A STUDY ON TATA CONSULTANCY SERVICES LIMITED

Project Report Submitted to

The Mahatma Gandhi University in partial fulfilment of the

Requirement for the award of degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by

KEERTHY.C.UNNI
Under Supervision and guidance of

Mrs SONIA ELIZABETH THOMAS

ASSISTANT PROFESSOR AND BATCH COORDINATOR OF

KOCHI BUSINESS SCHOOL

 Submitted by
Keerthy C Unni
1st year MBA
Kochi Business School

1
 INDEX

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Sl:No CHAPTERS Page No

1 Company/Organisation Profile
1.1 Brief History Of the Company 3-7
1.2 Business Process Of the Organisation – Products 7-11
1.3 Customers Of the Company – Level of Operation 11-13
1.4 Competitors Of the Company 13-15
1.5 Strategies – Business, Pricing, management 15-17
1.6 CSR Activities 17-20
1.7 Export / Import 21
1.8 Collaboration and Expansion Plans 22-23
1.9 SWOT Analysis Of the Company 23-25

2 An Overview of the Industry

2.1 Brief History of the Industry 26-28
2.2 Business Process of the Industry 28-32
2.3 Market Demand and Supply – Contribution to GDP 32-34
Revenue Generation
2.4 Level and Type of Competitors - Firms Operating in the 34-37
Industry
2.5 Pricing Strategies in the Industry 37-40
2.6 Prospects and Challenges in the Industry 41-44
2.7 Key Drivers of the Industry 44-47
2.8 Stalwarts in the Industry 47-51

3 Industry Analysis – Porter’s 5 Forces Model 52-55

4 Discussions
4.1 Objective Assessment 2 56-64
4.2 Specific Learning Outcome 64-65
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 CHAPTER 1

COMPANY/ORGANISATION PROFILE

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1.1 BRIEF HISTORY OF TATA CONSULTANCY SERVICES

TATA CONSULTANCY SERVICES

Tata Consultancy Services is an IT services, consulting and business solutions

organization that has been partnering with many of the world's largest businesses in
their transformation journeys for over 50 years. TCS offers a consulting-led, cognitive
powered, integrated portfolio of business, technology and engineering services and
solutions. This is delivered through its unique Location TM Independent Agile delivery
model, recognized as a benchmark of excellence in software development.

A part of the Tata group, India's largest multinational business group, TCS has over
448,000 of the world's best-trained consultants in 46 countries. The company generated
consolidated revenues of US $22 billion in the fiscal year ended March 31, 2020, and is
listed on the BSE (formerly Bombay Stock Exchange) and the NSE (National Stock
Exchange) in India . TCS' proactive stance on climate change and award-winning work
with communities across the world have earned it a place in leading sustainability
indices such as the MSCI Global Sustainability Index and the FTSE4Good Emerging
Index.

BRIEF HISTORY OF TCS

Tata Consultancy Services Limited (TCS) is a subsidiary of the Tata Group, an Indian
information technology consulting and business solutions company which operates in
46 countries worldwide. TCS Limited was founded in 1968 by a division of Tata Sons
Limited.  Its early contracts included punched card services to TISCO (now Tata Steel),
working on an Inter-Branch Reconciliation System for the Central Bank of India.

TCS also offers IT infrastructure services, business process, outsourcing services

engineering. Even more, industrial services global consulting and asset leveraged
solutions.

They provide various services; their segments include banking financial services and
insurance; manufacturing; retail and distribution and telecom. The company is a part of
Tata Group which is one of India’s most respected business conglomerates and most
respected brands.

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TCS acquired company name ICL 1903 in 1970. After acquiring the company TCS
started building software for a common process like financial accounting, share registry
work, sales analysis, and inter-bank reconciliation, provident fund accounting, etc. and
operating that software on the behalf of customers.
They started their first international assignment in the year 1971. Their first
assignment was to build a computerized inventory control system and organize the
store for management consultancy services.

In 1973 TCS partnered with Burroughs to distribute and supports its product in India as
well as build software that would be exported to various Burroughs units and client all
over the world. TCS completed their first full software development lifecycle in 1974
when they built a financial accounting package for two building societies in the UK on
the behalf of Burroughs.

Growth over the Years of TCS

TCS was growing within a few years of its establishment. After 7 years of its
establishment, TCS crossed the $1 million mark in export revenue. TCS opened Tata
Research and Design Development Centre (TRDDC) in Pune, India in 1981 with the
objective of focusing on computer-aided software engineering i.e. a structured, tool
driven approach to software development using process automation.
It was a farsighted vision of the management of the company to open TRDDC. In 1983
TCS engaged with Swiss National Bank in the first and largest offshore project done out
of Delhi Centre. Until then, Mumbai had been TCS’ only offshoring destination.

In 1988 TCS launched the integrated standard banking system which automated branch
banking functions and customer service, which was quickly adopted by many banks in
India. Furthermore, in 1989 TCS signed a huge deal of $10 million with Swiss Securities
Clearing Corporation (SEGA) to design, build, and implement the world’s first real-time
domestic and cross border securities clearing and settlement system.
In 1991 TCS launched a user-friendly accounting software package called E.X. in India,
which went on to become a market leader in India in subsequent years. In 1992 TCS set
up the core trading platform of newly created National Stock Exchange, Which changed
the way capital markets worked in India.

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TCS launched the Network Custody Systems (NCS) in 1995 in partnership with
Standard Chartered Bank in Singapore. The product went on to become a runaway hit,
adopted by a leading custodian and other market participants across the world.

In 2000 TCS unveiled a new $2 million global e-business development facility at

Mumbai. TCS aggressively pursued the e-business opportunity, grew it into a significant
business over the next few years. In 2001, TCS won the largest banking software project
in India. A project was to implement a core banking solution at State Bank of India
across 13,000 branches, including seven associate banks. Likewise, TCS Signed the first
$100 Million deal with GE Medical Systems in 2002. One of the largest single contracts
ever won by an Indian software services company till then. In 2003 TCS Crossed the $1
Billion mark in annual revenue. Then-CEO S Ramadorai formally unveiled the vision
statement, ‘Top 10 by 2010’. This goal was achieved before time in 2009, when TCS
finally broke into the ranks of the top 10 global IT service-providers in terms of
revenue, profitability, number of people and market capitalization.
TCS unveiled its tagline “Experience Certainty” in 2005. In the same year, TCS won a
deal valued at $847 million (£486 Million) to provide insurance back office transaction
processing services to the UK-based Pearl Group. TCS also acquired Sydney-based
Financial Network Services for approximately US$ 26 million and Chilean business
process outsourcing company, Comicrom, for $23 million. TCS introduced two new
service lines, Remote Infrastructure Management, and Business Process Outsourcing,
marking the formal launch of their full services strategy.

Present Condition of TCS

TCS Crossed $10 billion in revenue in 2012. The cloud platform of TCS namely ion
assessments, financial inclusion, HR, financial accounting, TAP™, procurement, and
analytics crossed $100 million in revenue in 2015. TCS ranked 64th overall in the
Forbes World’s Most Innovative Companies in 2015.

TCS Net Worth

Tata Consultancy Services has $15.4B in estimated revenue annually. The company
competes with a similar tech giant like Wipro Technologies, Hewlett-Packard, and
Infosys. Tata Consultancy Services has made 2 investments. Their most recent
investment was on Dec 18, 2015. They invested $2M in KOOH Sports.

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It is the world’s 9th largest IT services provider by revenue. TCS ranked 10th on the
Fortune India 500 list in 2017. In April 2018, TCS became the first Indian IT company to
reach $100 billion market Capitalization. The revenue of TCS in the year 2018 is $19.08
billion. The company generated consolidated revenues of US $22 billion in the fiscal
year ended March 31, 2020.

1.2 BUSINESS PROCESS OF TATA CONSULTANCY – PRODUCTS

Business Process Management grew by 4.5% over the prior year driven by a greater
focus on robotic process automation as customers automate repetitive tasks and focus
on strategic work. Business Process Services refers to the delivery of BPS over a cloud
computing model. Whereas traditional BPS relies on labour arbitrage to reduce costs,
BPaaS aggregates demand using the cloud, servicing multiple customers with a single
instance, multitenant platform and shared services, thereby delivering significant
operating efficiencies. The pricing model is usually outcome based. Business process
services Of TCS include Designing, enabling, and executing business operations
including data management, analytics, interactions and experience management.

1.2.1 PRODUCTS AND PLATFORMS ARE OFFERED BY TCS

TCS BaNCS

 23 new wins (7 for TCS BaNCS Cloud) and 24 go-lives in FY 2020

 Highlights: -

Banking: Serves - 25% of the world population.

Capital Markets: Records 10 million trades per day (peak), represents $40 trillion worth
of AUC across 100 countries.

Insurance: Administers over 20 million life, annuity and pension policies; 135 million
property and casualty policies.

TCS iON

 Digital Glass room: Virtual learning platform, made available to educational

institutions across the country shut down by lockdown, free of cost. 2,000
institutions resumed their teaching sessions in a span of one week since launch.

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 Assessment: 200 million+ candidates assessed till date; 2.4 million candidates
assessed in largest single shift in FY 2020.
 Learning: 3 million+ learners on the platform, 47,000 courses available, 18,000
communities.
 Process Management: 500+ SMB clients, 1 million+ user.

Ignio

 World leading cognitive automation software for enterprise IT and business

operations.
 54 new wins and 34 go-lives in FY 2020.
 12 VARs and distributors and 13 tech and cloud partners in FY 2020.
 Manages over 1.5 million technology resources autonomously.

TCS ADD

 Comprehensive suite for digital transformation of drug development and clinical

trials.
 9 new wins in FY 2020.
 6 new offerings enabled by AI and predictive analytics launched in Site Feasibility,
Safety Leveraging Decision Fabric, Clinical Analytics and Insights Platform,
Regulatory Insights, Metadata Registry, Digital Documents.

TCS HOBS

 Plug and play SaaS based business platform to digitally transform business, network
and revenue management domains of subscription based businesses.
 Serving 27+ clients, across Communications, Utilities, Manufacturing and Personal
Care; Serving 21 million+ subscribers, handling 125,000+ devices and processing 1
billion+ events.
 5 new wins and 4 go-lives in FY 2020.

TCS TwinX

 AI powered system of actionable intelligence – powered by an enterprise digital

twin (customer, product, process) to help business leaders simulate and optimise
enterprise decisions, predict and proactively manage outcomes.

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 2 new wins and go-lives in FY 2020.

TCS Optumera

 AI and ML powered merchandise optimization platform that enables retailers to

unlock exponential value by optimizing their space, mix and price in an integrated
manner.
 4 new wins and 1 go-live in FY 2020.

TCS Omnistore

 Unified store suite which leverages AI to help deliver personalized, interconnected

journeys across various touch points for frictionless customer experience and
predictive operations .
 4 new wins and 2 go-lives in FY 2020.

Mastercraft

 Digital platform to optimally automate and manage IT processes.

 FY 2020 Highlights: 29 new wins, 1 billion+ records cleansed, 110 billion records
masked, 500+ million lines of code (mloc) analyzed, 25+ mloc generated.
 Successfully delivered 60+ modernization projects so far.

Jile

 SaaS-based, scalable Agile DevOps platform to accelerate software development and

delivery and integrate DevOps tools.
 8 new wins and go-lives in FY 2020.

1.2.2 SERVICES ARE OFFERED BY TCS

IT Services–
 Custom Application Development
 Application Management
 Migration & Re–engineering
 System Integration
 Testing
 Performance Engineering
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Infrastructure Services–
 Infrastructure Readiness Assessment
 IT Service Desk
 Data Center Management
 End User Computing Services
 Database Services
 Application Management Services
 Command Center Services
 Managed Security Services

Enterprise Solutions
 Supply Chain Management
 Master Data Management
 Customer Relationship Management
 RFID
 Call Management
 Oracle
 SAP

Consulting
 Business Consulting
 IT Consulting
 Business Solutions

Business Process Outsourcing

 Customer Interaction Management (CIM)
 Finance and Accounting
 Human Resources Outsourcing
 Knowledge Process Outsourcing
 Supply Chain Management
 Reconciliations
 Benefits Administration

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 Payroll
 Industry–specific Offering

Business Intelligence & Performance Management–

 Business Intelligence
 Business Process Management
 Enterprise Data Management
 Integration Services
 Knowledge Management / Enterprise Content Management

Engineering & Industrial Services–

 New Product Development Solutions
 Product Lifecycle Management
 Plant Solutions & Services
 Geospatial Technology Solutions
 Industry–specific Offerings

1.3 CUSTOMERS OF TATA CONSULTANCY SERVICES – LEVEL OF OPERATIONS

TCS had a very productive year, engaging with customers in their innovation, growth
and transformation initiatives, expanding and deepening their relationships, deploying
very impactful solutions, and winning some of their largest deals till date.

