Value-basedManagement Report on Tata Consulting Services

Introduction:
Recent years have seen a type of new management approaches for improving organizational performance total quality management, flat organizations, empowerment, continuous improvement, reengineering, team building and so on. Many have succeeded but quite a few have failed. Often the cause or failure was performance targets that were unclear or not properly aligned with the ultimate goal of creating value1. Value-based Management (VBM) tackles this problem head on. It provides a precise and unambiguous metric value upon which an entire organization can be built. The thinking behind VBM is simple. The value of a company is determined by its discounted future cash flows. Value is created only when companies invest capital at returns that exceed the cost of that capital. VBM extends these concepts by focusing on how companies use them to make both major strategic and everyday operating decisions. Properly executed, it is an approach to management that aligns a company's overall aspirations, analytical techniques, and management processes to focus management decision making on the key drivers of value.1 "Value" means in HR terms is the clincher. Outsourcing solutions, Web-enabled processes and shared services have almost eliminated the need for HR as a purely administrative function. Today, HR can only truly add value if it helps the organization develop capabilities to compete and win business. This includes attracting and retaining talent, acting with speed and agility, instilling learning, crafting a shared identity, facilitating innovation, investing in the future of leadership, and providing strategic clarity to the entire organization. The economic downturn and fragile international relations have meant that cultural issues and change now take center stage for HR. "We now face relentless margin pressure ever more powerful customers diminishing returns on yesterday's sure-fire strategies anemic growth and enormous pressure to innovate." A daunting set of issues, to be sure.2 It is a set of functions quite away from routine administrative activities, which contribute in developing capabilities to compete and take business on a high graph. It includes increasing attraction rate of the organization ,developing and retaining the talent, acting with speed and agility, creating learning environment, providing strategic clarity and facilitating innovation with empowerment. The demand on HR Management to become value based and strategy is increasing day-by-day.
1

Measuring and Managing the Value of Companies, Second Edition Timothy Koller.

1.Company profile:
Tata Consultancy Services Limited (TCS Limited) is engaged in providing information technology (IT) services, business solutions and outsourcing. The Companys services portfolio consists of application development and maintenance, business intelligence, enterprise solutions, assurance, engineering and industrial services, IT infrastructure services, business process outsourcing, consulting and asset leveraged solutions. It also services several other industries, such as life sciences and healthcare, hi-tech, energy, resources and utilities, media and entertainment and travel, transportation and hospitality. On August 31, 2010, Diligenta Limited, a majority owned subsidiary, acquired Unisys Insurance Services Limited. On October 4, 2010, Tata America International Corporation, a wholly owned subsidiary, acquired 100% interest in MS CJV Investments Corporation. On October 8, 2010, the Company acquired 100% interest in SUPERVALU Services India Private Limited from SUPERVALU Inc. In the early 1970s, Tata Consultancy Services began exporting its services. The company pioneered the global delivery model for IT services with its first offshore client in 1974. TCS's first international order came from Burroughs, one of the first business computer manufacturers. TCS was assigned to write code for the Burroughs machines for several US-based clients This experience also helped TCS bag its first onsite project - the Institutional Group & Information Company (IGIC), a data centre for ten banks, which catered to two million customers in the US, assigned TCS the task of maintaining and upgrading its computer systems. On 9 August 2004, TCS became a publicly listed company. TCS is one of the largest private sector employers in India with a core strength 202,039 individuals.TCS has turned into the second-largest employer among listed companies after Coal India Limited. TCS's BPO arm had revenues of $925 million in the year that ended in March, and 34,000 employees. TCS has one of the lowest attrition rates in the Indian IT industry. In the past and in the present, TCS has been criticized by its employees in Public forums on its Appraisal and Promotion policies.

