A DISSERTATION REPORT ON ORGANIZATIONAL ANALYSIS OF TATA CONSULTANCY SERVICES (TCS) LTD FOR

PARTIAL FULFILMENT F OR THE AWARD OF THE DIPLOMA OF POST GRADUATE DIPLOMA OF MANAGEMENT(PGDM)

SUBMITTED TO

SUBMITTED BY

Prof. Shabnam Siddqui

Ms. Nisha Kumari

Enrollment No. UIMS-PGDM-10-035 Batch: 2010-2012
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UDAI INSTITUTE OF MANAGEMENT STUDIES JAIPUR

PREFACE

As a part of my syllabus of PGDM programme in Final year, I was assigned some Practical and theoretical project work. Study of management will be immaterial if it is not coupled with study of financial aspect of the business. It gives the student an opportunity to learn the connection between comparison & execution to test & verify application of theories & help in the comparison of management theories and practice. The study gives a chance to know about the profitability and financial position of the firm. I have chosen TCS which is a $14.5 Billion Global company in Information Technology Services, R&D Services, and Business Process Outsourcing. This report contains the analysis of the 8 years data of the company. In the Scenario Analysis of the company we have included the companys industrial GDP, its Market Share, Market Capitalization, Market Growth, HR policy etc. some other reason of choosing this segment are; Highly versatile & innovation oriented sector Large number of employees are working Highly challenging job opportunities High growth opportunities Work on international project Platform to show the difference dimension of talent

ACKNOWLEDGEMENT

With a sense of gratitude and respect, I would like to extend my heartiest thanks to all of those who provided help and guidance to make this project a big success. No Project is ever the outcome of single individuals talent or effort. This work is no exception. This project would not have been possible without the whole hearted encouragement, support and co-operation of our guide, friends and well-wishers. Although it is not possible for us to name and thank them all individually, I must make special mention of some of the personalities and acknowledge our sincere in debtness to them. The successful completion of this project rests on the shoulder of many persons who have helped us directly or indirectly. I wish to take this opportunity to express to all those, without whose help, completion of this project would have been difficult. I am indebted and thankful to all the individuals who have guided, advised, inspired and supported me in making this project a success.

My gratitude to my honorable guide Prof. (Dr.) Neeran Gautam for giving us the opportunity for developing the project and his able guidance, inestimable motivation and constant encouragement throughout our project. Without his help this project would never have been realized in its entirety. I would also like to express my gratitude to my immediate project supervisor Dr. Ruby Dwivedi for her immense help in this project.

CONTENT

SL. NO. 1 2 3 4 5 6 7 8 9 10 11 11 12

TOPICS

PAGE NO.

Introduction to the company Introduction to IT industry& TCS strategic Analysis External Analysis External Environment- PESTLE Analysis Porters 5 Forces model: IT Industry Company Overview SWOT Analysis TCS Strategy Analysis BCG matrix of Tata Group BCG Matrix for TCS TCS Joint ventures Annexure Board of director Key Financial Ratios of TCS
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6 10 13 15 17 20 23 26 30 32 37 39 40

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EV/EBITDA ratio of Tata Consultancy Services

48 53 56 60 61 64 66 67

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15 16 17 18 19 20

Human Resource Planning (HRP)

TCS Training and Development mode Self Competency Mapping For Compatibility Check Alternative career Path HR Outsourcing Human Resource Outsourcing: Scope for India Conclusion Annexure

INTODUCTION

Tata Consultancy Services 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 TM 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 100,000 of the world's best trained IT consultants in 50 countries. The company generated consolidated revenues of US $5.7 billion for fiscal year ended 31 March 2008 and is listed on the National Stock Exchange and Bombay Stock Exchange in India. Tata Consultancy was established in the year 1968 and is a pioneer in the Indian IT industry. Despite unfavorable government regulations like the Licence Raj the
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company succeeded in establishing the Indian IT Industry. 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. F C Kohli was the first general manager. JRD Tata was the first chairman, followed by Nani Palkhivala. Together with other organic growth initiatives like the expansion into Brazil, Mexico, China and Hungary as well as by setting up strategic units to pursue new opportunities in the financial services products space or new services like Remote Infrastructure Management and Platform-based BPO, TCS set the stage for positioning its brand and its offerings in a unique manner to global customers. The culmination of all these led to the Companys offerings of TM Global Network Delivery Model (GNDM ) across India, China, Europe, US and Latin America as well as its integrated full services offerings, all backed by the promise of certainty of experience for customers. In 2007, this value articulation of Experience certainty was formally introduced, accepted and validated by global customers.

As the Indian economy continued to grow in the new millennium, the need for technology to drive inclusive growth became part of the national agenda. TCS, which had been investing in the domestic IT market since its inception was well positioned to help the Government at the central and state level in its new initiatives. Some of the complex, e-governance projects which directly impacted Indians include the digitization of the Ministry of Corporate Affairs as well as citizen service portals built for State Governments. On its own initiative, TCS created a digitized delivery system for the NREGA program and is building a mobile based advisory service for farmers. In a reflection of the Companys pioneering spirit and with a desire to spread the benefits of the IT revolution across the country and given Ramadorais passion for education and development, TCS has initiated several bold steps to take the IT industry beyond the metros. A new training center was opened in Guwahati in the North-East of the country. TCS launched Ignite, a unique program to train science graduates software professionals. Over 2,500 young graduates including 60 per cent first generation graduates have completed the program and been inducted into the Company. The philosophies of leadership, delivery excellence and the promise of Experience certainty are pillars on which the success of TCS is cemented. This is perhaps, best reflected in the fact that as a $ 6 billion company, TCS has achieved its vision of being counted amongst the top 10 IT service companies in the world today. TCS' ability to deliver high-quality services and solutions is unmatched. It is the worlds first organization to achieve an enterprise-wide Maturity Level 5 on both CMMI and P-CMM, using the most rigorous assessment methodology SCAMPISM. Additionally, TCS Integrated Quality Management System (iQMS) integrates process, people and technology maturity through various established frameworks and practices including IEEE, ISO 9001:2000, CMMI, SW-CMM, PCMM and 6-Sigma

Brand Name

TCS

Logo

Category Sector Tagline/Slogans USP STP Segment

IT Services IT and Technology Experience Certainty India's largest IT company

Enterprises seeking IT solutions Large overseas enterprises along with domestic clients.

