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WIKI ANALYSIS
Tata Consultancy Service (BOM:TCS) is
Company Overview
Tata Consultancy Services Limited (TCS) is an Indian software services and consulting company. It is one of India's oldest and largest providers of information technology and business process outsourcing services. As of 2007, it is Asia's largest information technology firm. TCS, a part of the Tata group, provides information technology and management consultation services to organizations in more than 53 countries. The company offers e-business, application development and maintenance, architecture and technology consulting, engineering, security, infrastructure development and management and quality consulting services.
In addition, TCS offers software packages for electronic banking, insurance billing, customer relationship management, and hospital management. It caters to finance and banking, insurance, telecommunication, transportation, retail, manufacturing, pharmaceutical, energy and utility industries. The company generates around 19% of its revenues from the manufacturing industry, and 6% of its revenues from its engineering and industrial services (EIS) business.
The company was founded in the year 1968 and is based in Mumbai. It has over 89,000 trained IT consultants in 47 countries. The company generated consolidated revenues of USD 4.3 billion for the fiscal year ended March 2007. TCS went public in 2004, raising USD 1.17 billion in one of the largest initial public offerings.
History
Tata Consultancy Services was established in the year 1968. It began as the "Tata Computer Centre", a division of the Tata Group, whose main business was to provide computer services to other group companies. However, the potential of computerization and computer services was realized early on, and an electrical engineer from the Tata Electric Companies, Fakir Chand Kohli, was brought in as the first General Manager. Soon after, the company was named Tata Consultancy Services.
TCS's first software export project was undertaken in 1974 when it converted the Hospital Information System from Burroughs Medium Systems COBOL to Burroughs Small Systems COBOL. This project was carried out entirely in TCS Mumbai on the ICL 1903 Computer. In 1980, TCS and a sister Tata firm accounted for 63% of the Indian software industry exports, $4 million shared by 21 firms. In 1984, TCS set up an office in the Santacruz Electronics Export Processing Zone (SEEPZ) – Mumbai.
The early 1990s saw a tremendous surge in TCS's business, which also resulted in a massive recruitment drive by the company. In early and mid-1990s, TCS re-invented itself to become a software products company. In the late 1990s, to accelerate its revenue growth, TCS decided to employ a three-pronged strategy – developing new products with high revenue earning potential, tapping domestic and other fast growing markets and focusing on inorganic growth through mergers & acquisitions. In late 1998, the company decided to concentrate on new revenue opportunities including Y2K and Euro conversion. E-business was a major area of focus in the late 1990s.
In 1999, TCS started an annual IT Quiz called TCS IT WIZ in India. It has been a great success and a matter of craze among young students inclined towards IT.[1]
In 2004, TCS became a publicly listed company.
In 2008 Tata Consultancy Services was involved in a variety of industries. Some of these included telecom, government, insurance, manufacturing, high tech, and banking and financial services. They offer product life cycle management and systems integration to their customers.
Financials
In 2007/08, Tata Consultancy Services had a total income of Rs. 23,349 crore, up 23.4% from Rs. 18,914 crore in 2006/07.[1] Its net income was Rs. 5026 crore with a net profit margin of 22.0%.[1]
In 2006/07, the company's total income was up 41.3% from Rs. 13,386 in 2005/06.[1] Its net income was Rs. 4213 crore with a net profit margin of 22.5%.[1]
Services
Tata Consultancy Services offers the following services to its customers:
- IT Solutions and Services (74.9% of net sales): This segment develops IT products for and offers IT services to customers. Some of these IT products include software applications and systems for performance management, customer relationship management and supply chain management. Some of the company's IT services include software application management, system integration, data mining and data quality management.
- Business Process Outsourcing (6.2% of net sales): This segment helps customers automate and complete specific non-core business tasks. Some of these non-core business tasks include payroll, finance and accounting, and human resources.
- Engineering and Industrial Services (5.4% of net sales): This segment helps customers engineer and manage products, design and automate plants, and source for and manufacture components.
- IT Infrastructure Services (6.5% of net sales): This segment builds and maintains IT infrastructure for customers.
- Asset Based Offerings (3.6% of net sales): This segment develops IT products for and offers IT services to customers that operate specifically in the banking, financial services and insurance industries.
- Global Consulting (3.4% of net sales): This segment advises customers on management and IT issues.
Industries
Tata Consultancy Services sells to companies in the following industries:
- Others (Rs. 5,360 crore or 23.4% of net sales): Industries that fall under this category include Transportation, Life Sciences and Health Care, Energy and Utilities, Media and Entertainment, Travel and Hospitality, Government etc.
Geographies
In 2007/08, revenues from customers in the Americas amounted to Rs. 12,612 crore or 55.2% of net sales. The company also had revenues from customers in Europe (Rs. 6,628 crore or 29.0% of net sales), India (Rs. 2,046 crore or 8.9% of net sales) and Others (Rs. 1,578 crore or 6.9% of net sales).
TCS has set up nearshore centres in North America, Europe and Asia-Pacific, regional development centres in Hungary, Uruguay and Brazil and a global development centre in China, in addition to India.
In 2006, Tata acquired Chile's Comicrom S.A., Australia's Financial Network Services (Holdings) Pty Ltd, (FNS) and Sweden's Indian IT Resources AB (SITAR) through subsidiaries.
The Company has set up two subsidiaries, viz. TCS FNS Pty Limited in Australia and Diligenta Limited in the UK. It has also set up other subsidiaries such as Portugal Unipessoal Limitada in Portugal, Tata Consultancy Services Luxembourg S.A. in Luxembourg and Tata Consultancy Service Chile Limited in Chile. The Company has 49 subsidiaries as on March 31, 2006.
In March 2006, the Company, through its subsidiary Diligenta Limited acquired, on a going concern basis certain businesses of Pearl Group Services Limited. The acquisition included specified insurance contracts and claim administration business and assets including goodwill and know-how.
The Company has entered into a joint venture agreement with the Intelenet Global Services Ltd. For the GM deal, TCS is tying up with EDS to bid for parts of the business.
In February, 2007, TCS kicked off a joint venture in China with Microsoft and three Chinese entities - TATA Information Technology (Shanghai) Co. Ltd..[10]
Tata Consultancy Services has a branch in Japan, which is located on several floors in the Queen's Tower A high-rise building in Minatomirai (Yokohama). This location is the only office in Japan, and does embedded research, as well as ERP and other consulting.
On October 8, 2008, Tata Consultancy Services (TCS), a leading IT services, business solutions and outsourcing firm, and Citigroup Inc., a leading global financial services company, today announced that they have reached an agreement for TCS to acquire all of Citi's interest in Citigroup Global Services Limited (CGSL), the India-based captive business processing outsourcing (BPO) arm of Citi for all cash consideration of approximately $505 million, subject to closing adjustments. In addition to the sale, Citi has signed an agreement for TCS to provide, through CGSL, process outsourcing services to Citi and its affiliates in an aggregate amount of US$2.5 billion over a period of 9.5 years. The agreement builds upon the existing relationship between Citi and TCS whereby TCS provides application development, infrastructure support, help desk and other process outsourcing services to Citi.
Key Trends and Forces
Competition
Infosys and Wipro are key competitors of TCS
References
- ↑ 1.0 1.1 1.2 1.3 "Consolidated Profit and Loss Account for the year ended 31 March 2008", Page 165, Annual Report (07/08), Tata Consultancy Services
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