Corporate Strategy @ TCS

TCS’ Vision


Today 2001

Indian
Enterprise
Global Reach
Top 40 US$ 689 MM
IT Consulting Revenues
16000 + Largest 23+
Professionals IT Employer Countries
in India
Customers Quality and R&D

Infrastructure People
2001

Indian Enterprise - Global Reach

People
Customers
• 800+ clients People
• 10% Fortune 500 clients • People CMM Level 4 in some
• IT Partner to 7 of 10 largest centers
US corporations • Hiring, and people care
• # 1 client base in India practices - Industry standards
• Training - Leading edge
• Compensation rewards model
- Traditional
• EVA under Implementation
Infrastructure
2001

Indian Enterprise - Global Reach

Customers
Quality and R&D
• 13 CMM Level 5 delivery centers
Infrastructure
- The largest number in the
• Infrastructure - Selective best world
in India
• ISO 9000 organisation
• Work environment to people &
• Technology innovation efforts-
customers - Good
4% of revenues
• Internal systems - Traditional
• Certified Quality Analysts -
and initiatives on integration
The largest number in the world
• Knowledge Management -
Selective implementation
People
Our Industry Scenario
• Deregulation • Complexity
• Dismantling of • Consolidation
territorial barriers
Moving towards
• Competition
• Globalisation providing one- • Co-petition
• Ready access to stop end to end • R&D Costs
solutions to our • Obsolescence
information
clients
• More perfect • Cannibalization
marketplace • Talent Retention

VOICE ENERGY
DATA ENGINEERING
CONVERGENCE
VIDEO SERVICES
CONTENT TECHNOLOGY
 Our Organizational Perspective
Satisfied
Shareholders

Dynamic Mgmt Global

Environment

Hig
Competition

ce

Ac lth C
er

Pr ve
an

We

ti
o
Alignment
rm
Pe Hi

a
rfo

Consultants
Hi-Brand

rea
Employers
Consultants

tio
of Choice

n
Premier Support Top
Clients People
Better Value Proposition
Hi
Growth

Rapid Convergence
Our Vision

Global
Organisation

Top 10 US$ 6 BB
IT Consulting Revenues
100,000 + Global 35+
Professionals employer of Countries
choice
Customers Quality and R&D

Infrastructure People
Our Vision 2004

Global Organisation

Quality and R&D

Customers
• Branded Service Offerings - People
Each industry segment
• People CMM Level 4 - Entire
• 50%+ Fortune 500 clients organisation
• IT Partner to 7 of 10 largest • Hiring, training and people
global corporations care practices - Leading edge
• # 1 client base in India • Compensation rewards model-
EVA based & Innovative

Infrastructure
Our Vision 2004

Global Organisation
Customers
Quality and R&D
Infrastructure • CMM Level 5 - All delivery
• Infrastructure - Best in class centers
• Work environment - Best in • ISO 9000 organisation
class • Continual innovation
• Internal systems - • Best Practices
Responsive & Best Practices
• Knowledge Management -
Systems based

People
 Vision Setting

CHAIRM AN
M r. Ratan Tata

CEO
M r. S. Ram adorai T h in k T a n k

EVPs CFO IP / SP / Product SBU Geography Heads Heads

S. Mahalingam, K V Nori (CIO) Mr. Vinay Aggarwal
Heads Americas, UK of
M Vidyasagar, Mathai Joseph
Europe, M iddle East& Africa, Corporate Groups
P.A.Vandrevala
G Jagannathan Asia Pacific, ANZ, India

RM s/BRM s
Genesis:
• Formed in 3 Q1999
• Core team of 5 people, works closely with Corporate Strategy Group
CSG is a facilitator of TCS’ vision

The Think Tank are the key strategists

Key Responsibilities

Business Simulation Models

Genesis

Overview

Parameters

Sample Simulations
* Revenue / Profitability Vs Price Bands
* Price Bands and Profitability