Target Group Positioning SWOT

Focus on emerging markets as well. Trustworthy company with big customers

1) High command on local and domestic market(India) 2)Strong brand backing (TATA) Strength 3) Strong Ethics 1) Doesn't innovate Weakness Opportunity 2) Failed in product segment 1) emerging markets 1) Attrition and Employee loyalty 2) Bigger MNC's entering India and competing for global clients Threats Competition 1) Infosys 2) Wipro Competitors 3) Mahindra Satyam 3) Focussing on organic growth

IT Industry & TCS Strategic Analysis

In an increasingly flat world, significant complexity and uncertainty is getting attached to the unprecedented economic crisis. The Indian economy has also been impacted by the recessionary trends, with a slowdown in GDP growth to seven per cent. The focus and exponential growth in the domestic market has partially offset this fall and insulated the country, resulting in net overall momentum. The IT-ITeS industry in India has today become a growth engine for the economy, contributing substantially to increases in the GDP, urban employment and exports, to achieve the vision of a young and resilient India. During the year, the sector maintained its double digit growth rate and was a net hirer. This growth has been fuelled by increasing diversification in the geographic base and industry verticals, and adaptation in the service offerings portfolio. While the effects of the economic crisis are expected to linger in the near term future, the Indian IT-BPO industry has displayed resilience and tenacity in countering the unpredictable conditions and reiterating the viability of Indias fundamental value proposition. Consequently, India has retained its leadership position in the global sourcing market. India is now the leading country in providing IT Enabled Services in the world. According to a recent study, Indian IT & ITES is expected to grow at 10.8% in 2009,
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the lowest in the last five years, due to the current global meltdown. But in next four years, it would grow at 13.9% to touch revenue of $110 billion. NASCOM, the premier institute which manages all the IT and ITES companies in India, estimated that the revenue of the IT Enabled Services will cross the revenues of IT industry by 2010. The export revenue generated from ITES is about US$ 47.5 billion and has a projection of more than US$ 86 billion by 2012. (CAGR 20.7%) Source: NASSCOM McKinsey Research India holds a dominant share of the global offshore IT-ITES sector (65% of the global market in offshore IT and 46% of the ITES market). Yet, at US$ 31.3 bn in FY07, Indian IT-ITES exports accounted for less than 3% of the global spend on ITITES. This clearly indicates significant headroom for growth. If India maintains its current share of the global offshore IT-ITES market, IT-ITES exports from India will exceed US$ 60 bn by FY10 and US$ 86 bn by FY12. Further, growing at current trends, Indian IT-ITES exports are projected to reach nearly US$ 330 bn by FY20 (nearly 14% of the projected worldwide spend). Software and services exports (including BPO) are expected to account for over 99 per cent of total exports, employing over 1.76 million employees. But the Indian IT companies will have to move up in the value chain and concentrate more on high value added services.

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Why Outsourcing?
Outsourcing system allows companies to contract for services that are not within the scope of their expertise, so that they can focus their time, money and energy on their core competencies instead of wasting valuable resources trying to gain Understanding of areas that are somebody else's expertise". Challenges While the industry has significant headroom for growth, competition is increasing, with a number of countries creating enabling business environments aimed at replicating Indias success in the IT-BPO industry. Hence, concentrated efforts are required by all stakeholders to address the current challenges, to ensure that India realizes its potential, and maintains its leadership position.

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External Analysis
Current position of IT/ITeS sector in India

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External Environment - PESTLE Analysis

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National Revenues: IT & ITES Industry in India

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Market share

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Sources of Revenue

Porters 5 Forces model: IT Industry

This industry analysis model was developed by Michael E. Porter of Harvard Business School in 1979. This model was challenged and a extended six forces model has been developed which includes Complementary such as combination products (e.g: MS Window and Mcafee Antivirus) The five forces with reasons for existence are described below with an example of telecoms industry. Reasons that attract new entrants in ay industry are: Good returns High and steady growth
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 Low barriers to entry (capital costs, raw materials) Latest technology Reasons for high probability of Substitute products and services are: Switching costs Price performance trade off of substitutes Patents of Invention Reasons for threat from Buyers: Buyer purchase volumes relative to seller sales. Option for substitute products with lower switching costs. Brand identity Reasons for threat from Suppliers: Switching costs between suppliers Presence of substitute products. Costs relative to total purchases in the industry. Supplier brand identity favoured by buyer. Rivalry among or within firms: Like for like product performances Advertising strategies Customer service Price competition Time to Market

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THREAT OF SUBSTITUTES 1. Other offshore locations such as Eastern Europe, the Philippines and China, are emerging and are posing threat to Indian IT industry because of their cost-advantage. However, this should have an impact only in the medium to long term. 2. Price quoted for projects is a major differentiator, the quality of products being same.