As a strategic partner to their Customers across 10 industries, they help them deliver
their business goals and drive technology led transformations.

Their clients across the world have achieved significant business results using their
world-class solutions and have recognized them for their efforts: they have been ranked
number one for customer satisfaction in Europe’s largest survey of service provider
performance. Conducted across 13 countries in Europe by Whitelane Research. This is
the third consecutive year that they have topped the customer satisfaction ranking for
the IT services industry, with TCS also being rated number one across all nine individual
key performance indicators (KPIs).

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The new operating model that they call it Secure Borderless Workspaces™ (SBWS™). Using
SBWS, we have been able to continue supporting their customers not only in their mission
critical operations but also their transformational projects, just as before, without any
slippages.

TCS customers are comfortable with this model and want them to take more work that others
are not able to handle. This has given them the confidence to come out with a bold new
Vision 25x25. They believe that by 2025, only 25% of TCS associates will need to work out
of their facilities at any point of time; and every associate will be able to realize their
potential without spending more than 25% of their time in a TCS office. They have received
over 500 emails from customers in recent weeks, appreciating how seamlessly TCS managed
the transition to SBWS, and expressing gratitude for how their teams went above and beyond
to help keep their mission critical systems and their business operations running under very
difficult circumstances.

MAINLY THEIR CUSTOMERS ARE:-

 ABN AMRO Clearing  Mashreq

 ABN Amro  Microsoft Corporation
 Aegon Life  Ministry of External Affairs, India
 American Greetings  Mother Dairy
 Anglian Water  Multi-national BFS company
 Arysta LifeScience  NV Bekaert SA
 Asda  National Employment Savings Trust
 Astra Zeneca  Neotel Telecom
 Australia (VHA)  New York Road Runners
 BG Group  PT Asuransi Allianz Life Indonesia
 Bajaj Finance Limited  Panasonic Corporation
 Bajaj Housing Finance Limited (BHFL)  Posten Norge
 British Telecom  Professional Services Major
 British Telecommunication (BT)  Proximus
 Canon Europe Limited  Proximus PLC
 Cargotec  QIAGEN
 Cell C (Pty) Ltd  Qantas
 Citibank UK  Refinitiv (Formerly Thomson Reuters)
 Clariant  Royal HaskoningDHV
 DNB Norway  Scandinavian Airlines (SAS)
 Delphi-TVS Technologies  Scottish Water
 Department of Excise  State Bank of India (SBI)
 Department of Health , Family Welfare  TDC Group

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 Directorate of Income Tax, GoI  TMILL
 Electricity Distribution Company Ltd  Tata Advanced Systems
 Flowserve Corporation  Tata AutoComp Systems
 GE Power  Tata Communications Limited (TCL)
 GE Power Services  Tata Consultancy Services
 GHCL Limited  Tata Metaliks Ltd.
 Global Media House  Tata Sons
 Globe Telecom  Tata Sons
 Hawaiian Airlines  Tata Steel Europe
 IFFCO  Telecommunications Service Provider
 KLM Royal Dutch Airlines  Trent Hypermarket
 Large European Bank  Tryg Forsikring Denmark
 Leading Financial Services Company  Uganda Revenue Authority
 Lexmark International Inc.  Vedanta
 London Hydro  VersaCold
 MDES  Vodafone Hutchison
 Malaysia Airlines  Voltas
 Marks & Spencer PLC  Wolters Kluwer
  Zain KSA Zee Entertainment Enterprises Ltd.

1.4 COMPETITORS OF THE TCS

Tata Consultancy Services Ltd. operates as an information technology services, digital

and business solutions company.

Regarded as one of the top 35 companies in the world by Forbes, TCS has a market
capitalization of 777,756.78 cr and operates through main 6 segments which are:

 Banking
 Financial Services & Insurance
 Manufacturing
 Retail and Consumer Packaged Goods
 Telecom, Media and Entertainment
 Others

 TCS tops the list with a market capitalization of followed 777,756.78 crore by 3 major
IT giants in India Infosys, HCL technologies, Wipro, and global competitor IBM with

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300352.29crore, 152,507.98 crore, 120382.48 crore , 8.321 lakh cr. market
capitalization respectively.

HCL

An Indian multinational technology company, headquartered in Noida, Uttar Pradesh,

India. Originally a research and development division of HCL, the company has offices in
44 countries including the likes of the US, France, UK etc.

HCL being a home-grown competitor of TCS, operates in sectors like

 Aerospace and defence

 Automotive
 Banking
 Capital markets
 Chemical and process industries
 Mining and natural resources
 Oil and gas
 Retail and telecom
 Life sciences
 Media and entertainment
 Logistics and hospitality etc.

INFOSYS

Another major competitor of TCS which was given it a run for its money on different
fronts is Infosys Limited (formerly Infosys Technologies Limited). The company is best
known for providing best in class business consulting, information technology and
outsourcing services.

Infosys is the second-largest Indian IT company by 2017 revenues and 596th largest
public company in the world based on revenue.

Infosys offers services to companies operating in sectors like finance, insurance,

manufacturing and other domains.

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IBM

A main competitor of TCS is International Business Machines Corporation (IBM). IBM is

an American multinational information technology company that produces and sells
computer hardware, middleware and software.

Some of the main services that IBM provides includes 

 Cloud computing
 Cognitive computing
 Commerce
 Data and Analytics
 IOT
 Mobile and Security

1.5 STRATEGIES – BUSINESS, PRICING, MANAGEMENT

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1.5.1 BUSINESS STRATEGY

In 2017, TCS unveiled its Business 4.0 thought leadership framework2 to guide
customers in their growth and transformation journeys. Their defining behaviours of
successful enterprises in the Business 4.0 era are: drive mass personalization, leverage
the ecosystem, embrace risk and create exponential value. They accomplish this by
harnessing the abundance of resources – compute power, storage, talent, market reach
– created by the convergence of intelligence, agility, automation and cloud.

This framework has resonated very well with customers. A study commissioned by TCS
in FY 2019 showed that over 90% of the surveyed enterprises have adopted at least one
of the their behaviours, and that leaders – who have adopted all their behaviours – are
expecting their strategies to drive over 10% growth over the next three years.

They have augmented their thought leadership in this area, with their unique Location
Independent Agile model and the forward-thinking Machine First™ Delivery Model. TCS’
Location Independent Agile model allows large transformational programs to be
delivered by globally distributed teams working collaboratively in an agile mode,
resulting in significant speed to market benefit to the customer.

To help customers optimize their operations, TCS has been advocating the Machine
First™ approach that embeds analytics, automation and AI deep within the enterprise to
reimagine entire slices of operations at a time to make them lighter, smarter and more
agile, while delivering a superior customer experience.

1.5.2 PRICING STRATEGIES OF TCS

Below is the pricing strategy in Tata Consultancy Services (TCS) pricing strategy:

Tata Consultancy Services has a diverse offering and hence a variable pricing policy.
Through its different pricing models and policies, TCS promises clients - process
improvement, cost reduction, revenue enhancement and timely deliverables. TCS
follows success based pricing model in some of its total outsourcing contracts and
differential pricing model for its ion services, wherein the prices differ as per different
clients. With the help of this, TCS is targeting small towns and all types of customer
bases. Since ion is a combination of hardware, software and network, along with the
services provided by TCS, there is no addition price to be paid for this technology.

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Hence, the pricing strategy in the marketing mix of TCS is basically based on the client
requirements, projects and the scale of operation.

1.5.3 MANAGEMENT STRATEGIES OF TCS

Strong leadership and effective corporate governance practices have been the
Company’s hallmark inherited from the Tata culture and ethos. The Company has a
strong legacy of fair, transparent and ethical governance practices. The Company
has adopted a Code of Conduct for its employees including the Managing Director and
the Executive Directors.

In addition, the Company has adopted a Code of Conduct for its non-executive directors
which includes Code of Conduct for Independent Directors which suitably incorporates
the duties of independent directors as laid down in the Companies Act, 2013 (“the Act”).
The Company’s corporate governance philosophy has been further strengthened
through the Tata Business Excellence Model, the TCS Code of Conduct for Prevention of
Insider Trading and the Code of Corporate Disclosure Practices (“Insider Trading
Code”).

The Company has in place an Information Security Policy that ensures proper utilization
of IT resources. The Company is in compliance with the requirements stipulated under
Regulation 17 to 27 read with Schedule V and clauses (b) to (I) of sub-regulation (2) of
Regulation 46 of Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”), as applicable,
with regard to corporate governance.

1.6 CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES OF TCS

TCS is deeply rooted in all the communities that they work with globally, through a
variety of formal CSR programs and volunteering efforts by employees. They engage in
community initiatives that are designed to create ‘Impact through Empowerment’, in
the areas of education and skill building, health and wellness, and environment. They
also support the restoration of heritage sites and participate in relief operations during
disasters. TCS’ global presence, core IT expertise and large employee base help scale up
social programs. In addition, TCS partners with Tata Trusts, NGOs and various not-for-
profit organizations. All these sustainability initiatives have tangible outcomes, on both

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individuals and communities, and their impact is regularly measured, reported and
improved upon.

TCS’ CSR initiatives reached more than 1.66 million beneficiaries globally, in FY 2019,
once again creating a considerable societal impact in the countries in which they
operate.

1.6.1 EDUCATION AND SKILL BULDING

Education is an integral part of development, and critical to a country’s economic

competitiveness. In India, the Right to Education (RTE) Act guarantees free and
compulsory education for all children between the ages of 6 and 14. While every child in
India has the right to education, there is a huge difference in the facilities available to
children in urban and rural areas.

TCS’ ‘Lab on Bike’ program provides children from low income, disadvantaged
communities and their teachers with fun learning opportunities that foster a scientific
mind-set. The Lab on Bike instructor travels to government schools with a set of science
experiment kits through which he conducts experiments in physics, chemistry and
biology. The Lab on Bike program has been implemented by TCS in 12 schools around
Bengaluru and 10 schools in Ahmedabad, in association with Agatha International
Foundation.

An experiment demonstrating the wave theory in a government school in Odisha. TCS

continues to run several pioneering programs across various Indian states in education
and skill development, which prepare children for a digital future. Launchpad and
Insight are two such initiatives. Launchpad, started in 2016, introduces secondary
school students (aged 10-13 years) to coding logic, using C++ and Python.

It is a gamified approach that helps children develop logical thinking and learn
programming methods. InsighT, launched in 2006, is an IT awareness and enablement
initiative for senior school students (aged 15-17 years) that aims to provide an
understanding of programming, IT and its applications. 13,546 students benefited from
these programs in FY 2019 (9,964 in FY 2018).

TCS supports the Avasara Academy, a residential school for underprivileged girls in
Pune, through the ‘TCS Centre for Entrepreneurship’, to develop leadership potential
among the students.

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TCS’ BridgeIT is a unique program that uses IT as a key enabler in school education,
adult literacy program and the creation of entrepreneurs in rural villages. Technology is
effectively utilized to educate rural communities and provide a platform to develop
ideas and skills that can help increase employability and the standard of living.

1.6.2 HEALTH AND WELLNESS

TCS has provided an integrated Hospital Management System (HMS) and IT

infrastructure which includes a comprehensive web-based solution, to the Cancer
Institute at Chennai and Tata Medical Centre at Kolkata. HMS is a secure and integrated
system that aims to minimize the use of paper for information flow across the hospital.

The Digital Nerve Centre (DiNC) is an innovative platform that leverages digital
technologies to connect to leading cancer research centres and specialists within the
National Cancer Grid. DiNC enables the country’s oncology experts to effectively
collaborate and communicate. TCS in collaboration with Tata Trusts is working towards
the implementation of this platform in the National Cancer Grid hospitals at Tata
Memorial, Mumbai; Cancer Institute, Chennai; Tata Medical Centre, Kolkata and
Regional Cancer Centre, Thiruvananthapuram.

TCS partners with the American Heart Association to support national awareness and
prevention through information sharing and awareness building, particularly aimed at
women. There is an increasing prevalence of cardiovascular disease across the United
Kingdom and Ireland (UK&I). TCS entered into a corporate charity partnership with the
British Heart Foundation (BHF) to help spread awareness on heart health.

Operation Smile provides free surgery for children with cleft lip and palate in remote
areas of China. TCS employees regularly volunteer and provide their services on
medical record and patient image management, translation services for international
medical staff and also help patients who undergo surgery.

1.6.3 ENVIRONMENT

TCS’ commitment towards the environment is driven by an organization-wide

environmental policy that focuses on making a continuing positive impact on the
environment, includes environmental responsibility as a core organizational value, and

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creates awareness among employees. The overall approach adopted aims to mitigate
climate change related risks through resource optimization and impact minimization.

 Energy Conservation and Carbon Management

Energy and carbon continued to be material environmental aspects for their greater
focus on energy reduction and carbon mitigation. This year they further reduced their
carbon footprint by ~8.1% over the prior year, and ~56% over the baseline year FY
2008. Having achieved their 2020 target to reduce the specific carbon footprint by 50%,
they are now working on the next stage of their environmental sustainability targets.