1.1 Recent Developments:

Tata Consultancy Services has managed to receive ten large deals.TCS is planning to hire 60,000 Employees in Financial year 2011-2012.TCS has got contract from Credit Union Australia. Country's largest software firm Tata Consultancy Services (TCS) has received a multi-year, multi-million dollar contract to provide application support, maintenance and development services from US-based Air Liquide.TCS is going to open its first office in Madhya Pradesh in Indore worth Rs.1000 crores. The 100 acre project, expected to be operational by 2013, will employ more than 25000 people directly and equal number indirectly. This project is the first and the biggest IT project of the state and would play a vital role in the development of Indore.3
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Mckinsey Quarterly, value-based management_59.

2.Competitor:
Tata Consultancy competitors are primarily in the Information Technology Services industry. Tata Consultancy also competes in the Consulting, Staffing, and Financial Services, Legal & Government Software sectors. Tata Consultancy competitors include: IBM Global services WIPRO Technologies Infosys HCL

2.1 Competitive Landscape:

India, though rich in history, culture, and tradition, is now rapidly developing in terms of Technology and Ecommerce. To address the need for Information technology and its services, Infosys and TCS were created. These are the two giants in the IT industry of India which were powered by the countrys skilled manpower and the exponential development of Information technology Services. Both IT and BPO service providers; these two giants still have their differences. TCS is older compared to Infosys, having started in the 1960s, and is a part of the TATA Conglomerate. Infosys, though it in 1981, is relatively new to the market. They are both highly innovative and remarkable in their growth and accomplishments. To further highlight their variances, here is a breakdown of their characteristics. Infosys has started late compared to TCS, however, it has been making major steps into popularity and growth as a stiff competitor of TCS. Infosys have their headquarters in Indias Silicone valley which is Bangalore, Karnataka. To date, this ITS provider boasts of 33 business centers in 33 countries and it still actively hiring more people as it is still expanding. Infosys also boasts of being considered as one of the best employers in India with profits standing at $1.26bn. Aside from the stated differences, the two giants also sports differences in terms of hiring policies, manpower, and work which are as follows: 1. TCS and Infosys are both actively hiring fresh graduates from esteemed engineering academes, however, Infosys is hiring more aggressively than TCS because of the formers rapid expansion. 2. TCS is more concerned with BPO, Infosys is renowned for its effective consultancy services. 3. Infosys is more aggressive in acquiring international deals with foreign clients, whereas TCS has more local work particularly with the government such as provision of software to healthcare industries and banks.

4. Both IT giants boast of their own unique product or service: TCS has TCS Quartz while Infosys has Infy Finacle. 5. TCS boasts of cheaper services than TCS, on the other hand, TCS declares to offer better services. 6. There is more work pressure in Infosys employees, whereas TCS workers are able to work at their own pace. 7. Infosys has better promotion process, TCS does not. In terms or Infrastructure and work culture, Infosys takes the lead while TCS lags behind. As in the competition TCS has 89% of Hip Rank, where as for HCL it is 75%.And TCS is superior, Infosys is trailer park trash. Also TCS is more Hipest i.e, 89% & 3% for Infosys. The next IBM has 50% of Hip Ranking.

2.2 Compitative Advantage: TCS gain compitative edge in following ways:

Impoving performance Strategy and Behaviour Making correct decisions

Competitive advantage Values and Behavior Minimizing Dissatisfaction and turnover

Ensuring legal Compliance

3.Customer:
TCS helps organizations devise and implement CRM strategies and solutions that become the backbone of their customer acquisition and retention strategies, and helping them foster loyal, profitable customer relationships. CRM has evolved from customer data management to building and managing long-term relationships. TCS works with enterprises to devise and implement CRM solutions that become