BARGAINING POWER OF SUPPLIER

BARGAINING POWER OF CUSTOMERS

1. Due to slowdown, the jobcuts, the layoffs and bleak IT outlook. 2. Demand and supply of IT professionals is no longer that favorable to employees. 3. Availability of vast talent pool freshers and experienced.

RIVALRY AMONG FIRM 1.Commoditized offerings 2.'low-cost,littledifferentiation positioning. 3. high industry

1. Large number of IT companies vying for IT projects resulting in high competition for projects. 2. Huge decline in IT expenditure: Indian IT sector is dependent on USA and BFSI in particular for majority of its revenues, and with the recent financial crisis, the new spending from these has reduced tremendously. 3. However, for the existing products and services, the clients continue the old companies.

BARRIERS TO ENTRY

1. Low capital requirements. 2. Large value chain, space for small enterprises. 3. MNCs are ramping up capacity
and employee strength.

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TATA CONSULTANCY SERVICES

Rapid globalization, diversification, and intense competition have resulted in a more dynamic and complex world. Corporations have to increase agility in a way in which their business units across geographies operate and collaborate seamlessly across people, processes and technology. Tata Consultancy Services Limited (TCS) is a leading and Indias largest provider of IT Services, Business Solutions and Outsourcing with revenues of USD 6B during FY08-09. TCS envisioned and pioneered the adoption of the flexible global business practices that today enable companies to operate more efficiently and produce more value. More than 95 percent of TCS customers reward the companys reliability, passion, creativity, and unique ability to handle the broadest range of their IT needs. TCS has 143,000+ worlds best trained IT consultants located in 50 countries. TCS achieved this by creating and perfecting a unique method of global deployment and delivery of high quality, high value services known as Global Network Delivery Model (GNDM), the strategic services delivery concept that has reshaped the IT services industry. GNDM is a unique network of 79 Delivery Centers in 16 countries. These delivery centers operate at the same quality (TCS is the only company in the world to be assessed at CMMi Level 5 through a single assessment across all its delivery centers), security and skill levels, giving customers the same experience of certainty across the organization globally. GNDM provides the fastest turnaround time from concept to service delivery, with certainty of cost, quality and schedule, tailored for its customers based on the type of work, risk mitigation needs, business knowledge requirements, geographic spread, scale of delivery etc. Being a pioneer in the IT industry, TCS have a good appreciation of trends and challenges faced by industries TCS choose to focus. The solutions TCS build are

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powered by domain expertise, enterprise solutions and infrastructure services, turning the challenges of globalization into a competitive edge for clients. TCS helps some of the worlds largest companies adopt the right technology-enabled solution that helps them:

hains

-time business insight

Profile Tata Consultancy Services Ltd. (Founded in 1968, went public in August, 2004) Vision: Top 10 by 2010 Leadership in IT Outsourcing: TCS is the largest IT consulting company in Asia with 143,000 of the world's best trained IT consultants and an acknowledged pioneer, innovator and thought leader in the IT space, having literally coined the term Offshore Development. It is also a global consulting, IT services and systems integrator with a 40-year track record and world class processes and methodologies. TCS has won many accolades for its significant contribution to the maturity and visibility of the Indian IT services worldwide Trusted Partner: TCS is part of one of Asia's largest conglomerates - the TATA Group. The group, with annual revenue of more than USD 72.5 billion+ (Feb, 2009), spans across diversified industry segments such as consumer package goods (CPG), energy, telecommunications, financial services, chemicals, engineering & materials. The TATA Group, a symbol of trust in India, is known for its pioneering spirit and the brand stands for business excellence and integrity. Headquarters TCS is headquartered out of Mumbai, India.
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Location TCS is operating in 47. TCS has 50+ delivery centers in India across 15 cities; 15+ development centers outside India. TCS employees are spread across countries. Thus, Global presence helps in country availability of competencies for any technical assistance mission or application project. Also, TCS deputes the associates on long term and short term basis to the local countries for specific engagements. Turnover Tata Consultancy Services Limited (TCS) is a leading and Indias largest provider of IT Services, Business Solutions and Outsourcing with revenues of USD 6 Billion during FY08-09. Number of customers Over 985 active clients; 6 out of Top 10 US Fortune companies are TCS clients. Customer revenue contributions are presented below: Mission: To help our customers achieve their business objectives by providing innovative, best-in-class Consulting, IT solutions & services. We shall make it a joy for all stakeholders to work with us. Values: Integrity, Excellence, Respect for the individual, Continuous learning and

sharing, Leading change.

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SWOT Analysis
Tata Consultancy services (TCS) is one of the major IT service providers. The company provides a wide range of services including business consulting, information technology, business process outsourcing, infrastructure, and

engineering. The company has extensive global reach, which provides a diverse revenue base. However, increasing competition threatens to erode its market share.

TCS Resources & Capabilities TCS has over 143,000+ (Apr-2009) World Class Professionals. 30% of workforce is women. Non Indian nationals comprise 8.3% of TCS workforce. TCS employees are from across 67 nationalities.

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Key Differentiators of TCS

Pioneer in the industry & Brand Having started in 1968, TCS has established himself as the industry leader. Being part of the trusted Tata group is also a big differentiator for TCS giving it a strong brand strength. Integrated full-services player Portfolio of offerings extends from consulting to implementation, testing and support; from engineering services to BPO; from products to end-to-end solutions. Collaboration with multiple stakeholders Having worked on large global scale enterprise projects, TCS appreciates the need for flexibility to work with multiple stakeholders from customers, partners, and other service providers. TCS have developed innovative engagement models that have proven TCS ability to deliver significant value to its customers in managing their projects as the sole solution provider, or prime/lead partner, or supporting partner. Global Network Delivery Model Unique network of 79 Delivery Centers in Brazil, Uruguay, Chile, China, Hungary, UK, Japan, Australia, Singapore and India that operate at the same quality, security and skill levels, giving customers the same experience of certainty across the organization globally with a lower total cost of ownership. High Quality and Maximum security In 2005, TCS was awarded enterprise-wide triple certification for: Quality (ISO 9001:2000), Security (BS 7799-2:2002) & Services (BS 15000-1:2002) Innovation Network TCS has established 19 labs with strong links to start-ups, academia and alliance partners to continuously develop innovative solutions for their customers.

