TATA CONSULTANCY SERVICES

“Experience Certainty”

Submitted by-
Vipul Singh (P39117)
Prasoon Kumar (P39091)
Kush Chaurasia (P39077)
Mohammad Shaya (P39113)
Ujwal Narasapur (P39114)
Sharad Solunke (P39103)
 OBJECTIVE
• Understanding industry level value chain
• Understanding industry attractiveness through Porter’s 5 force model
• Understanding competitive advantages from the firm-level value chain
• Formation and Execution of the strategy
INDUSTRY LEVEL VALUE CHAIN
 Porter's Five Forces
Threat of Potential Bargaining Power of Bargaining Power of
Rivalry Among Existing Product Substitute s
Entrants (LOW- Suppliers (MODERATE- Buyers (LOW-
Competitors (HIGH) (LOW)
MODERATE) HIGH) MODERATE)

There are significant Reputation of Integration of IT into For large IT Services Usually, IT Services
cost differences among leadership and clients’ business project, specialized IT projects are large and
IT Services firms as established brand are processes makes Consulting is required, generate high margins.
cost-saving is the main important in IT outsourcing complex hence there is few Buyers have limited
motivator for offshore Services industry. and raises execution substitutes for options for high quality
IT Services. Access to resources is risks-Price of supplier’s input. and cost advantage IT
Differentiated value relatively easy substitutes is high. Suppliers can use price Services providers.
delivery to customers is for entrants. India has the largest discriminate among The prices of IT Services
important as the The largest firms are pool of talent potential customers are negotiable between
industry matures. the fastest growing and appropriate for offshore according to ability and buyers and sellers.
Brand loyalty and brand hold a substantial IT-ITES. willingness to pay for
marketing play an profitability advantage the services.
important role. over smaller firms- Indian IT Services
competition is high. industry is much more
concentrated than the
global industry
 OUTCOME OF INDUSTRY ANALYSIS
ATTRACTIVENESS
 Indian IT Services industry is very attractive in terms of profit potential.
Although the competition is high among existing competitors, the threat of substitutes is
low and bargaining power of suppliers is fairly high. Also, large companies like TCS
have potential profitability advantage over small companies.

INDUSTRY CHANGES  Differentiated proposition is becoming a critical issue for Indian IT companies as other
offshoring markets such as China emerge. There are increased risks that Indian IT
Services industry lacks sufficient cost advantage or customer value.
FIRM LEVEL VALUE CHAIN: Enabling Factors
1. Physical Infrastructure
• 4 near-shore
• 3 regional and 27+ global delivery centers
• Operations in 35 countries worldwide ensuring smooth execution of Global Network Delivery
Model (GNDM)

2. Financial Resources
• 23.27% - Net Income as percentage of total revenue in FY07 indicating good margin
• This allows hiring of staff with more experience and improved quality with decline in defect rates
& innovation leading to operational excellence

3. Human Resource
• TCS- 60: 40 ratio over Infosys- 90:10 ratio for fresher and experienced
• 51% of employees having experience > 3 years, (41% for Infosys)
• Resulting into Higher Functional expertise & Reduction in defects
for the Operational excellence
4. Technology
• Software Reuse: MIGHTY Resuable Asset Management Platform
• Center of Excelence-Technology Maturity Model
• Defect prediction model
• iQMS framework (ISO 9001:2000, Six sigma, CMMISM, PCMM and SWCMM)
• Knowledge management system KnowMaX

5. Brand Reputation
• Considered to be first largest Indian IT company
• Reputed for its technical capabilities, process discipline & competitive price
• Marketing expense less than compared to Infosys, i.e. 6.7%

6. Monitoring
• Dashboards monitored by VP for critical measures, targets and levels of the projects
• Uniform color-coding for inter-unit comparison and internal benchmarking leading to low variance
in deliverables
7. Process discipline
• 96.6% deliverables completed on time
• 3.3% budget variation for Fixed-price model (w.r.t 11% industry benchmark)
• Effective use of Defect prevention model to work at 1.4 defects per 1000 function pts. in
comparison to industry benchmark of 4.1

8. Internal & External commitment

9. Technical Capability
• Reduced dev. Cost 3-10 folds & reduction in defects through software reuse
• Ready deployment of evolving technologies & best practices through Centers of Excellence

10.Operational excellence
• World’s first organization to achieve Maturity Level 5 (CMMI & P-CMM) using its extensive
assessment methodology to improve CMM level, TCoSQ, especially ‘cost of rework’ has reduced
TCoSQ: 16% maintenance, 25% development projects
 ‘Certainty’ as competitive advantage
Establishing
Relevance Clients yearning for truly predictable delivery
- Madison Avenue (marketing consultant)
Scarcity TCS is World’s first org to achieve enterprise wide Maturity level five on CMMI, P-CMM

Sustaining
Durability None of the resources responsible for ‘certainty’ are susceptible to immediate change,
Moreover TCS is helping them (tech & HR) evolve
Transferability Only the Skills/Know-how is transferable (through employees), but this resource has an ability
to develop/ implement most of the capabilities in the new org. ‘Certainty’ is transferable, but
only when complemented by other resources.

Replicability Since TCS follows complex set of procedures like day-to-day collaboration on project teams to
divisional financial targets, supported by robust Review & Monitoring mechanism at the top;
‘certainty’ will be slow to be replicated, even if the competitor manages to.
 ‘Certainty’ as competitive advantage
Appropriating

Appropriability In TCS, Certainty is mainly derived from processes & systems; along with the compliance from
employees. This limits the employee power relative to the firm. Lower attrition despite
conservative compensation also indicates the same.