the backbone of their customer acquisition and retention strategies. With a framework that ensures alignment to the organizations strategic objectives, TCS approach addresses the key dimensions of people, process, and technology, helping enterprises succeed in their CRM initiative with the best technology. Oracle For the past two decades, TCS has been developing and implementing solutions on Oracle technology; we are an Oracle strategic Global Systems Integrator and Certified Advantage Partner. TCS focuses on providing solutions across Oracle E-Business Suite, PeopleSoft Enterprise, JD Edwards Enterprise One, JD Edwards World, Siebel, and Oracle Fusion. SAP As a trusted SAP partner, TCS offers various solutions from pre-implementation consulting to complete end-to-end implementation and post-implementation maintenance and support that help enterprises maximize ROI from SAP investments. TCS also implements various industry solutions such as IS Pharma, IS Retail, IS Oil and gas, and functional solutions such as Strategic Enterprise Management, Supply Chain Management, Business Warehouse, Enterprise Portals, and Customer Relationship Management for enterprises across the world. Amdocs TCS System Integrator Partnership with Amdocs allows us to implement Clarify CRM solutions for our customers. Salesforce.com As a strategic partner of Salesforce.com, worldwide leader in on-demand CRM services, TCS is entitled to benefits such as use of the Salesforce.com applications; support and maintenance services; education and training; access to the Salesforce.com Partner Portal; targeted joint selling; and so on. TCS currently provides a range of solutions based on Software as a Service (SaaS) on-demand applications to its clients, thus enabling them to enhance their customer experience from strategy to implementation to application management outsourcing in customer-facing areas of Marketing, Sales, Service and Support, Customer Analytics and Customer Data Integration.

Gary Hamel Value-based HR management Business Forum in 2001 TCS group The Brand Trust Report 2011.

4.Economical position:
It has stock information of revenue as $2.2 billion, revenue growth is 36.6% this growth is economically developed from their initation of company. It has an return on equity of 70.5%, to that total return of 44.3% it may be increases depend on investment. TCS follows the Going Green theme from their start up their industries. In the economic analysis we have the following points to be maintain : Political Equation Global recession and Indian economy Economic Growth Government Policy Budget Infrastructure Taxation Policy Interest Rate Inflation

5. Technological:
Tata Consultancy Services Named the Official Technology Partner for the 2010 Boston Marathon. Balanced work life: Wellness is an important concept for communities and individuals in todays world. We are very committed to supporting healthier communities At TCS, we actively encourage our employees and their families to make fitness and wellness a part of their lives. This not only helps them have a balanced work life, it also creates higher energy and a feeling of well being at the workplace, said N Chandrasekaran, CEO and MD, TCS5. Human Relationship: TCS, part of the Tata group, was founded on the principle that a company thrives on social capital, the value created from investing in good community and human relationships. The companys engagement with these community-led initiatives reinforces that principle and allows TCS to further promote good health and personal wellbeing internally among employees and also within the communities that the company serves.

Tata Consultancy Services (BSE: TCS.BO, NSE: TCS.NS) is an IT services, business solutions and outsourcing organization that delivers real results to global businesses, ensuring a level of certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of IT and IT-enabled services delivered through its unique Global Network Delivery Model, recognized as the benchmark of excellence in software development. A part of the Tata Group, Indias largest industrial conglomerate, TCS has over 149,000 of the world's best trained IT consultants in 42 countries. The company generated consolidated revenues of US $6 billion for fiscal year ended 31 March 2009 and is listed on the National Stock Exchange and Bombay Stock Exchange in India.

6. Objectives: They understand that their clients needed to do more with less,respond quickly to the needs of their markets and get more strategic advantage from IT. We are uniquely able to help them tackle these business challenges. Be it IT services, Business solutions or outsourcing . we can assure you level of certainty unmatched by other clients in the field. TCS serves large and fast-growing organizations who share a common set objectives: Increase profitability and efficiency by doing more with less. Rapidly and efficiently respond to the changing market demands there by improving organizational agility. Finally ,TCS help clients to achieve and maintain a competitive advantage through the use of their Innovations and Co-Innovation Network..And also their collaborative R&D and innovation engine that works to successfully exploit and commercialize new ideas, technologies and best practices. They had the goals like : Functionality Scalability Adaptability Magnebility

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7. Factors which increases Values of company:

Factors like below is increasing the values of company: Ability Effort Motivation Equity &Expectancy Perception Environmental factors.