Reverse Engineering the Competition

What-ifs for the future
 Key Responsibility: Strategy Development

Develop Strategy
3
2
Coherence of Offerings
Scenario Simulations
Prioritization
Risk Analysis Think Tank
Capability Review
Option Selection
Validation with market

Review and
Refine
Conceptualize and Refine Senior
Management Review Strategy Strategy
Strategy
Development
Executive Process
Committee

Vision, Goals and Purpose Define measures

Performance Review Corporate
Define alignment and
Strategy
1 Market and competition Review dissemination
Group
Linkages to action plans
4
Option Generation

Publish Strategy

Action Plans, Results

 Key Responsibility: Strategy Planning
Strategic Objectives

Leadership Financial Competitiveness

Corp. Strat
Grp . Communication through presentations/ corporate directive Other external
CACI inputs

IPs SBU SPs Geographies

A
c
IPs’ SBU SP Geographies’
t
Business Plans Business Plans Business Plans Business Plans
i
o Resource Forecasting
n
HR, Capacity, Infrastructure, Training etc.
P Review of all business plans by senior management
l
a Finalised Business Plans
n
Identification of resource needs

D Resource Allocation
e
v Identification of key performance measures
p Feedback Feedback
t Quaterly review & analysis
 Key Responsibility: Competency Management
Dimension Implementation
Organizational Competency Analysis


Vision and Mission from Senior management

Analysis by Think Tank

Business Planning by Business Unit Heads
Development of Competency

and Corporate Unit Heads, enabled by
Corporate Strategy Group

EVP (HR), with the Training Task
Committee

Oversight of Competency Development

 
Corporate Training and Education Group

Support from all organizational units and
Implementation of Competency Development

Corporate

Project Teams, Groups, Customer
Relationships, Enabled by MATC, RDMs
Competency Management

 Competency Management

Key performance measures

Human Resources Plan

Manpower Requirement MATC Plan Training Other Initiatives

Experienced Mgt.
Trainees New
persons Trainees Devpt.
Requests Technologies
Database Programs
for skills of skills

LOB/LOT
Campus
domain
Selection
knowledge
Matching of
skills Mentoring Compensation
People CMM
Restructuring

Linkage of Organizational Competencies to Individual Competency

Key Responsibility : Growth Co-related with Wealth Creation

Future Growth Value

NPV of Future (FGV)
EVA
improvements

Enterprise
Current Value of Current
Value Value
EVA/c* EVA going forward
Added

Capital
Expected incremental EVA
over time is reflected in
enterprise value!
EVA Drivers
• Rate / License Price
• Billable hours
Revenue • Response time
• Domain skills
• On time delivery

• Productivity
EVA Expenditure • Sales & Marketing
• Recruitment

• Training
Capital • Receivables
• IPR
 EVA Performance Measures

Internal Process Customer

• Productivity • Response Time
• Project Planning • On Time Delivery
• Recruitment • Right Skills
• Resource Allocation • Domain Expertise

Financial Learning & Growth

• Rate / License Price • Continuous Education
• Billable Hours • IPR
• Receivables
• Sales & Marketing

Drives EVA-Drives Organizational/Individual Performance-Drives Reward Mechanism

 Key Responsibility: Budgetary Control
Conceptualization
Corporate Budget
Profit Centers Cost Centers

Product Capex
budgets Support functions

S P budgets R&D

Del. Cent.
Geo budgets

Training
I P budgets Revenue Expense

Capex Specific Direct Exp. Manpower

 …Conceptualization

TCS Cell unit

On site Off shore

Services Offerings

Strategic
Turnkey T&M Licenses Services
Consulting
 Action

Circulation of Budget data

Budget Data Analysis
received
Templates

Corporate Circulation of Feedback

Budget Revised Budgets & Revisions

Control
Finance Corporate
Actuals IP/SP/Geo/
Support/ Capex Review of Variances
Variance Report Submission to
(Actuals Vs Budgeted ) Senior Management
 Macro & Micro Roles