 Water Conservation

TCS has optimized its water consumption through conservation, sewage treatment and
reuse, and rainwater harvesting. All their new campuses are designed for 50% higher
water efficiency, 100% treatment and recycling of sewage, and rainwater harvesting. In
FY 2019, consistent water management measures, consolidation of offices and
increased occupancy at green field projects has helped them to reduce their specific
fresh water consumption by over 5.5% compared to FY 2018.

 Waste Reduction and Reuse

Since, they are an IT services and consulting organization, their facilities only generate
electronic, electrical and office consumables waste, and municipal solid waste. In FY
2019, over 42% of the total food waste generated was treated using onsite composting
methods or bio-digester treatment. All TCS campuses, owned offices and leased offices
that have the required space, have been provided with onsite food waste management
facilities. Dry waste is categorized, segregated and sent for recycling. Garden waste is
composted onsite. Over 275 tons of compost was generated in FY 2019, helping TCS
avoid the use of chemical fertilizers and the resultant soil and groundwater pollution.

1.7 EXPORT/IMPORT

1.7.1 EXPORT OF TCS

Tata consultancy services is a premier company that exports and import goods from
countries including United Kingdom, Singapore, and host of other countries.

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Tata consultancy services has maintained its position as the largest software exporter
from India selling software worth Rs 5503 crore (Rs 55.03 billion) in the International
market in 2003-04 according to latest NASSCOM rankings .TCS on the list of top 20
software and services exporters (excluding ITes-BPO services). Export revenue
constituted 93.3 percent of the total unconsolidated revenue in FY 2019 (92.2 percent
in FY 2018).

1.7.2 IMPORT OF TCS

The Company continues to adopt and use the latest technologies to improve the
productivity and quality of its services and products. The Company’s operations do not
require significant import of technology.

Export revenue constituted 93.4 percent of the total unconsolidated revenue in FY 2019
(92.2 percent in FY 2018).

Foreign exchange earnings and outgo FY 2020 FY 2019

Foreign exchange earnings 128501 119499
CIF value of imports 569 447
expenditure in foreign currency 51748 49336

Source from annual report of TCS 2019-20

1.8 COLLABERATIONS AND EXPANSION PLANS

1. TCS, which had acquired French SAP service provider acquire Alti SA for 75 million
euros (about Rs 533 crore) in 2013, has been focussing on organic growth even as
its global and domestic rivals went on an acquisition spree.

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2. TCS has acquired the business of BridgePoint Group, LLC, a U.S. management
consulting firm catering to the financial services industry, and specializing in
retirement services, through the purchase of select company assets.
3. This acquisition provide TCS' financial services and insurance domain knowledge,
particularly in the area of US retirement services, where BridgePoint's team of
experts currently provide strategic insights and advisory services around growth,
business agility, customer experience and technical transformation.
4. BridgePoint's deep customer relationships and significant industry knowledge will
add to TCS' ability to provide digital solutions and drive transformation in the USD 1
trillion US retirement services market.
5. The US retirement business is complex, so BridgePoint's deep industry expertise and
team of highly experienced consultants will enable TCS to develop a robust
customer-focused retirement services business.
6. TCS has announced an expansion of its long-term partnership with Phoenix Group,
Europe's largest life and pensions consolidator, to drive the growth and
transformation of the Standard Life business and meet the needs of its customers,
workplace clients and their advisers.
7. The expanded partnership will result in the digital transformation of Standard Life's
pensions and savings operations onto the TCS BFSI Digital Platform, powered by TCS
BaNCSTM. This will expand the overall scope by a further 4.2 million policies, taking
the total number of policies managed by Diligenta, TCS' regulated subsidiary in the
UK, on behalf of Phoenix Group, to nearly 10 million.
8. Tata Consultancy Services is seeing greater demand to transform India’s first
generation e-Governance projects, as the government steps up use of such projects,
including the one for income tax filings. On August 31 2019, nearly 5 million people
filed their tax returns online, a record for any single day.

1.8.2 EXPANSION PLANS

1. Tata Consultancy Service (TCS) is preparing to invest significantly in the expansion

plans of its cloud-based learning solution, TCS iON. The cloud-based collaborative
learning platform, TCS iON helps students — in India as well as worldwide — access

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 study material, make submissions and also receive feedback. It helps students
interact with instructors, administrators and learning institutions.
2. TCS is starting a major centre in Patna Bihar capital. Investment by India's largest IT
company in Bihar should promote IT investments in the state."  India's digital sector
and exchanged new ideas shaping a brighter digital future for the country.
3. Tata Consultancy Services (TCS) is revisiting its strategy by raising the size of its
business units, apart from identifying the next billion dollar bets in the digital
services space. The IT firm is planning to raise the size of the business units with
own profit and loss (P&L) accounts to around $400 - $500 million from $100 - $150
million at present.
4. Tata Consultancy Services (TCS, announced that will consolidate its operations in
Eastern Europe, The Middle East, Africa and Latin America into a strategic business
unit and appointed Gabriel Rozman, as Executive Vice President – Emerging
Markets.
 New strategy to diversify revenues and risks, expand business in
emerging markets and explore new sources of talent.
 New Unit will focus on emerging markets across Eastern Europe, Middle
East, Africa and Latin America.

1.9 SWOT ANALYSIS OF TCS

STRENGTHS IN SWOT ANALYSIS OF TCS

1. Clients from diversified markets: TCS has clients from diversified industries such

as Banking, financial services, retail, telecom and media and entertainment etc.
Exposure to diversified business industries dilutes business risks of
overdependence on a single market or industry.
2. Geographic Footprint: TCS has strategically expanded to geographically diversified
markets throughout the globe which includes North America, the UK, Middle East
Europe, Africa and Asia-Pacific. Presence in geographically diversified markets
reduces business risks and creates a strong global image for TCS.
3. Strategically established partnership network: TCS has established the strong
partnership with global companies around the world. It has partnered with
some technology giants such as Adobe, Amazon, Bosch, Dell and HP etc. These

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 partnerships allow TCS to deliver technologically sustainable and innovative
business as well as strategic solutions.
4. Strong portfolio of services offered: TCS has a strong and balanced portfolio of
offered services which includes, Business process services (BPS)
application development and maintenance, IT infrastructure, business intelligence
and much more. Such a strong and diverse portfolio attracts various business clients.

WEAKNESS IN SWOT ANALYSIS OF TCS

1. Legal battles: In 2014, TCS was involved in a legal battle against Epic Systems for
alleged misuse of Epic System’s confidential information. In 2016, TCS was found
guilty and was ordered to pay damages worth $940 million. TCS has opposed the
judgment and challenging it to the higher jurisdiction. Such incidents affect the
image of the company.
2. Decline in performance by Diligent: Diligenta, a subsidiary of TCS has
continuously performed below par. The company is not expected to improve on
performance soon and thus affects TCS’s bottom-line.

OPPORTUNITIES IN SWOT ANALYSIS OF TCS

1. Digital transformational technologies: The world is going digital and hence

business dynamics are also changing to the digital economy. TCS has focused on
digitally transforming itself and provide digital solutions. TCS should look ahead to
spend more on digital transformation technologies.
2. Cloud-based solutions: With the advent of digital transforming technologies and
fast internet connectivity. The world is moving towards cloud based solutions and as
a matter of fact, the spending on cloud services is expected to grow at a CAGR of over
19% in the next 5 years. TCS has a solid infrastructure to provide cloud-based
solutions and hence it is well poised to be benefitted with the demand created.
3. Machine-to-Machine (M2M) solutions: M2M solutions are those which allow
wireless as well as wired communications systems. There is a positive outlook for
M2M solutions in the future and is expected to generate high revenues. TCS has a
comprehensive suite of M2M services which will enable to take advantage of the
demand for M2M solutions.

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4. Enterprise Mobility market: With increasing, mobile worker population and
increased usage of sophisticated mobile devices, enterprise mobility solutions are
expected to be driven by business applications. There is a latent demand for mobility
solutions which is expected to grow at a CAGR of 24.7% till 2022. With TCS’
increasing focus on developing enterprise mobility solutions, it is well positioned to
benefit.

THREATS IN SWOT ANALYSIS OF TCS

1. Immigration restrictions: With stricter immigration laws, increased H-1B visa fees

and changing political circumstances in the US, Indian IT companies are expected to
suffer from it as it will increase its costs and impact profitability and hence this is a
threat to the industry.
2. Intense competition: The IT industry is subjected to intense competition from
companies such as Wipro, Infosys, Accenture, Capgemini and Deloitte etc. This leads
to pricing wars in the industry and limits market share.
3. High attrition rate: The Indian IT industry is subjected to high attrition rate which
increases cost in providing skills and leadership development to new hires and also
impacts the image of the company.

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CHAPTER 2- OVERVIEW OF THE INDUSTRY

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2.1 BRIEF HISTORY OF THE INDUSTRY

Information Technology (IT) sector in India is one of the rapidly growing sectors. Indian
IT sector has a great reputation and brand value in the global markets. Indian IT
industry comprises of Software sector and Information Technology Enables Services
(ITES). Indian IT industry also includes Business Process Outsourcing (BPO) industry.
India is an affordable market destination for software development and IT & ITES
services.

2.1.1 HISTORY AND ORIGIN OF IT INDUSTRY

The journey of Indian IT industry started in 1974, when Burroughs, mainframe

manufacturer, offered Tata Consultancy Services (TCS) to export programmers for the
installation of system software for its US client. But the situation was very worse that no
local business firm was supported and the policy of Indian Government towards private
companies was also very aggressive. The Indian IT industry was started by a Bombay-
based corporation which entered the business with the supply of programmers to IT
companies located overseas.

Till 1984, IT was not considered as an industry and was not given any subsidies. In
1984, some strategic reforms were made and considered IT as an industry. In the same
year, Indian Government introduced a policy, New Computer Policy (NCP), which
consisted of a package of slashed import tariffs on hardware and software. And the
policy also recognized the software exports as a ‘delicensed industry’. Delicensed
industry is eligible for bank finances, free from the license-permit and to set up offshore
units of foreign companies in India.

IT industry in the country has played a major role in placing India on the international
map. The Indian IT industry mainly comprises of instance system Integration, software
experiments, Custom Application Development and Maintenance (CADM), network
services and IT solutions. According to the analysis done by the annual report 2009-
10 ,prepared by the Department of Information Technology (DIT) ,the IT_BPO industry
was expected to achieve a revenue aggregate of US$ 73.1 billion in 2009-10 as
compared to US$ 69.4 billion in 2008-09 , growing at a rate of over 5% . The report even
predicts that the Indian IT-BPO revenues may reach US$ 225 billion in 2020.

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PRESENT AT IT INDUSTRY

In 2019, the global market for software and services is estimated to have grown to $1.5
trillion1 . IT services is estimated to have grown by 3.5% YoY, characterized by a shift to
digital technologies, and adoption of DevOps, and as-a-service models. Business Process
Management grew by 4.5% over the prior year driven by a greater focus on robotic
process automation as customers automate repetitive tasks and focus on strategic work.

2.2 BUSINESS PROCESS OF THE INDUSTRY

A Business process is a collection of linked tasks which find their end in the delivery of a
service or product to a client.   A business process has also been defined as a set of
activities and tasks that, once completed, will accomplish an organizational goal.  The
process must involve clearly defined inputs and a single output. These inputs are made
up of all of the factors which contribute (either directly or indirectly) to the added value
of a service or product. These factors can be categorized into management processes,
operational processes and supporting business processes.

2.2.1 BUSINESS PROCESS OF IT INDUSTRY

IT business processes standardize all the activities of the company related to the
information technology, bringing them to an elevated state of quality and
excellence. With the IT business processes, the services can assure the delivery, no
matter who executes them.

The absence of clearly defined IT business processes increases the chances for errors in
the processes of the company. As a result, in a future replacement of employees, all the
structure would be compromised. In contrast, the presence of an IT governance with
well-modeled processes allows that any employee of the area attends to the projects in
a satisfactory way, even in critical and emergency situations. It works like a business
continuity plan.

IT business processes must be considered as an integral part of the business process

management. Therefore, it has to receive many resources and investments, so they can
be improved and optimized in a continuous way, contributing to the developing and
growth of the business

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1. Client On boarding Process

When on boarding new clients, an agency has to display professionalism, courtesy, and
expertise. If they end up acquiring a big client, the last thing they want to happen is their
team sitting here and wondering. What would be next

If they have a clear, defined client on boarding process, however, that’ll be a thing of the

past. For the sake of an example, let’s look at the case with a marketing agency.

 Schedule an initial meeting. Get to know the client’s business, how the
industry works, how’s the competition, etc.
 Assess company goals & assets. Know what their client wants from them, and
how they can use their strengths to achieve those goals.
 Define KPIs. The client will want to have a way to measure their progress,
making sure that they’re bringing in results.
 Create an action plan. What their team is going to do within the week, month,
year, etc.
 Pitch the client. See if they like the proposed strategy. If not, start over. If they
do, assign all the tasks to the right team members.