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TCS Technology Partnerships and Relationships

Tata Consultancy Services combines its system integration expertise, flexible global delivery model and deep industry insights with the technological expertise and capabilities of its renowned alliance partners to offer competitive advantage to its customers. The alliances enable TCS to deliver cutting edge technological solutions and enhanced services to help customers integrate their business applications effectively while improving the operational efficiencies and ROI. Strategic partner relationships of TCS include leading industry players like SAP, Oracle, IBM, and Microsoft among others. Strategic Partners - Global System Integrator Partner - Global System Integrator and Global Certified Advantage Partner - Global System Integrator Partner - Global Consulting Partner

Growth Engine Partners - Consulting Partner - Global System Integrator, Preferred Offshore Partner - TCS is BEA Strategic Partner - System Integrator Partner, GSS Partner

Business Continuity TCS follows a well defined and mutually agreed (with customer) business continuity and disaster recovery plan. The BCP is tested on a pre determined frequency. This was recently invoked during the under-sea cable fault leading to disruptions in the voice/internet connectivity. The traffic was diverted through alternate routes as per the plan.

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TCS Strategy Analysis

TCS organization restructuring in April 2008 was one of the major moves in last decade to adapt to external environments. Having an organization structure that would respond to customer demands is most efficient way to lay down your business strategies. TCS did it little late but just in time.

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Business Strategy
TCS calls its Business Units as Industry Service Practice. TCS BU wise revenue distribution is as shown below

This clearly shows that TCS has 42.8% of exposure to Banking Financial Services & Insurance sector. No doubt, TCS has to re look its business strategy as the world financial institutions are in a tremendous shock of subprime crisis and think of scaling up revenue from other verticals/industries .

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Generic Business Strategy:

1. Low cost Global delivery 24X7 model. 2. Focus on customer relationship management, customer retention (for repeat business revenue which is 95.6%). 3. Timely delivery with the help of proven delivery & quality framework iQMS. 4. Differentiation in low end services in terms of cost, resources. 5. Differentiation in high end services such as consulting in term of niche offerings, expertise. 6. Protection from currency fluctuations with the help of currency hedging. 7. Due to its strong knowledge management system and resource strength, TCS has been successful in getting the cost leadership in the industry. 8. Since last decade, TCS has been following a more focused strategy where they are going as per local needs of customer and their nature of business. E.g. Middle East, Australia. They are being more focused region wise and customer wise rather than being generic. 9. Focus on the Centers of Excellence (Coe) to strengthen capability so as to build state-of-the-art solutions in specific technologies such as service-oriented architecture, testing, and virtualization. These high-end skills and scale will help TCS to tackle larger projects aimed at transforming clients IT applications and infrastructures.

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This shows that TCS has a heavy exposure to IT Solutions Application Development & Maintenance 48.6%. TCS has traditionally a low cost outsourcing player which provides application development and maintenance services, which till date account for almost half of its revenue. Though TCS has managed to bring down this percentage significantly in last decade by entering into niche areas like, BPO, infrastructure services, business consulting, IT consulting, asset leveraged solutions etc. TCS sees a strong growth potential especially into consulting, BPO and infrastructure services. Thus TCS is investing heavily into these areas to explore new market segments.

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BCG matrix of Tata Group

Portfolio Analysis of the Tata Group

The BCG Growth Share matrix uses the dimensions of relative market share and the market growth rate to establish a 2*2 matrix containing 4 main quadrants Stars (high market growth, high market share), Cash Cows (low market growth, high market share),Question marks (high market growth, low market share) and Dogs(low market growth, low market share). The ideal strategy is to hold on to the Stars and the Cash Cows, divest the Dogs and take a call on the Question Marks (hold/divest).We have conducted a detailed analysis (using the BCG Matrix) of the portfolio of companies in the Tata Group. This involved analyzing the sectors in which the Tata group operates as well as the companies in the Tata Group within each sector. We studied the operational and financial performances of each company to understand their growth stories. Special emphasis was laid on identifying the organic an inorganic growth routes pursued by each of these companies under the Tata umbrella. The conclusions drawn about these companies are based on analysis of the global strategy of the Tata group and on detailed conversations with top executives in the Tata Group. The analysis reveals that Tata Steel, Tata Power, Tata Motors and Indian Hotels emerge as clear Stars (high market growth, high market share). Hence, they should be retained and the investment in these companies should be increased. Tata Chemicals and Tata Tea emerge as the Cash Cows (low market growth, high market share)and should be held on to for the time being. Some of the Question Marks (high market growth, low market share) are Tata Tele services, Voltas and Tata Communications

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The profitability of the Tata Group in the telecommunication sector has shown a consistent decline from 10% in 2003 to 4% in 2006-07.Despite the telecom boom in India, the question on the presence of the Tata Group in the telecommunications sector warrants further discussion. For the Tatas, the broad objective behind entering any sector is to be among the top 3 in that sector. Despite having had a presence for many decades in the consumer durables segment, the Tatas have been unable to capture the leadership position in the segment through Voltas. Moreover, the growth registered by Voltas over the past few years has also been far from impressive which necessitates the need to critically evaluate its performance in this segment. In addition, the question of operating so many companies under the Tata Group needs to be looked into. Does it make sense to have so many companies in the first place? Should there be a relook into the question marks like Voltas, Tata Communications and Tata Teleservices? These are hard questions that need to be answered as the group keeps going forward. With close to 100 companies under one roof, the question arises whether all of them should be under the Tata Group or should some be spun off