Macro Level Description Task Level Description


Assist in Conceptualization of

Performance Analysis - Trends
Strategy & Projections based on

Scenario Simulation

Current Performance

Market Trends

Risk Analysis

Competition Performance

Option Selection
Course Correction Suggestions


Assist in Developing Strategy
Competition Analysis


Coherence of Offerings
Top Down Analysis



Prioritization 
Using “TCS” Analytical

Capability Review Models

Validation with Market
 Inputs and Outputs
Inputs Outputs

Senior Management 
Revenue/Profits Quarter wise

Company performance 
for TCS

Leading Indicators 
for leading competitors

Band Profile 
Geography Profitability

Employee Numbers 
Customer Profitability

Outstandings

Employee Economics

Lagging Indicators

The Model is also put to use to assist BU heads

Revenue, EVA to Increase profitability using Employee
Economics

No of customers

Business Units

Model is also useful to the HR heads


Scenario Simulation

Recruitment

Options -- linkage to Goals of BU’s 
Numbers & Levels

Assist/Feedback on Strategic Planning 
Attrition Projections
 Simulation Models: Genesis


Multiple Simulation Models have existed in TCS

Finance

Costing

Human Resources

‘Unified’ Model developed in early 2000 (V Chandra, Ananth,
Ravi Viswanathan)

Strong simulation capabilities

Some new concepts e.g ‘Price Bands’
 Simulation Models: Overview
Targets
O
u Segments Financial Human
Resource
t By geography Revenue Requirements by
p By revenue band Expenditure level

Profitability Attrition by level

u Realization Requirements by
t revenue bands

Vision,
Mission Analysis Scenarios
I
Costs Deployment External
n
p Salaries Onsite/Offshore Markets
Overseas Products /Services Competition
u allowances
Turnkey/T&M Exchange rates
t Infrastructure
Geographies Taxation
Other
s Revenue Bands Cost of living
 Simulation Models: Parameters
Revenue Side Cost Side

Manpower 
Manpower split

TCS 
by designation, by geography

Business Associate 
Business Associate

Deployment Mix, Gross and by Geography 
Salary, Allowances, Employee Taxes

Onsite 
In India, by designation

Offshore 
Overseas, by geography

Domestic 
Corporate Taxes

Internal / Non Billable 
Person-days by designation

Revenue Mix 
Attrition by designation

T&M 
Promotions and confirmations

Fixed Price 
Indirect Costs

Products 
Overseas Office Expenses

Forex Rates (USD, INR as base) 
Hardware and Software Costs

Manpower deployment by Geography 
Communication costs

Onsite 
Support Staff Costs

Offshore and Domestic 
Airfare and Travel

Manpower deployment by Price Band 
Packaged Software (3rd Party)

Onsite, Offshore by geography 
Depreciation

Domestic 
PR

Staff Welfare
 Sample Simulations - 1:
Revenue/Profits Vs Band Deployment

4000

3000
Rs. Crores

Revenue
2000
Profit
1000

0
A B C
No change in Scenarios
deployment Rapid
Slow change
strategy change to
to higher
from 4Q higher price
price bands
1999-00 bands
 Sample Simulations – 2: Price Bands and Profitability
Let us take a typical ‘large customer’ with a base rate of USD 37.5 per hour, onsite = Band 2?
75000
Band 2
Band 1
50000 Note:
Costs are for an ASE. At
higher designations, costs
will be even higher

25000

5000

Less No local co
Theoretical:
Actual : Less Local expenses and Contributio
2000 Hrs x
1720 Hrs x Co. local tax - n, less tax:
37.5 = $75,000 37.5 = Country B
contribution Country A
$64,500
 Results - Rate Band Movements

16.00
Off-shore
15.50

15.00

14.50

14.00
Apr May Jun Jul Aug Sep
Onsite
36.00
35.00 The simulation
34.00 model allows
33.00 quick prediction
32.00
and translation
31.00
Apr May Jun Jul Aug Sep
into action plans
 Towards the Top 10