2. Content Marketing Process

Content marketing can be a very hectic mess unless they organize it into clear business
processes. Unless they work on this, they’ll end up having 20 work-in-progress articles
lost in limbo, a very confused designer, and a confused follower-base – desperately
waiting for their weekly article.

For the sake of an example, let’s go through a very basic publishing process

 The content writer takes up & finishes the first draft of an article. Includes
descriptions of any custom images that are to be used in the article.
 The marketer gathers influencer contact information, to be used for advertising
and marketing once the article is done.
 The editor proof-reads the article, makes points on grammar, style, spelling, etc.

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  The designer creates custom images as asked, sending them over to the content
writer.
 The writer takes the comments into consideration, fixes any mistakes, and adds
the images to the article.
 The SEO expert makes sure that the article meets the right optimization best-
practices & publishes the article.
 The marketer uses a combination of advertising & email outreach to make sure
that the article is read.

3. Business Process Mapping

Business Process Mapping is pretty straightforward – they probably have a pretty good
idea of how their business works. If they’ve been doing it for a while, then they
definitely know the ins and outs of it!

So, they’d want to put down all their processes on paper. They could either use actual
paper for this, a flowchart software, or workflow management software. From then on
out, they can use the graph to analyse or keep track of their processes.

As a given, the more advanced their tool is, the more benefits they’ll get. Workflow
software, for example, in addition to allowing for mapping, also let’s keep track of the
process in real time.

4. Business Process Improvement (BPI)

Once they have all the processes down, they’ll get an even better idea on how their
business works. That would eventually lead them to initiate a business process
improvement (BPI) campaign – from a top-down view, it’s very easy to spot weaknesses
in their processes. Sometimes they’ll find tasks that are completely useless, others,
they’ll find more efficient ways to do them.

In some cases, they’ll find that some tasks are completely useless and can be skipped. In
others, they might find a much better, faster way to do them.

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5. Business Process Automation (BPA)

One way to improve their business processes is to just put technology into the mix – and
that’s where business process automation (BPA) comes in. Any task that is extremely
menial – that is, too much manual labour– there’s a chance that software can do it much
better and faster.

Say, for example, a team member has to email the person who’s responsible for the next
step of a process. Rather than having to manually do it, business process management
software (BPMS) could do it for them.

6. Business Process re-engineering

In some cases, they’ll realize that their processes are just completely out of date. Rather
than take something old and add up on it, it’s going to be much easier to just completely
re-do them.

Business Process Re-Engineering (BPR) means taking their old processes and finding
new ways to carry them out. This can be with the help of technology, for example.
Instead of manually doing accounting in the form of a physical ledger, they could adopt
some accounting software that makes the old process completely redundant.

A more recent example is using smart contracts for BPR. DNN, decentralized news

network, powers its publishing system through smart contracts. The submitted articles
need to be reviewed by different readers in order to select the best one and push it to
the editors and ultimately to the publishers. Smart contracts can help them to move the
articles through the publishing pipeline, stage after stage, while reducing biases and
increasing efficiency.

SEGMENTS OF INDIA’S IT SECTOR

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 Source from IBEF presentation Feb 2019

2.3 MARKET DEMAND AND SUPPLY – CONTRIBUTION TO GDP –REVENUE

GENERATION

2.3.1 MARKET DEMAND OF IT INDUSTRY

The demand for IT products and services from India will continue to increase as
companies making up the Indian IT/software industry become more advanced and
increasingly standardize their processes, which is inevitable with the increase in the
number of GICs in India, the demand for technical employees in the country is expected
to increase by approximately 12% by 2024. In 2024, many job opportunities related to
cyber security, analytics, applied machine learning, programming, coding, AI, mobile
app development, augmented reality apps design, and more will emerge in India. Mobile
app development and augmented reality apps design, in particular, will provide fresh
graduates in India with many job opportunities.

Now, as companies are maturing in their technology usage, there are demands across
all four IT pillars defined by CompTIA’s IT framework. Software development is the area

33
where most companies expect to place focus in the upcoming year, but there is also
strong demand for cyber security, data, and infrastructure.

2.3.2 SUPPLY OF IT INDUSTRY

The Indian Software development industry has in the last two decades of its growth
focused primarily on the supply of software services to foreign countries as of now
there is widening gap between demand and supply side arising from the IT sector, with
the growing demand of services the IT industry in India is not fully able to supply the
products or services that is demanded. This is due to certain supply side challenges like
lack of talent availability, outbreak of pandemic diseases, etc.

2.3.3 CONTRIBUTION TO GDP

The IT industry is a vital part of India’s economy, and in the fiscal year of 2016/2017, it
generated about 8 percent of India’s GDP alone – a slight decrease from previous years,
when it made up about 10 percent of the country’s economy. Nevertheless, the IT
industry is growing, as is evident by its quickly increasing revenue and employment
figures. IT includes software development, consulting, software management, and
online services, and business process management (BPM).

As the industry in the south Asian continued to flourish, end-user spending on the

market also increased, albeit slowly. IT end-user spending in the country stood at
around 67 billion U.S. dollars in 2013 but has decreased considerably and is estimated
to reach a value of around 17 billion U.S. dollars in 2020. About a third of this spending
in 2019 was estimated to be in the devices market, with telecommunications services
accounting for another third.

Some of the biggest IT service providers in India include IBM and HP, as well as Indian-
based companies, Wipro and Tata Consultancy Services (TCS). Overall, in 2017, the
industry provided direct employment to almost four million people and indirect
employment to more than ten million.

2.3.4 REVENUE GENERATION

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The total revenue generated by the IT and BPM industry in India was over 175 billion
U.S. dollars in 2019. In the year 2014, a revenue of around 118 billion dollars was
generated by the IT industry, which was revitalized by the massive wave of outsourcing
from foreign companies.

The Domestic Market

The IT-BPM sector contributed a share of about eight percent to India’s GDP in fiscal
year 2018. Exports from the sector also increased gradually over the years. The south
Asian country also had a revenue of four billion dollars through the ITeS and BPO
segment in 2018. At the same time, the sector had an export value which was almost
thrice more than the export of software products and engineering services.

2.4 LEVEL AND TYPE OF COMPETITION – FIRMS OPERATING IN THE INDUSTRY

2.4.1 LEVEL AND TYPE OF COMPETITION

 The level of competition in Indian IT-ITeS industry during 2004-05 to 2014-15. For this

purpose, firm-level data is collected from Centre for Monitoring Indian Economy (CMIE)
PROWESS database.. The findings reveal the presence of considerably higher level of
concentration (or low competition) in both the IT and ITeS segments of the industry
during the study period. Moreover, found to be 0.19 and 0.22, respectively in IT and
ITeS markets, which indicate that the IT-ITeS industry was monopolistically competitive
during the study period. In policy front, the study suggests to improve the competition
level by devising policies to promote the entry of new firms in the industry. Government
should formulate policy in the direction to encourage small and medium firms of this
industry to expand their business in the future. Furthermore, keeping in view of the
inherent heterogeneity of this industry, segment-specific policy may be planned for
further improvement of competition level instead of devising a common policy for the
entire industry.

A small number of firms (such as Tata Consultancy Services (TCS), Wipro, Infosys,
Hindustan Computers Limited (HCL), etc.) has been dominating the industry since long,
albeit the entry of new firms over the years. In this regard, policy should be formulated
to help the medium and small firms so that these firms could also be able to grow in the
future, thereby improving the level of competition over time. Keeping in view of the

35
intrinsic heterogeneity of the industry, segment-specific policy should be devised for
enhancing competition in this industry in the future.

2.4.2 FIRMS OPERATING IN THE INDUSTRY

Following are the top IT companies in India which are playing a major role in operating
the IT industry and growth of the economy.

 Tata Consultancy Services Ltd (TCS)

Tata Consultancy Services Ltd (TCS) is an Indian multinational information technology

(IT) service and consulting company. It is one of the top 10 IT companies in India. The
company is headquartered in Mumbai, Maharashtra, India. It is a subsidiary
of Tata Group and operates in 149 locations across 46 countries. It is offering IT,
Business Consulting and Outsourcing Services Worldwide. It is an Indian MNC company
which is a subsidiary of Tata Group. The company was established in the year 1968.

 HCL Technologies Ltd

HCL Technologies Ltd was founded in the year 1976 by Shiv Nadar, and it is
headquartered in Noida, India. It is an Indian Multinational IT service company. The
company’s segments include software services, infrastructure management services,
and business process outsourcing services. HCL Technologies Ltd is offering a wide
range of services including enterprise transformation, engineering, remote
infrastructure management, business process outsourcing, etc. It is among the top 10 IT
companies in India. The company is a subsidiary of HCL Enterprise. It has offices in 44
countries including the United States, France and Germany, and the United Kingdom.

 Infosys Ltd

Infosys Ltd was founded in the year 1981 by N.R. Narayana Murthy. The Indian MNC
company is offering Information Technology, Outsourcing Services, and Business
Consulting. It is among the top 10 IT companies in India. It is headquartered in
Bangalore, Karnataka. The company also provides application development and
management, independent validation, product engineering and management,
infrastructure management, enterprise application management, and support and
integration services.

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 Larsen & Toubro InfoTech Ltd (LTI)

The company was established in the year 1997. It is headquartered in Mumbai,

Maharashtra. It is offering digital & automation solutions, IT Service Management, and
IT Consulting. Its offices are located in top Indian cities as well as North America,
Europe, Middle East, South America, Africa, Middle East, Asia Pacific, etc. The company
is among the top 10 IT companies in India.

 MindTree Ltd

MindTree Ltd was founded in the year 1999 by Subroto Bagchi, Ashok Soota, Namakkal
Parthasarathy, Krishna Kumar Natarajan. Mindtree Ltd is an Indian
multinational information technology and outsourcing company headquartered
in Bengaluru, India and New Jersey, USA. It is one of the top 10 IT companies in India.
The company deals in mobile applications, e-commerce, digital transformation, cloud
computing, data analytics, EAI and ERP. It is offering a wide range of products In-Store
Analytics, Intelligent Video Surveillance, Connected Building, Employee Training &
Micro-Learning and Field Engineer Inspection. MindTree provides services – Digital,
Operation, and IT Consulting.

 Mphasis Ltd

Mphasis Ltd was founded in the year 2000 by Jerry Rao, Jeroen Tas. It is headquartered
in Bangalore, India. The company is offering a wide range of services including IT,
Business Consulting and Outsourcing Services.The company provides architecture
guidance, application development and integration, infrastructure technology and
applications outsourcing services, and application management services. Mphasis is one
of the top 10 software companies in India.

 Oracle Financial Services Software Ltd

Oracle Financial Services Software Ltd was founded in the year 1990. It is a subsidiary
of Oracle Corporation. It is headquartered in Mumbai, India. The company provides a
wide range of services including business consulting, outsourcing services and IT
services. It provides IT Solutions to the Banking Industry. The company’s offerings
cover retail, private wealth management, corporate and investment banking, funds,

37
trade, treasury, cash management, asset management, payments, lending, and business
analytics. Oracle is one of the top 10 IT companies in India.

 Wipro Ltd

Wipro Ltd was founded in the year 1945 in Amalner, Maharashtra. It is headquartered
in Bangalore, Karnataka. Wipro Ltd is among the top 10 IT companies in India. The
company operates through two segments: IT Services and IT Products. The Company’s
IT Services business provides a range of IT and IT-enabled services. The IT Products
segment provides a range of third-party IT products, which allows it to offer IT system
integration services.

 Tech Mahindra Ltd

Tech Mahindra Ltd was founded in the year 1986, and it is headquartered in Pune,
India. Tech Mahindra Ltd is an Indian Multinational provider of IT networking
technology solutions and business process outsourcing to the telecommunication
Industry. The company is one of the top 10 IT companies in India. It is offering a wide
range of solutions.

 Next-Gen Solutions
 Cloud
 ADMS Java & Open Source
 Consulting
 Customer Experience
 Enterprise Architecture
 Enterprises of Future etc.

2.5 PRICING STRATEGIES IN THE INDUSTRY

Software pricing strategy plays a significant role in augmenting software market sales.
It can be interpreted as an important tool in the marketing toolbox which a company
needs to consider before launching a product in the market. The managerial group in
the software industry has conventionally improved their pricing strategies based on
cost related criteria. Cost-based pricing strategies concentrate on the product value to
the customer. Furthermore, they are also focusing on the short-term value to the

38
vendor. On the other hand value based pricing is based on the customer's
understanding of the value of the product. Value based pricing strategies pays
attention on innovating long term value for the customer.

Aim of pricing strategy is to set a price that the customer sees in the product while
meeting profits on investment goals. This paper presents a comprehensive view about
the conventional cost-based approaches to software pricing; these ideas to software
pricing are short-term and place the seller’s interests over the interests of the buyer.