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BCG Matrix for TCS

Market Penetration Strategy Current Markets: USA and Europe Current Products: ADM, BPO, KPO, consultancy services (in BFSI, manufacturing and retail) and software products (financial products). Recommendation: As most large clients in US and Europe are cutting costs, TCS needs to be more aggressive on cost and quality front. Market Development Strategy New/Emerging Markets: India, Middle-east and Australia Current Product: ADM, BPO, KPO, consultancy services (in BFSI, manufacturing and retail) and software products (financial products). Recommendation: Since these are fast developing IT market, TCS needs a paradigm shift in focus from US and EU markets to these markets. Product Development Strategy Current Market: USA and Europe New Product: Consultancy and package implementation services in relatively growing sectors esp. life sciences & healthcare, aviation sector, and KPO services.
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Recommendation: Concentrate on building expertise in these domains by strategic acquisitions. Other global strategies cessfully leveraging labor cost in Eastern Europe, South America and China. Getting big foreign names on board of directors is also one of the key strategies for TCS. The current three foreign directors are: Clayton M Christensen (HBS Professor, joined in 2006), Dr. Ron Sommer (former Chairman of the Board of Management of Deutsche Telekom AG, joined in 2006) & Laura M Cha (member of the Executive Council of the Hong Kong Special Administrative Region (SAR) and Non-Executive Chairman of HSBC Investment Asia Holdings Limited) Look beyond US and UK for growth and beyond India for skills to emerge as a global firm. Clearly bullish with successes such as ABN Amro in continental Europe, Qantas in Australia, and almost 18% to 20% revenue from the Asia Pacific market, TCS wants to grow its businesses in global markets including India. Recent acquisitions in Ireland and Latin America demonstrate its ambition to create delivery centers of respectable size outside of India. TCS was the first one to set up a delivery centre in China.

Corporate Strategy
TCS is a firm believer in organic growth and acquire only those companies which are in line with TCS strategic long term goals. Diversification Strategy In February 2008, TCS restructured its global operations to adopt an integrated, customer-centric approach, which is expected to helpful in eliminating the risk factors arising from the U.S. economic collapse. The companys operations are now divided into five units: Industry Solutions (for vertical-specific services), Major
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Markets (North America, Western Europe and the U.K), New Growth Markets (Latin America, Eastern Europe, Middle East & Africa and India), Strategic Growth Business (TCS Financial Solutions, SMB and Platform-based BPO) and Organizational Infrastructure. TCSs diversification plan seems to have worked since the company has been gaining momentum in Europe and other emerging markets, which is evident in the companys marked growth rate of 40% year to year in its FY08s European operations. The firms operations in Latin America and Middle East have also seen considerable expansion. In order to deepen its penetration, TCS has established delivery and offshore centers in countries like Brazil, Uruguay and Mexico. The weakening European economy and its GDP decline of 0.2% in the second quarter (April, May, June) might hinder TCSs diversification plans, as it is bound to have a direct impact on BFSIs outsourcing services. TCS, which draws 44% of its global revenue from the BFSI sector, is likely to be affected. Also, the Indian market is becoming difficult to afford, leading to a wider gap between the demand and supply of IT consultants. This can be traced to the fact that hired employees lack required skills or fail to deliver their expertise, but still seem to be demanding higher wages. Strategic Alliances TCS has strategic relationships with various global technology vendors. These relationships are in various dimensions such as Customer, Service Provider, Supplier, and Alliance Partner. Extending collaborative research to several global technology vendors has made relationships with them more holistic. TCS and these technology vendors collaborate on joint research leveraging each others strengths to research and to the development of best-of-breed offerings. The intent is to define and develop solutions with associated services and offer the same as an integrated business model to customers. Some of the strategic alliances are listed below. Intel: Intel and TCS provide information technology products and services that complement each other. The companies are engaging in a technology alliance model

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in which the two organizations collaborate on research and develop solution offerings to deliver customer-specific solutions to the marketplace. This alliance has matured over the last two years of collaborative work, with the companies implementing a well-defined model for collaboration using a three-stage approach: Joint innovation engagements defining new or improved solutions Joint go-to-market strategies for the solutions

The companies have completed two significant virtualization and balanced compute research projects with these objectives: Virtualization: Demonstrate server consolidation through virtualization using multi-core Intel Xeon processors and Intel Virtualization Technology on a real-life customer application to reduce total cost of ownership. Balanced Compute: Demonstrate and validate balanced compute model usages in real end-user scenarios, showcasing central manageability and client side computing using a combination of OS and application streaming technologies on Intel vPro technology-based platforms.