Global
Knowledge and Global Offshore Global Global
Global Global Global Innovation Competency Development Solution Marketing Solution High Range of
Brand Alliances Workforce Management Centers Maturity Delivery and Sales Frameworks Cost Quality Offerings
IBM Global
EDS
Accenture
Cap Gemini E&Y
Computer Sciences

TCS
 Benchmarking with the World
Consulting is a wide term, includes Management Consulting, Strategy Consulting, HR Consulting, IT
Consulting, Domain Consulting and so on. There is no one ‘Top’ list. Instead of arguing about who does
what, the Think tank tracks its own list..
Rank Organization Revenues Revenue in USD Employees
1 IBM Global Services 33,152,000,000 150000
2 EDS (including AT Kearney) 19,226,000,000 120000
3 KPMG 13,500,000,000 100000
4 Deloitte Consulting 11,200,000,000
5 Andersen Consulting (now Accenture) 10,800,000,000 70000
6 CSC 10,524,000,000 68000
7 Mercer Consulting Group (Marsh and McLennan) 10,200,000,000 57000
8 PricewaterhouseCoopers Estimate 10,000,000,000 160000
9 Arthur Andersen 8,387,000,000
10 Cap Gemini Ernst and Young 6.9 Billion Euro 6,210,000,000 59549 Sample – 2000 List
11 Ernst and Young Estimate 6,000,000,000
12 SAIC (Including Telcordia) 5,900,000,000
13 McKinsey & Company Estimate 3,000,000,000
14 debis Systemhaus 3.3 Billion Euro 2,970,000,000 21615
15 Origin 2.8 Billion Euro 2,520,000,000 27000
16 Sema Group 1410 M Pounds 2,036,666,667 21700
17 Booz-Allen & Hamilton 2,000,000,000 10000
18 American Management Systems 1,280,000,000
19 Logica 847.4 M Pounds 1,224,022,222 10500
20 CMG 810 million pounds 1,170,000,000
21 The Boston Consulting Group 1,100,000,000 2000
22 Towers Perrin 1,000,000,000 9000
23 Bain & Company Estimate 1,000,000,000
24 DMR Consulting Group 900,000,000 8000
25 Keane 871,900,000
26 Aon Consulting 770,000,000
27 Watson Wyatt Worldwide 515 Million (9 months) 686,666,667 5900
28 Arthur D Little 629,000,000 3000
29 XANSA (Formerly FI group) 434 Million Pounds 626,888,889
30 Cambridge Technology Partners 587,000,000 3500
 What-Ifs for the Future

Year End 2000-01

Manpower +10% +20% +45%

Base Price Band -20% -24% -30%

Base+1 Price Band +20% +10% -56%

Base+2 Price Band +2% +14% +86%

Onsite Effort 0% 0% +3%

Offshore Effort +3% +3% +2%

Geography Distribution No change No change No change

Rev: +50% Rev: +60% Rev: +100%

Prof: +30% Prof: +90% Prof: +175%
 Management Dash Board

We monitor the following high-level Leading Indicators in the form of a Management Dashboard

Measurement Parameter
Total Revenue (Rs. Crores)
Total Profit (before Indian Tax, Rs. Crores)
USA Revenue : % of Total Overseas Revenue
UK Revenue : % of Total Overseas Revenue
Other Countries Revenue : % of Total Overseas
Revenue
Onsite : Offsite Manpower Ratio
Onsite : Offsite Revenue Ratio
Salaries to Total Revenue (%)
Overseas Allowances to Onsite Revenue (%)
Other Costs to Total Revenue (%)
Overseas Taxes (Rs. Crores)
Indian Taxes (Rs. Crores)
Revenue : Top 10 Customers (Rs. Crores)
Revenue : Top 25 Customers (Rs. Crores)
Manpower Deployment : Top 10 Customers
Realization – Overseas, Onsite*
Realization – Overseas, Offshore
Realization – Domestic
Outstanding – Number of days
 Thank You