 Cost Based Software Pricing

Cost-based software pricing is one of the most popular methods which rely on the
information provided by the cost-accounting system. This authentic data is generated to
produce operating results, budgets, and financial statements. Marketing and product
managers are trained to price the software to yield a desired return on fully allocated
costs. There is no product approval in a business development plan for a novel market
without considering an lucrative return on investment (ROI).This profitably calculations
ignores the voice of the customer and serves as a layout plan for average market results.
Cost-based pricing strategies can tap the power of the market sellers to force a higher
price on to the seller.

 Cost Based concept of Value

The conventional software pricing model addresses customer value which is often
calculated as profit. Profit is figured out by deducting the software's development cost
from its price (i.e., the total value to the customer). In totality, the value to the customer
is 6 defined in terms of particular needs fulfilment, good will, ease of use, opportunity
costs, the business value of information, or other unmeasured factors.

 Earner Value Concept

Earned value is a related cost-based concept that is used for trailing software’s
adherence to the original project budget. Earned value pays attention on explaining the
cost variances between the amounts allocated for the work and the equivalent dollar
volume of work completed during specified time duration. The cost variances are
noticeable to specific project tasks, which can then be evaluated for corrective action.

39
These cost-based ideas to measure value form the basis of the main software
engineering economics models.

 Issues of Cost based software pricing

Pricing disputes is the most quarrelsome issues that arise between software vendors
and their customers. Pricing resistance originates from high software prices and
perceptions that the vendor puts its own interest ahead of those of the customers. A lack
of trust can result from oppressive, cost-based pricing. As a result of the relatively big
investment in software research and development when compared to other product
costs, software vendors have high fixed cost (i.e., software development) and relatively
low variable costs (i.e., excluding service and support). The situation outcomes make
software product managers to put heavy emphasis on the aims of cost recovery and
rapid return on investment through the pricing mechanism. This pressure leads to
pricing strategies that are not clearly customer-valued oriented.

 Flat Price

Users pay a fixed price for limitless usage of software product. This idea enables
customers to more easily know in advance for what they will pay for the software usage.
The fixed price is usually restricted to a specific user or machine. Many software
offerings to the consumer are priced in this manner. Some level of online support is
typically built for a limited time frame. The main disadvantage to this method is the lack
of flexibility in customizing a price for individual customer based on customers required
values. Some customers will have to pay more than they would like and may be
intended to seek better deals . A fixed-price strategy can be segmented to clasp
discounts for large purchasers, government, and members of preferred buying
organizations.

 Tiered Pricing

Tiered-pricing tries to package software benefits according to user necessities and their
willingness to pay. This idea to pricing is an effort to link software product costs to
detected customer value. IBM is one among the number one software marketer to make
usage of tiered-pricing idea that is based on the class of processors for its mainframe
computers

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 User based Pricing

This is another cost-based pricing method that has the tendency to benefit the vendor
more than the user by maximizing license fee revenues. The charge is based on the
user’s count that utilizes a collection of software features over a given time frame. It
tries to assign costs to a specific number of users or workstations. It is a simple model to
work as compared with tiered-pricing based ideas.

 Value Based Pricing

Software vendors often deal pricing from the requirements to cover costs and attain
profit objectives-often to the loss of their customer relationships. The circular logic of
the cost-based idea where costs sets price and price impacts sales volume throws into
confusion the pricing process. The answer to value-based pricing favourable outcome is
the recognition that the price the customer is willing to pay depends on the customer’s
value requirements, not the vendor's. Buyers make decision about benefits and prices
and select those products that maximize their perceived value. The objective of value-
based pricing is to provide more advantageous pricing by gaining control over value.
That price should, in turn, decide the level of product development cost that the
customer is willing to occur.

Infosys Technologies has developed a new method of pricing software maintenance

projects to make its revenues more effort-based and less manpower dependent. The
company will start offering clients 'ticket-based pricing' as opposed to fixed price and
time and material-based pricing for software maintenance projects. But if a client has
opted for a fixed price model, then even after the application becomes more stable and
the number of requests decreases, the same price has to be paid. Ticket-based pricing
will give them the flexibility to change that and reduce the total cost of ownership.

Wipro offers two core pricing models for implementation:

Pricing Model 1 — capacity-based this model is based on the minimum capacity

required by the client and additional costs to cover the additional capacity required to
fulfil the occasional peaks in demand.

Pricing Model 2 — element-based/object-based Wipro has also established an element-

based or component-based pricing mechanism to deliver services from the factory. For

41
example, if the factory has been set up to deliver SAP reports, interfaces, customizations,
enhancements, and forms, Wipro can provide the price for delivering each of the
components. Wipro also offers outcome-based pricing and sees that a clear direction is
to move to a business-linked pricing model. Some examples are fixed plus outcome-
based.

2.6 PROSPECTS AND CHALLENGES IN THE INDUSTRY

The IT industry in India employed around 4 million people in 2017,  up 170k from the
previous year. Much of the employment is concentrated at the large firms. For example,
Tata Consultancy Services (TCS) employs over 275k people, and Infosys employs 156k.

According to the National Association of Software and Services Companies (NASSCOM),

the IT sector in India only grew by 5% in 2018. Furthermore, hiring rates have
decreased by around 40% in the last three years. This slowdown is being felt by even
the leading IT companies, who are starting to lay off employees. For instance, Wipro
has dropped 600 employees, Cognizant has cut at least 6,000 jobs, Tata Teleservices
fired 500-600 employees, and Aircel handed pink slips to more than 700 employees.

2.6.1 PROSPECTS IN THE IT INDUSTRY

India is the topmost offshoring destination for IT companies across the world. Having
proven its capabilities in delivering both on-shore and off-shore services to global
clients, emerging technologies now offer an entire new gamut of opportunities for top
IT firms in India. Export revenue of the industry is expected to grow 7-9 per cent year-
on-year to US$ 135-137 billion in FY19. The industry is expected to grow to US$ 350
billion by 2025 and BPM is expected to account for US$ 50-55 billion out of the total
revenue.

The global sourcing market in India is continuing to grow at a faster pace. The global IT
services industry is currently going through a transition phase from traditional to
digital transformations like cloud computing, analytics, artificial intelligence and IoT.
India is the leading sourcing destination across the world, with about 55 per cent
market share of the $200 billion global services sourcing business in 2017-18.

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AT FUTURE

 Digital transformation is a huge opportunity

These business transformations are creating a huge opportunity for IT services

companies. Nasscom projects the size of digital transformation businesses at around
$470 billion by 2023. The markets are likely to grow at a CAGR of 18.5 per cent over
next five years. The industry’s exports increased to $126 billion in FY18 while domestic
revenues rose to $41 billion. Indian IT sector's core competencies and strengths have
attached significant investment from major countries.

 Higher investment to help build robust infrastructure

Leading Indian IT firms like Infosys , Wipro , TCS and Tech Mahindra are diversifying
offerings and showcasing leading ideas in cloud computing and artificial intelligence to
clients using innovation hubs and research & development centres in order to create
differentiated offerings.

 By 2022, India’s digital economy have the potential to reach US$ 4 trillion, as the
Indian Government estimate it US$ 1 trillion.
 By 2025, Indian IT and BPM industry is expected to grow to US$ 350 billion and BPM
is expected for US$ 50-55 billion out of the total revenue.
 By 2026, E-commerce market in India is set to grow US$ 200 billion gross
merchandise values by 30% annually.
 Also, the government has set up a Rs 5,000 crore fund for realising the potential of
these champion service sectors. As a part of Union Budget 2018-19, Niti Aayog is
going to set up a national-level programme that will enable efforts in artificial
intelligence and will help leverage AI technology for development works in the
country.

2.6.2 CHALLENGES IN THE IT INDUSTRY

 H1-B Visas

The H1-B visa is a program that allows companies based in the US to temporarily
employ highly skilled professions from other countries. This year, the Trump
administration changed the policy of issuing H1-B visas. Unfortunately, the new

43
procedure makes it difficult for companies to prove that the H1-B worker comes with
specific and non-speculative qualifying assignments in a certain occupation.

According to the USCIS (US Citizenship and Immigration Services), nearly 75% of H1-B
visa holders are Indian citizens.

The new H1-B policy is negatively impacting the IT industry in India and people looking
to find jobs in the US. There are several small and medium enterprises in India that rely
on the US market and H1-B visa.

Also, the new policy states that the minimum salary of an H1-B visa holder should be a
minimum of $130,000. Given this high salary, understandably, a lot of companies in the
US now opt to hire Americans.

 Economic Slowdown

The IT Industry in India draws most of its clients from Western countries like the US,
the UK, Spain, and Canada. In the last few years, these Western countries have faced
slowing economic growth, which has hurt the growth of the IT industry in India.

 Data protection and privacy rules

The new data protection and privacy rules enforced by other countries are preventing
Indian companies to serve in those countries. For example, the European Union’s GDPR
(General Data Protection Regulation) law that became effective in May 2018. GDPR is
applicable to all the companies that operate in the EU or have their customers in the
region – any company that deals with the personal data of European customers need to
comply with GDPR rules.

Since not all the IT companies in India can comply with GDPR and other data protection
rules, many had to stop serving EU customers. As mentioned above, most of the clients
of the Indian IT industry are from Western countries, and many clients are choosing
development options closer to home. GDPR is preventing some India tech companies
from working with European clients.

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 Domestic Challenges

Today, traditional business models have become outdated. It is the era of digital
transformation, where companies around the world are embracing modern
technologies like cloud computing, artificial intelligence (AI), the Internet of Things
(IoT), and block chain. These technologies help them reduce costs, accelerate time to
market, save time and increase employee productivity. However, Indian organizations
are slow in adopting these technologies. They are still stuck with the traditional models.
This is because of the lack of skilled employees, conventional infrastructure, as well as
restrictive regulations.

In India, more than 400,000 students graduate every year. Yet, only 20% of them get
employment. This is because the universities and colleges are focused on providing
degrees rather than enhancing student skills. This has created a gap between the supply
and demand.

 Negative reputation around the world

India’s IT giant, TCS was slammed by a penalty of $420 million by the US court in April
2016. The US-based company Epic Systems had accused TCS of stealing trade secrets,
confidential information and data that belonged to Epic.

Infosys paid a penalty of $1 million for violating the visa and immigration rules in the
US. The company was accused of employing foreign workers in New York without
paying taxes and wages.

TCS and Infosys are the pillars of the IT industry in India. Such incidents negatively
impact the image of the Indian IT industry in the global market.

45
2.7 KEY DRIVERS IN THE INDUSTRY

IT Sector to Be Driven By the Strong Demand and Indian Expertise

 Global BPM spending estimated to rise and reach to US$ 233 billion by 2020.

 Tax holidays for STPI and SEZs.

 More liberal system for raising capital, seed money and ease of doing business.

 In the Interim Budget 2019-20, the Government of India announced plans to launch
a national programme on AI* and setting up of a National AI* portal.

 Government of India has identified Information Technology as one of the 12

champion service sectors for which an action plan is being developed. Also, the
government has set up a Rs 5,000 crore (US$ 745.82 million) fund for realising the
potential of these champion service sectors.

 Nasscom has launched an online platform which is aimed at up-skilling over 2

million technology professionals and skilling another 2 million potential employees
and students.

 Strong mix of young and experienced professionals.

 IT service giant DXC Technology has decided to set up its first global analytics unit in
Bengaluru to leverage the skill set that India offers.

 Increasing adoption of technology and telecom by consumers and focused

government initiatives leading to increased ICT adoption.

Export to Remain Robust as Global IT Industry Maintains Growth

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 Export revenue from the industry has grown at a CAGR of 12.25 per cent t oUS $ 126
billioninFY18 from US$ 50 billion in FY10.
 Total export revenue of the industry is expected to grow 7-9 per cent year-on-year
to US$ 135-137 billion in FY19.

Digital Exports to Be a Major Growth Driver

 Global digital spend is expected to increase from US$ 180billion in 2017 to US$ 310
billion by 2020.
 India’s IT industry is increasingly focusing on digital opportunities as digital is
poised to be a major segment in the next few years. It is also currently the fastest
growing segment, growing over 30 per cent annually.
 Export revenue from digital segment already forms about 20 per cent of the
industry’s total export revenue. The figure was estimated at US$ 22-25 billion in
FY18.
 Revenue from digital segment is expected to comprise 38 per cent of the forecasted
US$ 350 billion industry revenue by 2025.

India has become the digital capabilities hub of the world:

 More than 8,100 firms offer digital solutions.

 Digitally skilled talent pool of 450,000-500,000.
 75 per cent of global digital talent in India.

Indian Talent Pool Ready To Take IT Sector To Next Level

 Availability of skilled English speaking workforce has been a major reason behind
India’s emergence as a global outsourcing hub.
 The number of engineering graduates has increased from 651,000 in 2013 to an
estimated 779,000 in 2017 and is further expected to grow to 802,000 by 2020.
Indian IT industry is expected to add around 250,000 new jobs in2019.