SAP: SAP as a leading technology and product vendor is one of the key partners of TCS. The partnership with SAP has been a long-standing one and multi-dimensional. Leveraging and extending this existing partnership to collaborate for joint research and innovation was a logical next step for both SAP and TCS. Senior Research Scientists of SAP and TCS initiated this collaboration setting the objectives and defining the modus operandi for carrying out research in a collaborative manner. And they committed to cause by undertaking the responsibility to be Executive Sponsors in the respective organizations. Collaboration with SAP Research was initiated after detailed discussions and exchange of research interests from both SAP and TCS. Identified areas include
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Model-driven Architecture and Integration of Enterprise-Data, Web 2.0, Internet of Services, and Internet of Things. Hewlett-Packard: HP and TCS have initiated discussions for joint research in the areas of SaaS, Power Management & Cooling, Utility/Grid Computing, Cloud Computing, Green IT and Next Generation Data Center. Some of the potential research initiatives could also involve development of market-specific offerings based on value-added services, using products and solutions from HP. EMC2: With TCS being an IT solutions and services provider, EMC2 and TCS have conceptualized IT solution architectures for specific industry-domains integrating products from EMC2 and software platforms from TCS. Acquisition Strategy TCS is looking at growth from two ways first through organic means and second through the inorganic way. The inorganic way of growth is through acquisitions of those companies that make business sense to TCS. The companies should add great value to TCS. Like for instance TCS acquisition of CMC is helping it taking a sharper look at the domestic IT business. Both the companies have synergies in the government sector, since both the companies are well known for doing work for the government. TCS as part of its strategy to look at growth options has set up an internal team which will focus only on acquisition strategies .Below are some of the acquisitions of TCS in the recent past: Nov 2008: TCS Acquisition of Citigroup Services. TCS gains a range of new capabilities, with end-to-end banking BPO service offerings, and an opportunity to provide integrated IT and BPO services to the banking market, as well as the significant contracted revenue commitment. Over 12,000 staff has transferred with the deal. From the Citigroup side, they get a cash payment, and an external partner committed to deliver (and probably to improve) the services they have monetized their investment in setting up CGS (Citigroup Services). They no longer have direct responsibility for managing an offshore

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delivery centre in a market becoming increasingly competitive, and they have significantly reduced their overall headcount. Feb 2006: Tata InfoTech (TIL) Limited was merged into TCS Limited. TIL was a software services company like TCS with operations in the UK, U.S, and Australia among others. The merger gave TCS a broader customer base and deeper penetration into key geographies. The acquisition was touted as providing TCS more ability to provide full-service to customers in affected markets. March 2006: TCS, through its subsidiary, Diligenta, acquired a basis in part of UKs Pearl Group. Pearl is the 2nd largest player in the UKs life insurance and pension BPO industry, giving TCS a new stake in BPO work for the UK market. Right after Pearl, TCS picked up Comicron in Latin America to offer banking solutions in both IT and BPO services in that market, and now Spanish language capability. Experience gained here will again allow TCS to expand further into new markets with BPO offerings, especially in the rather large and under-addressed Spanish-speaking world. Oct. 31, 2006: Similar to the financial stakes made above, TCS again expanded its banking products and consolidated its European operations after acquiring a 75% equity stake in its Switzerland-based partner, TKS-Teknosoft. TKS was the marketing agent for TCS in Europe.

TCS Joint ventures

TCS went for a joint venture (JV) in Feb 2007 with three Chinese partners and is billed by the company as a "role model for the Chinese IT industry. The TCS joint venture, in which Microsoft took a 10 per cent stake, planned to employ over the next five year at least 5,000 people that would represent a considerable scaling up from the company's then present strength of 800 employees in China. The Chinese software industry remains fragmented and lacks scale. Only about 10 Chinese IT
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firms among some 8,000 employ more than 1,000 people. The TCS joint venture will thus be one of the largest software companies in China once it reaches its 5,000employee target. The new venture is widely expected to enable TCS to finally break into the $30-billion domestic Chinese IT market, a market that has in the past proved elusive for Indian IT companies. Another JV is between TCS and SBI (State Bank of India) in Nov 2005 to cater advanced technology solutions and domain consulting for the banking and financial services sector. The joint venture is called C-Edge Technologies Ltd. and has an authorized capital of Rs. 40 crore. TCS holds 51 per cent of the equity in C-Edge and SBI the balance with no asset transfer. The joint venture was to offer transformational capabilities to banks and financial institutions in India and other markets by helping them to use technology as a competitive tool in the market place using bureau services and service platforms. "In three to five years, we hope the company creates niche services in the national and international stage,'' said Mr. Ramadorai.

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Board of Directors

Non-Executive Board Members

Ratan N Tata, Chairman S Ramadorai, Vice Chairman Laura Cha, Director Prof. Clayton M Christensen, Director Aman Mehta, Director Dr. Ron Sommer, Director Venkatraman Thyagarajan, Director Dr. Vijay Kelkar, Director Ishaat Hussain, Director Phiroz A Vandrevala, Director

Executive Board Members

N Chandrasekaran, Chief Executive Officer and Managing Director S Mahalingam, Chief Financial Officer and Executive Director
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Key Financial Ratios of Tata Consultancy Services

Mar '11 Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) 29.96 27.67 28.12 27.21 27.21 25.44
40

Mar '10

Mar '09

Mar '08

1.00 14.00 44.82 149.58 97.95 79.65

1.00 20.00 34.06 117.74 75.24 79.65

1.00 14.00 61.52 228.92 134.37 59.30

1.00 14.00 51.35 189.39 110.22 59.30

28.93 26.62 26.89 26.44 26.44 24.13

26.87 24.75 25.01 26.09 26.09 20.74

27.11 24.42 24.64 25.29 25.29 24.11

Adjusted Net Profit Margin(%) Return On Capital Employed(%) Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Excluding Revaluations Return on Assets Including Revaluations Return on Long Term Funds(%) Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed

