CASE ANALYSIS TATA CONSULTANCY GROUP: SELLING CERTAINTY Harvard Case Solution & Analysis

CASE ANALYSIS TATA CONSULTANCY GROUP: SELLING CERTAINTY Case Solution                                      

PROBLEM STATEMENT

Being the largest IT Company in India in terms of revenue, number of employees and profitability, Tata Consultancy Services is faced with the challenges of differentiating itself along with intense local and international competition. Despite being Asia’s largest standalone company, TCS still has to deal with prominent brand names like IBM and Accenture especially as the prerequisite for client-vendor relationship is based on a strand brand name and reputation in the IT industry. (pg.2)

The firm is looking for a realignment of its strategic focus based on ‘operational excellency’ or ‘experience certainty’. The problem at hand is whether this strategy will be effective in creating a sustainable competitive advantage globally and what business level strategy should be adopted for taking this initiative forward.

The key players in the IT industry are not limited to just the firm and the client. While technical expertise plays an integral role in the vendor selection criteria (pg.2) and involvement of players like the CEO, the CIO solely leads the decision making process for clients. Other players include executives from departments such as human resources, legal and other business units.

Industry analysts and specialized consultants are also the key players in the IT industry given the fact that they build the foundation of a firm’s reputation in the market.

EXTERNAL ANALYSIS

PEST Analysis: The external environment of TCS is studied with the help of a PESTL analysis (appendix 1) where political, economic, social and technological and legal factors are studied to understand what the firm can expect in the future. As far as the global political environment is concerned, governmental policies could eventually lead to difficulties in pursuing off-shoring because of wage differentials that emerging economies are portraying as compared to the west.

However, in the long run eventually the difference in demand and supply will make it inevitable not to pursue off-shoring and utilize resources emerging countries.
On the other hand, the local Indian political environment is rather favorable for IT companies especially as IT firms are being given incentives for collaborating with the academia and government to strengthen the pipeline for new graduates. (pg.6)
The economic environment for the IT companies shows a difference in the wage rates of the West and the emerging markets. The fact that the personnel costs for an IT business are approximately 70% to 80%of the total costs suggests that there may be an increase in demand however,it will eventually lead to a reduced wage rate gap. Having the largest pool of IT professionals in the world, India would not only see an increase in demand for professionals but it may also experience a shortage owing to the rise in the IT related occupations from2004 to 2014. (pg. 6)

The social environment suggests an improvement in the standards of living in India owing to the rise in demand for IT professionals and the potential increase in perks and wages for retaining the experienced IT professionals. This indicates that an increase in retention efforts by multinationals in India could put greater pressure on local companies to increase wages and perks, which may result in increased costs of personnel for smaller companies.

The technological environment provides ease of data sharing, which has made off-shoring a promising strategy for technology companies.

Legal complications could eventually emerge in the IT industry since the provision of sensitive information from the Western companies may not be easily accessible for IT companies in the emerging nations. However, there have been cases when access to such information has been made possible through illegal sales suggesting that the legal environment has loopholes. (pg.4)

Porter’s Five Forces Analysis: The competitive environment for TCS can be understood via Porter’s five forces analysis as summarized in appendix 2. With a diverse customer range across 50 countries with clientele ranging from financial services to telecom, manufacturing, banking and retail amongst some of the few sectors (pg.9) TCS does not have a high dependency on any specific sector.................

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