1. HARSHA HALYAL (09900911047)
VTU Belgaum MBA 4th Sem
Email harschal007@gmail.com
Harschal007@hotmail.com
Tata Consultancy: First Mover In India
MUMBAI, BANGALORE. INDIA -
The story of India's largest software services firm, Tata Consultancy Services, is of a
management that put its first mover advantage to optimum use. TCS, which isn't listed abroad
yet but plans to do so in the U.S., earns about 12% of its revenues from the Indian market. That's
a substantial amount, since Indian tech companies usually focus their attention abroad.
But Mumbai-based TCS has also been at the forefront of global expansions, whether that
involves going into China or some Eastern European nations that have become destinations of
choice for domestic Indian majors eyeing the lucrative European outsourcing market.
With companies in North America, Europe and Asia increasingly warming toward outsourcing
as a key means of cost-cutting, the Indian software services industry is growing at a rate of over
30% annually. And TCS, with annual revenues of $4.3 billion for the last fiscal year, grew 41%
year-over-year, with about half of the money coming from North America.
TCS, a part of the country's leading conglomerate--the Tata Group--added thousands of
employees last year as it rapidly expanded in India and abroad, taking its head count to 89,000 in
47 countries. In an industry where competition for talent among global and domestic majors has
fueled attrition, the company boasts of among the lowest attrition rates--11.3%.
In an interview with Forbes, CEO S. Ramadorai spoke of the challenges facing the industry as
the appreciating rupee eats into global revenues, TCS's favorite destinations to set up global
offices, and what the company is doing to ensure it retains talent.
Forbes: To what extent and for how long will you and the industry be able to weather the
impact of the rising rupee [which has appreciated over 8% against the dollar since
January]? What do you expect from the government on that front?
Ramadorai: The rupee's appreciation vis-à-vis the dollar is definitely of concern to the industry
and TCS. Hedging is a mechanism by which you cover your losses. We've done that fairly well
in the last quarter. But because of the mechanism and costs involved, we can only go to a certain
point. So anything below 43 rupees vs. the dollar will continue to worry us.
To what extent the government will succeed in the short term in addressing inflation will
determine how the rupee's rise will play out. The industry has expressed its views on a number of
policies, and we've said what interventions are possible from our perspective.

2. TCS has a huge workforce, to which you're adding substantially every quarter. What
percentage is global and how much is that going to expand in the next few years?
Ramadorai: We have a network model where we deliver from multiple global locations,
including Uruguay, Chile, Mexico and China. It's becoming a scale play even outside the
country. At present, 9.6% of our employees are from other nationalities; it'll grow to 10.5% in
two years.
We're hearing so much about the talent crunch today. What are you doing to attract and,
more important, retain employees in India? How much is the fight for talent contributing
to rising costs per employee?
Ramadorai: The war for talent will only get tougher. [In India] the demand is not from IT alone-
-there are also industries like retail, financial services, banking. The brand which TCS has built
has some attraction for young graduates. The number of colleges we go to in India alone each
year just crossed 300. We've been successful in ensuring we get invited [to campuses] early in
the game. We also engage students through summer projects, training and have strong ties with
the faculty. We have centers of excellence on campuses, fund projects there.
Having gotten people from campuses, the second level is the quality of work, what kinds of
opportunities they have. We have a dedicated [two-month] training program for all new
employees. Experienced professionals have two-week trainings every year. Our attrition rates are
11.3%, way below the industry average. We trained 32,000 professionals last year.
What are your favorite global locations for TCS centers? Why?
Ramadorai: North America tops the list because of its proximity to our customers. Another
favorite is Uruguay, from where we are able to address European and North American
requirements and cater to companies that need Spanish capabilities support. Canada is another
asset.
In China, we can address the domestic as well as Asia-Pacific market. Countries in Eastern
Europe and Africa help us to identify talent and draw professionals. They want us to employ
their graduates. And in India, tier-two cities are definite destinations of the future.
There's growing interest from global firms in setting up captive centers in India. For how
long will our infrastructure and talent pool be able to sustain that?
Ramadorai: This will be one of the mechanisms global corporations will adopt for their own
strategic reasons. They see India as a good destination, but the size of such centers will not
exceed a couple of thousand employees. And some global majors also exit these centers after a
certain period of time. Some will never have captives. Most companies realize their main brief is
to run their business rather than run their IT capabilities. The bigger portion [of their technology
needs] will always be outsourced.
What keeps TCS ahead of the competition? What do you do that makes the firm unique?

3. Ramadorai: The experience of the last 38 years is a very clear and powerful differentiator.
We're present across geographies. We do strong deployment of capabilities in the domestic
market, where 12% of our revenue comes from. Our ability to handle large turnkey, total-
responsibility projects is also a very important differentiator. Another factor is, we've integrated
our global workforce and reached out to markets that are far beyond traditional non-English-
speaking markets. We did it successfully in Uruguay and China. We're a global player with a
global presence.
How will a reduction in discretionary spending in the U.S. affect TCS and the industry as a
whole? Is a global slowdown good for Indian tech growth?
Ramadorai: When discretionary spending gets reduced, that plays out well to our strategy and
the India strategy, because of our ability to take costs out through process improvements and by
shifting from high-cost to low-cost locations. We provide value-added, low-cost arbitrage for
firms. The ability to ramp up in offshore locations rapidly is a dimension we bring in.
But I don't see any such indication of a slowdown in spending as we speak. About 18% of our
revenues last year came from new services that we launched.
Opponents of an increase in the H1-B visa cap argue that since Indian firms file the highest
number of those applications for visiting Indian professionals, the program isn't really
being used to retain talent. Is that a fair argument?
Ramadorai: To us, whether the number of visas gets increased or decreased or stays the same,
we look at our business model differently, where we should not be dependent on just the
movement of people from here to there. How do you localize, globalize, how do you hire the
locals as well as distribute the workforce, not just in the U.S. alone. We view this in totality. We
don't make recommendations saying, quot;Increase the number of H1-Bs … we're having problems.quot;
Our whole view is the mobility of employees, and the ability to execute projects in any part of
the world, is going to be critical for any global company, whether you go for one year or a
couple of weeks. The same is for whether a U.S. company needs access into India or any other
country. That's the way we need to look at this, rather than as a U.S. quot;visa situation.quot;
HARSHA HALYAL (09900911047)
VTU Belgaum MBA 4th Sem
Email harschal007@gmail.com
Harschal007@hotmail.com