25.44 44.38 38.80 38.74 99.53

24.13 42.46 37.30 37.75 76.72

20.74 43.27 35.13 41.06 136.38

24.11 42.92 41.34 39.16 111.43

99.53 44.38

76.72 42.46

136.38 43.27

111.43 42.96

2.41 2.40 0.01 0.01

1.49 1.48 0.01 0.01

1.83 1.83 0.01 0.01

1.98 1.97 0.01 0.01

435.25 0.01 462.13 406.19

674.43 0.01 723.63 639.14

784.41 0.01 840.52 688.32

1,383.58 0.01 1,517.73 1,453.50

5,451.66 7.19 5,451.66 4.91 1.50 4.91 92.90 0.01 111.38

3,398.94 6.54 3,398.94 4.74 1.52 4.74 72.97 0.04 55.58

1,321.77 6.00 1,321.77 5.15 1.66 5.15 93.98 0.07 67.44

1,137.21 5.66 1,137.21 5.74 1.68 5.74 98.28 0.03 71.55

0.06 80.35

0.10 78.67

0.23 79.74

0.24 80.43

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Selling Distribution Cost Composition Expenses as Composition of Total Sales Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times

0.05 91.08

0.03 92.38

0.09 93.01

0.14 90.51

42.21 39.40 57.73 60.54 0.01 Mar '11

81.61 75.30 19.37 25.53 0.01 Mar '10 28.62 76.72

34.20 31.41 70.74 72.81 0.01 Mar '09 47.92 136.38

35.55 32.26 62.47 66.11 0.00 Mar '08 46.07 111.43

Earnings Per Share Book Value

38.62 99.53

Objective of internal Benchmarking.

To know weather operating Profit Before Tax is consistently increasing or not. If the op PBT consistently increasing through various periods in ascending order , it indicates that the company has implementing the cost effective measures. When we analyze each of the cost in the benchmarking statement we cal the cost as a % of the NOI

1. MATERIAL COST If Increases: Due to increases in the Price of Material. Due to increase in the Quantity of the material. If Decreases: Better Utilization of the material.
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 Trading activities have increased. i.e Trading activities increases over the manufacturing activities Note: . If Trading activities increases over the manufacturing activities and still the cost of material increases that means that Trading activities started but the company not getting benefits.

Raw Material
78.00% 77.00% Axis Title 76.00% 75.00% 74.00% 73.00% May-05 Mar-07, 73.36% Oct-06 Feb-08 Axis Title Jul-09 Nov-10 Raw Material Mar-06, 77.25% Mar-08, 77.25% 77.10% 77.21% Mar-09, Mar-10,

2. EMPLOYEE COST It depends on Factor of productivity and Way you utilize your people. If Increases: Productivity of employee is low Wrong persone for the wrong job. If Decreases: Improving the productivity of the employees by better people orientation. Right person for the right job.

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Employee
2.50% 2.00% Axis Title 1.50% 1.00% 0.50% 0.00% Sep-05 Mar-06 Oct-06 Apr-07 Nov-07 Jun-08 Dec-08 Jul-09 Jan-10 Aug-10 Axis Title Employee

3.MANUFACTURING COST:If sales goes up and as well as Material cost goes up that mean Bad Manufacturing process. And if Manufacturing cost goes down and sales increases that mean excellent manufacturing process If Increases: Inefficient operations Increases in carrying cost. Rising of fuel prices. If Decreases: Efficient operations. Effective productive process.

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Manufacturing cost
5.00% 4.00% Axis Title 3.00% 2.00% 1.00% 0.00% May-05 Oct-06 Feb-08 Axis Title Jul-09 Nov-10 Manufacturing cost

4.SELLING AND ADMIN COST:Sales goes up and selling & admin cost also increases which indicates that Product is not of quality standard. Investment to much in Advertising without getting adequate return. If Increases: Huge investment on Advertisements. Quality and feedback of product is not as per expectation. If Decreases: Existing product is in mature state and no new product was launched. Existing product capture the major market share.

S&A
6.00% Axis Title 4.00% 2.00% 0.00% Sep-05 Mar-06 Oct-06 Apr-07 Nov-07 Jun-08 Dec-08 Jul-09 Jan-10 Aug-10 Axis Title S&A

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5. INTREST:If Increases: Investment through Borrowing If Decreases: Debts were paid off. Investment

Intrest
0.40% Axis Title 0.30% 0.20% 0.10% 0.00% May-05 Oct-06 Feb-08 Axis Title Jul-09 Nov-10 Intrest

6. DEPRECIATION:If Increases: New asset has been purchased. Re-invested on assets. If decreases : No new assets has been purchased. Assets has become obsolete.

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DEP
4.00% 3.00% 2.00% 1.00% 0.00% May-05 Oct-06 Feb-08 Jul-09 Nov-10 DEP

7. PBT:If Increses: Increases in other income.

OP PBT
20.00% Axis Title 15.00% 10.00% 5.00% 0.00% May-05 Oct-06 Feb-08 Axis Title Jul-09 Nov-10 OP PBT

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EV/EBITDA ratio of Tata Consultancy Services and its peer group for financial analysis

Analysis
The EV/EBITDA ratio is a relevant ratio for financial analysis. Tata Consultancy Services shows a EV/EBITDA ratio of 14.32 for the next 12 months, which is significantly higher than the median of its peer group: 7.61 according to this financial analysis Tata Consultancy Services valuation is way above its peer group's. this ratio is significantly higher than the average of its sector (Computer Services) 6.79 according to this financial analysis Tata Consultancy Services valuation is way

Tata Consultancy Services Peer group: (Ratio is based on Dec 2011

Tata Consultancy Services Peer group

Enterprise Value(in thousands USD) Tata Consultancy Ser... Cognizant Techno Sol... Infosys Ltd
27 040 168 18 734 470 43 136 481

EV/EBITDA
2012 next 12 month 13.81 14.32

Relevance Score

12.20 12.32

100%

11.54 11.98 2.17 2.32

96% 82%

Computer Sciences 4 821 826 Corp. Hewlett Packard Co IBM Wipro

246 410 950 19 102 677 78 406 351

4.73

4.70

77%

8.86

8.88

71% 67%

11.78 12.22

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above its sector. TCS V/S OTHER OFFSHORE PLAYERS Among the top four Indian IT companies, Infosys has highest total score in ADM space (on the back of very high score in strategy), followed by TCS -having highest score in current offering and market presence (as can be seen in the table given below). Considering its strengths in ADM space TCS is expected to maintain the lead among offshore players going forward.