7.1 Human Resource Management :

The role of HR assumes unthinkable proportions and is subject to mammoth challenges. With this sensitive breed of IT professionals, how has TCS grown to and sustained at the number one position is a question which market watchers have asked themselves a thousand times. There is but one answer - passion for excellence in the workforce practices. TCS has developed an unbreakable bond with sound HR practices in an environment that defies traditional roles and responsibilities.

Human resource management (HRM), also called personnel management, consists of all the activities undertaken by an enterprise to ensure the effective utilization of employees toward the attainment of individual, group, and organizational goals. An organization's HRM function focuses on the people side of management. It consists of practices that help the organization to deal effectively with its people during the various phases of the employment cycle, including pre-hire, staffing, and post-hire. The pre-hire phase involves planning practices. The organization must decide what types of job openings will exist in the upcoming period and determine the necessary qualifications for performing these jobs. During the hire phase, the organization selects its employees. Selection practices include recruiting applicants, assessing their qualifications.6

7.2 Multiple Process of Assessment:

It would increases the Values of employees ,vis-a-vic the company value also increases.

General Applications
Developmental uses

Specific Purpose
Identification of individuals needs Performance Feedback Determining Transfers and assignments Identification of individual strengths and develop needs. Salary Promotion Retention and Termination Recognition of individual performance

Administrative Uses/Decisions

Lay-offs Identification of poor performance HR Planning Evaluation of Organization needs Evaluation of HR Systems Reinforcement of Organizational Development needs. Criteria for research Documentation of HR Decisions Helping to meet legal requirements

Organization Maintenance/Objectives

Documentation

7.3 Leadership:
TCS actively seeks and applies the best possible solutions and methodologies for enterprises today, making sure to holistically factor in people, processes and business issues. Select an article below to get more insights on our innovative thinking.

7.3.1 Innovative Management:

Realizing the benefits of innovation, however, requires not only talking but walking the talk. The walk is a systematic approach to the continuous development and implementation of value-adding ideas to increase your competitive advantage. This systematic approach, or innovation management, involves the establishment of a cross-enterprise model, championed by senior executive leadership.

7.3.2 Innovation Cluture:

At the center of the innovation management value ring is culture. Without all employees acknowledgment of the importance of innovation to the health of the organization and, sssultimately, their livelihoods, all the best innovation management processes and tools in the world will not generate a volume of good ideas or ensure the realization of the value sought.

Missioin and Values:

TCS has built a global reputation for its ability to help customers achieve their business objective by providing innovation, best-In-class consulting. It core set or values underpin all activities in the company and these include leadership with trust ,integrity, excellence ,respect for the individual and learning . 6 http://www.referenceforbusiness.com/management/Gr-Int/Human-ResourceManagement.html#ixzz1YvGgtSUm

Strategy :
Strategy is focused on using its full services capabilities and its Global Network Delivery Model to create business value for its customers and help them optimize their operations and execute new growth initiatives. The companys ability to deliver an unparalledled quality of experience a high level of certainty in their IT operations.

Customer centricity:
The companys strategy is to be a trusted business prtener to large global coporations.TCS has built a customer-centric organization structure which puts customers at the center of its operating units and teams.TCs ability to solve the customer as most challenging business problems is the core business need around which our offerings and service evolve.

8.Analysis:
The company analysis can be done by using below aspects: Buying TCS share at a target price of Rs1, 350 is highly recommended. The last quarter revenue earnings of TCS, has shot up to Rs96.63bn. This can be attributed to the 4.1%QoQ growth.

