the implementation of the business strategies which will affect either positively or negatively, the overall performance of the company. Implementation of the new innovations should therefore be aligned or linked with the overall business strategy (Armstrong, M. and Baron, A., 2002).

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