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 Employment in the sector reached 3.97 million in 2017-18. An addition of around
105,000 was witnessed in FY18. Online hiring activity in IT software sector
increased 28 per cent year-on-year.
 India BPO promotion scheme was approved under Digital India programme. It aims
to create employment opportunities for the youth and promote investments in the
IT&ITeS industry. Under the scheme employment has already been created for more
than 10,000 individuals.
 India’s top 10 Information technology companies added about 114,390 engineers to
its workforce in 2018 against 22,156 in 2017.

SEZs to Drive It IT Sector; Tiers II Cities Emerge As New Centres

 IT-SEZs have been initiated with an aim to create zones that lead to infrastructural
development, exports and employment.
 As of January 22, 2019, there were 231 exporting SEZs across the country.
 Over 50 cities already have basic infrastructure and human resource to support the
global sourcing and business services industry. Some cities are expected to emerge
as regional hubs supporting domestic companies.
 Software Technology Parks of India (STPI) has set up 57 centres across the country
which provide single window clearance and infrastructure facilities. Under STP
scheme, STP units can avail Excise Duty exemptions on procurement of indigenously
manufactured goods.

2.8 STALWARTS IN THE INDUSTRY

2.8.1 STALWARTS IN THE INDIAN IT INDUSTRY

 Tata Consultancy Services – CEO Rajesh Gopinathan

Rajesh Gopinathan is the Chief Executive Officer and Managing Director of Tata
Consultancy Services (TCS), a leading global IT solutions and consulting firm.
He has played a key role in helping TCS become a USD 22 billion global company. With
over 448,000 consultants, TCS is one of the largest private sector employers globally

48
and was recognized as a Global Top Employer for the fifth consecutive year, with the
highest retention rate in a competitive industry.
Under Rajesh’s leadership, the market capitalization of the company crossed USD 100
billion during April 2018, making TCS the most valuable company in India. TCS was
recognized as the fastest growing brand in the IT industry for 2020 with its brand value
increasing to USD 13.5 billion, thus consolidating its position as one of the top 3 IT
Services brands for the second year in a row.
 Infosys – CEO Narayana Murthy

Mr. Murthy founded Infosys in 1981. Infosys is, today, a highly-innovative software
services global company listed on NYSE in the US and on the Bombay Stock Exchange in
Mumbai. Mr. Murthy conceptualized, articulated and implemented the Global Delivery
Model (GDM) which has become the backbone of the Indian software industry. GDM is
based on collaborative distributed software development principles and has resulted in
the delivery of superior quality software to global customers delivered on time and
within budget. Mr Murthy also introduced the concept of 24-hour work day to the
world.

Under Mr. Murthy’s leadership, Infosys became the leader in innovation in technical,
managerial and leadership training, software technology, quality, productivity,
customer focus, employee satisfaction, and physical and technological infrastructure.

Infosys contribution to the growth of IT industry has been immersed and “The Time”
magazine described him as the “father of IT sector”. He has led key corporate
governance initiatives in India .He is an IT advisor to several Asian countries .He has
been honoured with several awards for his contribution to IT sector in India. NR
Narayana Murthy’s greatest contribution to Indian business is not the creation of
Infosys .One of the India’s most successful companies .It is the creation of a “possibility”
that people from humble backgrounds can create multibillion-dollar companies only on
the basis of a vision, passion and hard work.

Salil parekh is a current CEO of Infosys, he have served with commitment and integrity
to deliver a major business transformation in the large, complex organisation. Over the

49
past two years, those who have worked with him know that he operate with
inclusiveness and have no tolerance for divisiveness of any form.

 Wipro – CEO Abidali Z. Neemuchwala

Abidali (Abid) Z. Neemuchwala is Chief Executive Officer and Managing Director of

Wipro Limited. He oversees over $8 billion in revenue and more than 160,000
employees serving clients across six continents.

Previously as the COO, Abid spearheaded several initiatives that helped create a more
nimble and agile organization, and accelerated Wipro’s ability to not only respond to
customers in the digital age, but also ensure deeper employee engagement. 
Abid has over 25 years of experience in the IT services industry, with deep operational
knowledge and broad strategic insight in building and scaling businesses. He is an
advocate of change and believes simplification of processes, belief in people and
customer centricity is the key to success. Prior to Wipro, Abid has held key leadership
roles with Tata Consultancy Services, in business, technology, sales, operations and
consulting. He was recognized as the BPO CEO of the year in 2010. In 2012, he was
recognized for his contribution to the IT services industry by the Shared Services
Organization of IPOC.

 HCL Technologies – CEO C Vijayakumar  

C Vijayakumar (CVK or Vijay) is the President & Chief Executive Officer of HCL
Technologies, a US$ 9.94 billion global technology company. Led by 149,000+
professionals working across 46 countries across the globe, HCL helps forward looking
enterprises re–imagine their businesses through transformative Technology Solutions
and Services.

As the company’s CEO, Vijay has spearheaded HCL’s initiatives to leverage the
transformative nexus of forces like Digitalization, Internet of Things, Cloud, Cyber
security and Artificial Intelligence through a strategic blueprint called ‘Mode 1-2-3’. His
very recent efforts on adding products and platforms to the company’s portfolio have
already resulted in a billion-dollar run-rate for the business, the fastest acceleration of
its kind in the industry.

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Vijay joined HCL nearly 25 years back as a member of the core team that designed and
implemented India’s first ever fully automated trading network at the National Stock
Exchange. With a strategic vision and global outlook, he relentlessly reinvented himself
to emerge as a leader who could span a breadth of technologies and deftly navigate the
shifting industry landscape.

2.8.2 STALWARTS IN THE IT INDUSTRY IN GLOBAL PERSPECTIVES

 Google – CEO Sundar Pichai

India-born Sundar Pichai was named as Google CEO on August 10, 2015.
He is responsible for the launch of the dominant Chrome web browser, and was
previously the product head for Android, Chrome, Maps, and other popular Google
products.
Google hired Pichai in 2004 to lead development of Google Toolbar and then Google
Chrome. At the company's I/O developer conference in 2011, he launched the Chrome
OS and Chrome book to much fanfare. In 2013, Pichai became the leader of the Android
operating system, which powers smartphones worldwide. In 2014, he was appointed to
lead product and engineering for all of Google's platforms, which included search as
well as applications such as maps, Android and Gmail. Pichai was announced as the CEO
of Google in 2015, when the company was reorganized into Alphabet. He became the
CEO of Alphabet in December 2019.

 Adobe – CEO Shantanu Narayen

Shantanu Narayen is chairman, president and chief executive officer of Adobe, one of
the largest and most diversified software companies in the world.
Adobe’s mission is to change the world through digital experiences, serving a large
customer base from students to business communicators to the world’s largest
enterprises. As CEO, Shantanu has transformed the company into an industry innovator
by pioneering a cloud-based subscription model for its creative suite, establishing the
global standard for digital documents and creating and leading the explosive digital
experience category. Today, he’s driving the company’s strategy to unleash creativity
for all, accelerate document productivity and power digital business.

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 Under Shantanu’s leadership, Adobe has achieved record revenue and industry
recognition for its inclusive, innovative and exceptional workplace, including being
continuously named a Great Place to Work and a Most Admired Company by Fortune.

 Microsoft – Satya Nadella

Satya Nadella is Chief Executive Officer of Microsoft. Before being named CEO in
February 2014, Nadella held leadership roles in both enterprise and consumer
businesses across the company. Joining Microsoft in 1992, he quickly became known as
a leader who could span a breadth of technologies and businesses to transform some of
Microsoft’s biggest product offerings.

Most recently, Nadella was executive vice president of Microsoft’s Cloud and Enterprise
group. In this role he led the transformation to the cloud infrastructure and services
business, which outperformed the market and took share from competition. Previously,
Nadella led R&D for the Online Services Division and was vice president of the Microsoft
Business Division. Before joining Microsoft, Nadella was a member of the technology
staff at Sun Microsystems.

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 CHAPTER 3

INDUSTRY ANALYSIS – PORTER’s FIVE FORCES MODEL/ ENVIRONMENT

SCANNING (PEST ANALYSIS)/ CAMEL’s ANALYSIS (FOR BANKING)

53
3.1 PORTER’s FIVE FORCES MODEL FOR IT INDUSTRY
porter’s Five Forces analysis, following directly from the positioning of strategy is
clearly one of the most popular and powerful tool for anyone to understand the factors
affecting profitability in any industry and how then should an organization position
itself to attempt to maximise profitability. Building on the framework, they add
variables that affect the IT Industry landscape and headwinds that shape the future of
the industry.

Availability of
Substitutes

Bargaining Power Existing Bargaining Power

of Suppliers competition of Customers

Threat of New
Entrants

 Existing competition:

The IT Industry landscape is characterized by intense completion for conventional IT

services: Application Development & Maintenance, IT Infrastructure Management
Services, Network Management Services, Data-center Services etc. leading therefore to
commoditization. There are several firms in the market offering similar services and it
is difficult to differentiate based on these service offerings. The existing competition
comes from both domestic players (Infosys, TCS, Wipro, HCL technologies, Tech
Mahindra, Mindtree and so forth) and international ones (IBM, Accenture, Capgemini,
Cognizant and so forth).

It is in the context of non-conventional services, i.e. the ones focused (Digitization) on

emerging technologies and trends such as Analytics, Cloud computing, Social Media,

54
Enterprise Mobility, Internet of Things etc. where the opportunity for differentiation
through niche-specialization occurs. Another argument might be for industry-vertical
specialization but the major buyers (in terms of Industries) for instance Banking &
Financial Services (BFSI), Manufacturing, Energy & Utilities etc. are well catered to and
it would be easier to think of IT companies as portfolios of verticals (across clients)
especially when considering growth potential (with the growth in an industry
benefiting the IT service provider that draws most revenues from the industry in
question). Vertical specialization therefore will only be beneficial for industries going
through rapid change (Telecom for instance) or through rapid growth caused by
external factors like government regulation.

 Bargaining power of customers:

For conventional IT services, bargaining power of the buyer is large and the possibility
of pressure on rates exists. The buyer, having worked with both with international IT
providers as well as Indian ones is largely the price setter and has negated (to a large
extent) the offshore advantages through mature procurement and global delivery. The
international IT firms too have negated the advantage enjoyed by Indian IT companies
through captive centres in India and globally. In this industry, in case of conventional IT
services, the buyer is king.

In case of non-conventional services, i.e. those that cater to emergent technologies and
technology trends (in Data Analytics or Enterprise Mobility for instance) there is
potential for differentiation and higher margins. Also this is the case for non-
conventional, partnership-style engagements where both risk and rewards are higher.

 Bargaining Power of Suppliers:

The bargaining power for suppliers is very low and since high-standardization exists,
there is little scope of suppliers having any clout. The suppliers consists of IT
Infrastructure providers (Servers, computers etc.), Recruitment firms, Office Space
Suppliers etc.

 Threat of New Entrants:

In context of the highly commoditized IT services, there is little threat of new entrants.
That said, the Industry is also characterised by high people dependence and therefore

55
can see veterans detach from existing companies to invest in new ventures. An example
of this is Happiest Minds, which was started by a co-founder of an existing IT provider.
The newer technologies allow the possibility of new niche players that are not
dependant on size or experience constraints.

 Availability of Substitutes:

There are no substantial substitutes to IT services apart from Internal IT departments,

which have lost clout over the years and are ever thinner in numbers and significance.
One argument for internal IT is retaining control over pertinent aspects of business but
the argument against would be since the main business of the company is not IT
services, it should outsource as much as possible and focus on future growth in core
areas. Over time there has been a steady decrease in in-house IT development and
maintenance with more and more being outsourced and the internal IT staff has settled
into a supervisory (program management) role.

This has been a mixed bag for newer services as well since internal specialization is
very low, most of the work is outsourced. For critical areas, governance has been
retained in house and this trend seems to have found favour with most large enterprises
worldwide. Broadly speaking the market for conventional services is highly
commoditised with potential for differentiation concentrated around niche expertise in
new technologies and trends (SMAC + Internet of Things) and around non-conventional
engagements (revenue/profit share, risk-reward models). It is unlikely that the market
for conventional services will vanish overnight but the future promises to hold a highly
modified view.

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CHAPTER 4

DISCUSSIONS

57
4.1 OBJECTIVE ASSESSMENT

Market size of Indian IT Industry is advancing and showing significant growth.

The growth of the IT industry in India is unprecedented across the economies of the
world. All the sub-sectors of this industry (hardware products have relatively seen less
progress) have made strides in revenue growth in the last two decades and fueled the
growth of the Indian economy. The rapid advancement within the IT industry and
liberalisation policies such as reducing trade barriers and eliminating import duties on
technology products by the Government of India are instrumental in the growth of this
industry. Also, various other government initiatives like setting up Software Technology
Parks (STP), Export Oriented Units (EOU), Special Economic Zones (SEZ) and foreign
direct investment (FDI) have helped this industry in achieving a dominant position in
the world IT industry.