The growth has led to volume increase of 5.7%QoQ. Other contributory factors include pricing increase of 1.2%, off shoring shift impact of (1.7%) QoQ and exchange rate affect of (1.1%)QoQ. Despite the rupee appreciation, the EBIT margin to 28.1%. Other higher income sources include higher yield on investments and Forex gain of Rs520mn. Unlike Q2 when the tax rate was 18.9%, the rate this time has come down to 18.6%. Though top client grew by just 3%QoQ, top 10 clients grew by 7%. Also there has been vital addition in USD20mn category clients. TCS has hired 50,000 more employees for the last quarter. Prior to this the company had hired 40,000 employees. In the coming quarter the company expects to hire 12000 to 15000 new employees. As usual the strong hiring trends reflect on strong deals on the anvil. TCS has managed costs well to sustain high EBIT margin. For the last few quarters, even companies like Infosys have failed to match up to its performance. The premium in earnings multiples is likely to continue for TCS.7

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8.1 Human Resource Management Strategy Analysis:

8.1.1 Talent Retention: Attrition rate went up by 14.4% in 2011 as compared to 11.8% in 2010,as such it was very low when compared to other firms. 8.1.2 Talent Diversity: At 31st march,2010 30.4% Work-force as women employees personnel from different nations. 8.1.3 Talent Acquisition: Addition of 68,000 employees in 2011. 8.1.4 Talent Management and Leadership Development: Communication and Engagement with employees, rotating talent across projects countries and roles ,providing opportunities for upgrading competencies and helping employees progress to higher level roles, necessary platform for employees to realize their potentials.

8.2 Recognition at TCS:

Guaranteed high motivation levels at TCS through competitive compensation packages ,stimulating job content, outstanding development opportunities, and, not the least, aninnovative recognition mechanism The various ways in which TCS recognizes its people are listed below. Project milestone parties to encourage efficient execution of projects. Recognition of star performers / high fliers to recognize outstanding talent. Nomination to covet training programmes to encourage self-development. Best project award to promote a spirit of internal competition across work groups and to foster teamwork. Best PIP award to encourage innovation and continuous improvement. Best auditor award to acknowledge participation in critical support roles Spot awards to ensure real-time recognition of employees. Recommendations for new technology assignments / key positions to ensure career progression and development of employees' full potential.

Performance-based annual increments to recognize high performers Early confirmations for new employees to reward high-performing new EmployeesLong-service awards to build organisational loyalty EVA-based increments to ensure performance-based salaries. On-the-spot recognition to guarantee immediate recognition of good performance.

8.3 SWOT Analysis:

Strengths: High quality and price performance. Large pool of Knowledge employees. Flexibility and Adaptability. Reliability. High Growth. Large Projects.

Weaknesses: Lack of Domestic Computerization. Project management skills. Localization. Opportunities: Global Marketing. Domestic Demand. E-business. Threats: Economical. Technical Threat. Lack of speed. Government Interface. Cost.

9.Conclusion:
Value-based management undertakes to solve this problem effectively. It provides a precise and clear metric value upon which an entire organization can be strengthened. The philosophy behind value based management is clear and simple. The value of a company is ascertained by its discounted future cash flows. Value is created only when companies invest capital at proceeds that exceed the cost of that capital. Value based management develops these concepts by focusing on how companies use them to make both strategic and non-strategic decisions. If value based management is properly implemented, it integrates a companys overall objectives, investigative techniques, and management processes to direct management decision making on the stimulator of value. Management processes and systems encourage managers and employees to behave in a way that maximizes the value of the organization. Planning, target setting, performance measurement, and incentive systems are working effectively when the communication that surrounds them is tightly linked to value creation.

Reference:
Measuring and Managing the Value of Companies, Second Edition Timothy Koller.
2

Mckinsey Quarterly, value-based management_59.

Gary Hamel Value-based HR management Business Forum in 2001

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TCS group The Brand Trust Report 2011.

http://www.referenceforbusiness.com/management/Gr-Int/Human-ResourceManagement.html#ixzz1YvGgtSUm http://www.smartplanet.info/financial-management/stock-market/tcs-q3-results-2011.html
http://www.tcs.com/news_events/tecnology

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By Vamsikrishna Bollineni