In the present time, when the COVID-19 pandemic has grappled the whole world and
economies have been hard hit. Indian IT industry is still showing positive signs and has
the resilience to overcome this unprecedented tragedy. It has emerged as a global
economic force and a major contributor to the Indian economy in particular and the
world in general. This article tries to outline how the Indian IT industry has evolved
over the years and its prominent role in boosting Indian’s growth.

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Tata Consultancy Services

Tata Consultancy Services is an IT services, consulting and business solutions

organization that has been partnering with many of the world's largest businesses in
their transformation journeys for over 50 years. India's largest multinational business
group, TCS has over 448,000 of the world's best-trained consultants in 46 countries.
The company generated consolidated revenues of US $22 billion in the fiscal year ended
March 31, 2020, and is listed on the BSE (formerly Bombay Stock Exchange) and the
NSE (National Stock Exchange) in India.

TCS' Response to Covid-19

Ensuring Business Continuity for Customers

TCS works with more than 1,000 organizations across the world, helping keep their
systems and operations up and running. The company's software and solutions power
the financial backbones of several countries. It runs the technology for some of the
largest health care and pharmacy companies, retailers, telcos, utilities, governments and
public services organizations – whose continued functioning is all the more critical
during times of crisis. In response to the lockdowns, the company launched a massive
program to ensure business continuity of its services using its Secure Borderless
Workspaces model, which allows TCS associates to work remotely from the safety of
their homes, while continuing to provide uninterrupted support services to their
customers.

Analysis of revenue growth

 TCS has historically grown much faster than the market. In the latest five-year
period, while the market for IT-BPM services expanded by a CAGR of 2.4% (IT
Services CAGR: 2.3%), TCS had a CAGR of 7.3% in USD terms.
 One reason for the outperformance is market share gains on account of superior
capabilities, better execution, higher customer satisfaction and greater participation
in their customers’ growth and transformation spends.

59
 Annual revenue growth %
19

Fy 2018 Fy 2019 Fy 2020

 On a reported basis, TCS’ revenue grew 7.2% in FY 2019 -2020, compared to 19.0%
in the prior year. Much of the year on year deceleration is on account of the lesser
currency benefit received in FY 2019 -2020 (7.6% currency benefit in FY 2019 vs
0.1% benefit in FY 2020). Additionally, there was volatility in demand in the
financial services and retail verticals.

TCS verticals

TCS considers industry verticals as its go-to-market business segments. The five key
vertical clusters are: Banking, Financial Services & Insurance (BFSI), Retail and
Consumer Business, Communications, Media and Technology (CMT), Manufacturing and
Others. The last category includes Life Sciences and Healthcare, Energy, Resources and
Utilities, Public Services and others.

Industry vertical Growth

 The impact of slowing revenue from the banking, financial services and insurance
(BFSI) segment is more prominent for Tata Consultancy Services (TCS) compared
with the peers, including Infosys and HCL Technologies This is expected to shrink
the valuation premium that the stock of TCS enjoys over peers in the near term.
The revenue of TCS, the country’s largest software exporter, grew by 6.9 per cent
year-on-year to $16,588 million during the period while Infosys posted 9.7 per cent
growth in the top line at $8,739 million. For HCL Tech, revenue shot up by 16.3 per
cent to $7,392.6 million helped by revenue from acquired businesses. Wipro the

60
 fourth largest IT company, reported the slowest growth of 1.1 per cent in revenue at
$6,182.5 million.
 The BFSI vertical contributed 30.9 per cent, 31.5 per cent, and 21.6 per cent to the
revenue of TCS, Infosys, and HCL Tech, respectively. Given the management
commentaries for the December quarter, the BFSI vertical is expected to show
sluggishness in the near.
This will continue to impact TCS more since it generates over 46 per cent revenue
from BFSI and retail, which grew in single digits at over 5 per cent year-on-year in
the December quarter. Hence, they dragged the overall growth even though
verticals, including communications, life sciences and manufacturing, which
together contributed over 24 per cent to the top line, grew by more than 9 per cent
each. For Infosys and HCL Tech, the faster growing verticals contributed more to the
revenue growth.

Key Priority during Pandemic

Responding with Speed and Agility

As the pandemic spread, TCS priority was to safeguard the health and well-being of
their employees while continuing to support their customers’ mission critical activities
globally.

The lockdowns tested the agility, resilience and adaptability of their delivery model.
They responded to the challenge with speed and agility, and have emerged stronger,
with their model now proven to be able to adapt to even extreme shocks. From a highly
centralized model, with large campuses accommodating thousands of employees, they
were able to switch to an extreme form of distributed delivery, with 90% of our
448,000-strong workforce enabled to work remotely, in a matter of days. They did not
just enabled remote access for their associates but also calibrated their project
management framework and security posture so that work could be properly allocated,
governed, and reported, while maintaining their stringent security controls, and pivoted
into a new operating model that we call Secure Borderless Workspaces™ (SBWS™).

Using SBWS, we have been able to continue supporting their customers not only in their
mission critical operations but also their transformational projects, just as before,
without any slippages.

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Research and innovation has always been a strength for TCS. "Once again, during the
COVID-19 crisis, they are leveraging the TCS R&D infrastructure to run multiple threads
looking for opportunities to support the governments, both India and abroad,"
some of these include examples such as COVID-19 patient tracker, creating a quick and
light platform for clinical trials systems to rapidly collate effectiveness data in
collaboration with pharma and medical institutions, drug molecule discovery using
their patented technology and frameworks, exploring promising ideas for affordable
and effective ventilators, and kits. SR HRS.

Dividend Summary

For the year ending March 2020 Tata Consultancy Services has declared an equity
dividend of 7300.00% amounting to Rs 73 per share. At the current share price of Rs
1983.20 this results in a dividend yield of 3.68%.

The company has a good dividend track report and has consistently declared dividends
for the last 5 years.

In the below table we can view Announcement Date, Effective Date, Dividend Type
(Interim, Final and Special), and Percentage of Dividend given information for Tata
Consultancy Services Ltd.

Dividend Declared for 2018 to 2020

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Announcement Effective
Date Date Dividend Type Dividend % Remarks
Rs.6.0000 per
06-04-2020 03-06-2020 Interim 600% share(600%)Final
Dividend
Rs.12.0000 per
11-03-2020 19-03-2020 Interim 1200% share(1200%)Interim
Dividend
Rs.5.0000 per
10-01-2020 23-01-2020 Interim 500% share(500%)Third
Interim Dividend

Rs.40.0000 per
10-10-2019 17-10-2019 Special 4000% share(4000%)Special
Dividend

Rs.5.0000 per
30-09-2019 17-10-2019 Interim 500% share(500%)Second
Interim Dividend
Rs.5.0000 per
28-06-2019 16-07-2019 Interim 500% share(500%)Interim
Dividend
Rs.18.0000 per
12-04-2019 04-06-2019 Final 1800% share(1800%)Final
Dividend

31-12-2018 17-01-2019 Interim 0% Third Interim Dividend

Rs.4.0000 per
11-10-2018 23-10-2018 Interim 400% share(400%)Second
Interim Dividend.
Rs.4.0000 per
29-06-2018 17-07-2018 Interim 400% share(400%)Interim
Dividend
Rs.29.0000 per
19-04-2018 31-05-2018 Final 2900% share(2900%)Final
Dividend
(source from the economic times)

Market leaderships

 The market capitalization of TCS is 752428.18 Cr, while market capitalization of

Infosys is 301225.40 Cr.
 According to the market cap, TCS is India’s second largest company after
Reliance Industries Ltd.
 In 1990-2000, market cap of Infosys was greater than that of TCS. But over the
years, TCS has shown the dedicated and visionary leadership and became a
market leader now. Thus the market cap of TCS is around 2.5-3 times that of
Infosys as of today.

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TCS’ Corporate Social Responsibility (CSR)

 The commitment stems from the 151-year-old legacy of the Tata Group and the
founder’s vision that: In a free enterprise, the community is not just another
stakeholder in business, but is in fact the very purpose of its existence.
 TCS’ vision is to empower communities by connecting people to opportunities in the
digital economy. The company has focused on education, skilling, employability and
village entrepreneurship, to help individuals and communities bridge the
opportunity gap. In addition, it supports the health, wellness, water, sanitation and
hygiene needs of communities.
 The company’s approach is to support large scale, sustainable, multi-year programs
that build inclusive, equitable and sustainable pathways for youth, women and
marginalized groups and which can have a strategic impact on the community. In
India, these programs are aligned with the Government of India’s Affirmative Action
Policy and the Tata Group’s Affirmative Action Program.
 In FY 2020, the global community initiatives of TCS reached more than 840,000
beneficiaries. TCS’ purpose-driven worldview is shared by its employees who
contribute their time and expertise for social and environmental causes in their local
communities. In FY 2020, TCSers contributed more than 780,000 volunteering
hours.
 Over 2,500 children returned to a new school due to the efforts and contributions of
TCSers worldwide, who collaborated with ´Strong Mexico´ campaign, developed to
provide aid and support to the victims of the 2017 earthquake.

Employee Matrix

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 Employee Matrix
500000 16.00%

450000 14.00%
400000
12.00%
350000
10.00%
300000

250000 8.00%

200000
6.00%
150000
4.00%
100000
2.00%
50000

0 0.00%
2016 2017 2018 2019 2020

 The Company had a net addition of 24,179 employees globally, taking its total
employee count to 448,464. Fuelled by inclusive hiring and heavy investment made
to mentor and coach women at all levels, women currently account for 36.2 percent
of the workforce, making the Company one of the largest employers of women in the
world.
 An evolved on boarding model helped the Company to effectively integrate
associates acquired through a strong localization focus. The diverse workforce
represents 144 nationalities across 46 countries. The reimagined approach to
learning and development has helped the Company train over 335,000
employees on digital technologies and over 417,000 employees on Agile
methodologies.

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  The Company’s internal employee satisfaction survey PULSE showed the highest
employee satisfaction and engagement scores in the last 12 years.

Employee Attrition

Comparison of 2 quarters

 TCS has reported an escalated employee attrition at 12.2 per cent in the December
quarter compared with 11.6 per cent in the previous quarter. While its headcount
dropped by 4,063 sequentially to 4.5 lakh employees, the management attributed
this to the uneven hiring trend for the current fiscal wherein the first two quarters
reported higher recruitment.

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 This is evident from the high retention rates and improved engagement levels of the
associates. Attrition in FY 2020 was 12.1 percent for IT Services.

Investors

TCS is seen as a benchmark in transparency and disclosures, publicly

communicating its longer-term strategy, qualitative aspects of the demand outlook,
risks and opportunities. The company has a robust investor outreach program
through which it engages with a broad range of investors domestically and overseas.
These efforts towards removing information asymmetries and helping investors
arrive at a fair valuation of the company’s stock have resulted in TCS topping various

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 regional investor polls conducted by publications such as Institutional Investor,
FinanceAsia and AsiaMoney.

Brand Value

According to Brand Finance, TCS’ brand value grew 476% from 2010-2020, the
highest percentage growth in the IT services industry; year-on-year brand value
grew from $12.8bn to $13.5bn in FY 2020, making TCS the fastest growing among
the top three IT services brands for the second year running.

TCS share price has shown a significant growth in 5 years.

The IT Industry in India has grown with an exceptionally high growth rate

The IT Industry in India has grown with an exceptionally high growth rate in the post-
reform years and contributed a large share to the national GDP. Despite the uncertain
global economic scenario, the IT industry has steadily augmented and accelerated the
growth of India.  This Industry absorbs a large pool of Indian skilled human resources
which makes the country a global IT hub. The IT Industry has been instrumental in
transforming the whole Indian economic and governance landscape. India’s IT industry
is gaining footsteps in new disruptive technologies and will play a leading role in the
ongoing fourth industrial revolution globally.

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 4.2 Specific Learning Outcomes

1. From this project I have learned about history and overview of TCS, IT and ITes
industry as well.
2. Understand the role of Information Technology in India and its contribution to
Indian economy.
3. Able to understand about the business process of IT industry and their verticals.
4. Analyse the demand and supply conditions and how they affect the industry’s
growth.
5. Understand how prices are determined by the companies in the industry and the
strategies they are adopt.
6. Understand the major challenges faced by the Indian IT industry and their future
prospects.
7. Know about the Key personalities and top performing companies in the IT industry.
8. Study about the impact of COVID -19 in IT industry and how it may lead to the digital
transformation.
9. Analyse in detail about the industry using porter’s 5 forces model.
10. Understand the products and services offered by the TCS.
11. Understand the operations and business process of the TCS.

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12. Identified major competitors of TCS by analyse their market capitalisation and
performance.
13. Analyse various strategies like management strategies, pricing strategies and
business strategies of TCS.
14. Understand the CSR activities performed by TCS and their contribution to society
and commitment to the environment.
15. Analyse the organisation SWOT analysis (strength, weakness, opportunities and
threats).
16. Assess the organisation and industry in an objective manner.

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 CHAPTER 5

FINDINGS – SUMMARY OF FINDINGS – CRITICAL OBSERVATION BY

THE CANDIDATE ABOUT INDUSTRY AND ORGANISATION

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5.1 SUMMARY OF FINDINGS

Findings about TCS

Tata Consultancy Services (BSE: 532540, NSE: TCS), the leading global IT services,
consulting and business solutions organization, reported its consolidated financial
results according to Ind AS and IFRS, for the quarter and financial year ending March
31, 2020.

 Annual Revenue $22.031 Bn, +5.3% YoY (+7.1% in CC).

 Full Year Growth led by Life Sciences & Healthcare (+16.8% YoY), Europe (+14.6%
YoY) and UK (+10.4s% YoY).
 Full Year Net Income: $4.541 Bn, +1.1% YoY.
 Q4 Total Contract Value: $8.9 Bn.

Q4 Segment Highlights

 Industries

Revenue growth was led by Life Sciences & Healthcare (+16.2%), Communications &
Media (+9.3%) and Manufacturing (+7%). Retail & CPG grew +4.2% and Technology &
Services grew +3.5%. BFSI revenue declined 1.3%.

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 Markets

Growth was led by Europe (+11.9%) and UK (+5.4%). Latin America grew +3.9%, Asia
Pacific grew +3.5% and MEA grew +1.3%. North America grew +0.2% while India
declined 1.9%.

 Services

Consulting & Services Integration: Enterprise Agility, as a key enabler of enterprise-

wide operating model transformation goals, enabled several strategic wins. Amidst the
current crisis, C&SI has been helping customers re-orient supply chains to ensure
resilience and meet critical needs. The other driver of growth was engagements around
TCS’ Finance Transformation offerings.

 Digital Transformation Services:

MFDM™ and Bringing Life to Things™ frameworks continued to gain mindshare and
powered multiple transformational engagements. Engineering, Cloud, Cyber Security
and Enterprise Intelligent Automation services led growth during the quarter.

 Cognitive Business Operations:

TCS’ innovations around AI/ML enabled operations, scaling of Agile DevOps, and next-
generation workplace solutions which provide multi-channel, personalized and
integrated experience for users were growth drivers. Other growth areas included
offerings around cognitive HR, digital F&A and digital customer experience.

Key Highlights

 Chosen by DuPont Specialty Products USA, LLC, a leader in the specialty chemical
industry, to drive a strategic model for next-gen application management services
with perpetual transformation achieving efficiencies through MFDM and rapid
Merger & Acquisition alignment.
 Selected by a US-based diversified financial services company, as its digital
experience and enterprise technology modernization partner to transform the
advisor user experience in wealth management, asset management and insurance
business. TCS will also support the customer in transforming ita financials systems

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 with the deployment of a leading cloud-based financial management application that
enables real-time data-driven business insights.
 A large German retailer has selected TCS as a Strategic Application Development
Management (ADM) Partner for Analytics and Mobility platforms and extends
strategic Infrastructure Services partnership contract, enabling cognitive
capabilities through TCS’ ignio platform.
 Sainsbury's, one of the UK’s largest supermarkets has established a strategic
partnership with TCS for the creation of a new, scalable operating model that will
help integrate the various acquisitions while bringing in new synergies.
 Chosen by an ASEAN market leader in cement and building material industry, to
drive its growth and transformation agenda by modernizing and digitalizing its
Finance and HR shared services.

Research and Innovation

As on March 31, 2020, the company has applied for 5,216 patents, including 210 applied
during the quarter, and has been granted 1,341 patents.

Human Resources

 TCS hired 24,179 employees on a net basis in FY 2020, taking up the total headcount
to 448,464 as of March 31, 2020. The workforce is young and very diverse,
 comprising 144 nationalities and with women making up 36.2% of the workforce.
TCS’ organic talent development initiatives continued to deliver industry-leading
outcomes.
 Employees logged 37.7 million learning hours in FY 2020, resulting in over 335,000
employees getting trained on multiple new technologies, and over 417,000 trained
on Agile methods. The company continues to be the employer of choice, with
industry-leading talent retention. IT Services attrition rate (LTM) was at 12.1%.

Business Leadership: Awards and Recognition

 Ranked #1 in Customer Satisfaction in the Whitelane Research 2019/2020 IT

Sourcing Study, which surveyed more than 1,600 CxOs of the top IT spending
organizations in Europe. TCS has been voted to this top spot by customers for the
seventh consecutive year.

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 Ranked Overall Best Managed Company in Asia in the technology sector, in Finance
Asia’s 2020 Asia’s Best Companies survey of investors across the region. TCS also
won five awards in the India rankings, including #1 ranking in Best Environmental
Stewardship and Most Committed to Social Causes.
 Named as One of the Fortune Best Big Companies to Work For™ in 2020, for the
strength of its management team, how the company embraces diversity as an asset,
and the extent to which it helps to identify employee strengths and career growth
opportunities.
 Named in The Sunday Times list of Best Big Companies to Work For 2020 in the UK,
for its outstanding commitment to workplace engagement, employee-friendly
workplace practices and continued investments in building up local talent in the UK.
 Won the 'Best Risk Management Framework & Systems - Business Continuity'
Award presented by ICICI Lombard and CNBC-TV18 for the robust business
continuity framework and systems implemented across the organization .

Summary Findings About IT and ITes Industry

The global sourcing market in India continues to grow at a higher pace compared to the
IT-BPM industry. India is the leading sourcing destination across the world, accounting
for approximately 55 per cent market share of the US$ 185-190 billion global services
sourcing business in 2017-18. Indian IT & ITeS companies have set up over 1,000 global
delivery centres in about 80 countries across the world.
India has become the digital capabilities hub of the world with around 75 per cent of
global digital talent present in the country.

Key Findings

 India is the world's largest sourcing destination with largest qualified talent pool of
technical graduates in the world. The country has the low-cost advantage, being 5-6
times inexpensive than the US. India is the second-fastest digitising economy among
17 leading economies in the world.

 According to Cloud Next Wave of Growth in India report, India’s cloud market is
expected to grow three-fold to Rs 49,621 crore (US$ 7.1 billion) by 2022, driven by

75
 the demand for Big Data, Data Analytics, Artificial Intelligence (AI) and Internet of
Things (IoT).

 India’s IT industry contributed around 7.7 per cent to country’s GDP (Gross
Domestic Product) and is expected to contribute 10 per cent to India’s GDP by 2025.
Total number of employees grew to 1.02 million cumulatively for four Indian IT
majors (including TCS, Infosys, Wipro, HCL Tech) as on December 31, 2019. Indian
IT industry employed 205,000 new hires and had 884,000 digitally skilled talent in
2019.

 IT-BPM industry revenue was estimated at around US$ 191 billion in FY20 at 7.7 per
cent growth y-o-y and is estimated that it will grow to US$ 350 billion by 2025.
Moreover, revenue from the digital segment is expected to form 38 per cent of the
total industry revenue by 2025. Digital economy is estimated to reach Rs 69,89,000
crore (US$ 1 trillion) by 2025. The domestic revenue of the IT industry was
estimated at US$ 44 billion and export revenue was estimated at US$ 147 billion in
FY20.

 The computer software and hardware sector in India attracted cumulative Foreign
Direct Investment (FDI) inflow worth US$ 43.58 billion between April 2000 and
December 2019. The sector ranked second in FDI inflow as per the dassta released
[RM1]  by the Department for Promotion of Industry and Internal Trade (DPIIT).

 PE (Private Equity) investment in the sector stood at US$ 11.8 billion across 493
deals in 2019. Venture Capital (VC) investment in the IT & ITeS sector stood at US$
67.0 million during Q3FY19.

 The government of India has extended tax holidays to the IT sector for Software
Technology Parks of India (STPI) and Special Economic Zones (SEZs). As of February
2020, there were 421 approved SEZs across the country, with 276 of them from IT &
ITeS and 145 as exporting SEZs.

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 Further, the country is providing procedural ease and single window clearance for
setting up facilities. On May 2019, the Ministry of Electronics and Information
Technology (MeitY) launched the MeitY Start-up Hub (MSH) portal.

 Also, the government has identified IT as one of the 12 champion service sectors for
which an action plan is being developed. It is setting up a Rs 5,000 crore (US$ 745.82
million) fund for realising the potential of these champion service sectors.

Achievements
Following are the achievements of the government during 2017-18:

 About 200 Indian IT firms are present in around 80 countries.

 IT exports from India are expected to reach highest ever mark of US$ 137 billion of
revenues in FY19 growing at 8.3 per cent.
 Revenue of GICs is expected to touch US$ 50 billion by 2025.
 Highest ever revenue was generated by Indian IT firms at US$ 181 billion in 2018-
19.

Road Ahead
India is the topmost offshoring destination for IT companies across the world. Having
proven its capabilities in delivering both on-shore and off-shore services to global
clients, emerging technologies now offer an entire new gamut of opportunities for top
IT firms in India. Export revenue of the industry is expected to grow 7-9 per cent year-
on-year to US$ 135-137 billion in FY19. The industry is expected to grow to US$ 350
billion by 2025 and BPM is expected to account for US$ 50-55 billion out of the total
revenue.

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5.2 CRITICAL OBSERVATION

Critical Observation about TCS

 TCS, has announced that it will not affect layoffs any of its nearly 4.5 lakhs of
employees and they will hire about 40,000 of employees have given offers on
board ,but the crucial part is there will be no salary hikes to employees for this year.

 TCS’s decision about the employee layoffs are commendable but no salary hike will
be affect employees productivity negatively only because of employees hard work
and commitment results profit in TCS if they fail to pay salary hike that may affect
employee productivity. At least, TCS should consider about the stock option for
employee.

 TCS will ask a vast majority of 75 % of its 3.5 lakh employees to work from home by
2025, up from 20 % currently, as the company looks to permanently adopt the
remote working revolution brought by the coronavirus pandemic. They don't
believe that they need more than 25% of our workforce at their facilities in order to
be 100% productive.

 TCS try to improve their productivity into 100% that’s why they asking 75% of
employee to work from home but there is a chance to affect it negatively also
because employees may face difficult in communication, security concerns may lead
to less productivity.

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Critical Observation about IT and ITes Industry

 Middle-level employees in the Indian IT sector are facing an uncertain future even as
the industry gears up to adapt itself to the changes brought about by automation and
newer technologies.

 The nearly 1.4 million mid-rung employees, who typically have 8-12 years of
experience and earn Rs 12-18 lakh, are now at the centre of reskill and restructuring
conversations happening across the sector.

 That is because career progression in the IT sector has been for years measured in
terms of the number of people an employee managed and not in terms of the new
technologies learned

 As automation and digital technologies upend the normal way of doing business, the
traditional structure is under strain. The changes are already being seen. Roles that
were typically assigned to employees with over 10 years of experience are now
going to machines.

 India is a country with booming tech culture, and there are innumerable people
willing to do things at the cheapest prices. Multinational companies hire Indians to
do the same work that they would have asked their country’s counterparts at almost
half or one fourth of the salary.  

 Outsourcing from India is thus cheap and super-profitable for businesses. Many
people suffer from these underpaid jobs and often end up having personal issues
like dissatisfaction with their job, mental stress and anxiety or troubled personal
relationships because of financial pressures. 
 Many universities in India focus on producing engineers every year in an
unimaginably large quantity with the intention of getting them placed at the end of
graduation.
 They hardly pay attention to the quality of the education or practical knowledge of
the students.65% students are not retainable and 80% engineering graduates are
unemployed. In 2015-2017, over 30,000 people were laid off from their jobs by

79
 Wipro, TCS and Infosys. Engineers have become disposable enough for the industry
only because they are less skilled and qualified to understand the complexities of the
work.
 Indian students are trained in a certain way since the very beginning of their
education, mostly they are taught just to mug up things rather than understanding
the reason behind a certain concepts. As the business models change and revamp
the companies start looking for active, fresh and intelligent people who would fit
just right in the new model and make high scores of KPI’s. 
 With the introduction of automation in the technology, industries have been
revolutionised and the way they work have completely changed. Menial jobs are
now run by coded machines and higher skill sets are required for humans to control
such machines. Such skills come from quality education first and then with better
paying jobs.
 The companies hire engineers, computer students and other graduates in
humungous numbers which proves to be ultimately disappointing for the employees
because of the tough competition in promotions, unnecessary work pressure and
time, again fluctuating skill set requirements of the companies.

 Sometimes even stagnant positions have made people quit their jobs, robotic work
with no intention of seeing the end product often leads to discontentment. This is
exactly why students prefer going for higher education in abroad if they do not have
financial constraints or any other issues.

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