\Globally TCS Lead

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In China, TCS has entered into Joint Venture (JV) with 3 Chinese parties (Beijing Zhongguancun Software Park Development Company, Uniware Company and Tianjin Huayuan Software Area Construction and Development Company), which are supported by National Development and Reforms Commission (NDRC)- a Chinese government organization. TCS stake in JV is 72..22%, whereas that of Chinese parties is 27.78%. JV has entered into agreement with Microsoft, as a result Microsoft will join the JV by March 2008 and its stake will be 10%. The share of TCS will come down to 65% after the entry of Microsoft in JV. At present the employee strength of the JV is 1,100 plus (92% local recruits), which it plans to increase to 5,000 people by FY11. Whereas in revenue terms, the Company expects to touch $ 35 mn in FY08. TCS has head start against other Indian IT players in China, in terms of both revenues and employee strength. Companys Chinese operations serve both local customers (i.e. Chinese companies) as well as global clients, share of which is 50:50. Some of its major win from Chinese market includes $100 mn deal from Bank of China- to provide IT solutions

ADVANTAGES OF TCS OVER ITS COMPETITORS

Key strengths of TCS as compared with its listed peers Infosys and Wipro are: Strong vertical presence: TCS derived nearly 60 per cent of its revenues in 2003-04 from BFSI (banking, financial services and insurance) and manufacturing. These two sectors BFSI and manufacturing together account for 50 per cent of the global IT spend. In telecom also, the company's presence is quite strong. In each of these sectors, TCS is bigger than its largest domestic competitor. In revenue terms, the BFSI practice of TCS is about 35 per cent higher than that of Infosys; in manufacturing and, in the telecom vertical, it is comparable to Wipro. Even in newer verticals life sciences, for instance it has ramped up quite sharply.

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Good spread of service offerings: In service offerings, TCS has its presence across the gamut, ranging from bread-and-butter application development and maintenance to testing, engineering services and infrastructure management. In terms of revenues in 2003-04, the package implementation segment took the lion's share, as it is almost 1.5 times bigger than those of Infosys, Wipro and Satyam. Over the next year or so, it will increasingly compete in large deals with multinational vendors in the area of systems integration, infrastructure management and consulting. Client count and profile: The success of TCS in scaling up its clients is evident from its $20-million and $50-million clients which, at 16 and 4 respectively, number more than its billion-dollar peers. However, Infosys and Wipro have been adding $1million and $5-million clients faster than TCS over the past year. TCS has had a string of enduring relationships with clients. Names such as GE, P&O Nedlloyd and SegaIntersettle fall in the 10-20 year bracket, while clients such as AIG, HP, Prudential, Standard Chartered and Target fall in the 5-10-year bracket. Fixed-

GPRV The Growth Score for Tata Consultancy Services is 5.9 /10. The Growth Score for it's peer group is 5.3 /10. This means that Tata Consultancy Services has higher growth than its peers. The Profitability Score for Tata Consultancy Services is 8.4 /10. The Profitability Score for it's peer group is 7.8 /10. This means that Tata Consultancy Services is more profitable compared to its peers. The Value Score for Tata Consultancy Services is 1.5 /10. The Value Score for it's peer group is 2.1 /10. This means that Tata Consultancy Services is slightly more expensive that its peers

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The Value Score for Tata Consultancy Services is 1.5 /10. The Value Score for it's peer group is 2.1 /10. This means that Tata Consultancy Services is slightly more expensive that its peers.

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HUMAN RESOURCE PLANNING (HRP)

Model of HRP System:

Manpower Planning Recruitment & Selection Training & Development Performance Appraisal Promotion, Transfer, & Demotion Welfare Activities

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Area of Recruitment:
Consultant - CRM / SCM/ ERP / JDE - Enterprise Security - Testing Services - Legal / Law - Wireless Services / Switching Systems - Independent Verification & Validation - Enterprise Application Integration (EAI) - Banking / Finance / Securities / Insurance - TISP Solutions OSS / BSS Human Resource / Recruitment/ Training - Finance/ Accounts / Auditing - Marketing /Sales / Business Development - Microsoft, Mainframe & Internet Technologies ,Functional & Domain
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PROCESS OF RECRUITMENT:
Round 1: Written test Verbal: This section will have 15 questions related to synonyms, antonyms, Analogies, SC, Prepositions and reading comprehension. Aptitude: These sections will have 15 questions related to aptitude topics like Time & Work, Time & Distance, Blood Relations, Series Completion, Puzzles, Calendars, Clocks, Percentages, Ratio proportions, Ages, Pipes and Cisterns etc. Technical: This section will have 20 questions related to basic technical concepts from C, C++, Java, Linux, UNIX, DBMS, SQL, Programming fundamentals, Hardware, Software Engineering, Micro Processors etc. Candidates are informed to brush up their technical skills which were covered in their regular academic curriculum. Round 2: Technical Interview This is a major elimination round. Candidates should be thorough with their basic technical skills to clear this round. Candidates are here by informed to be prepared with their core subjects. Round 3: HR Interview Candidates can expect basic HR interview questions like Tell me about your self, Why should I hire you, Why only WIPRO, What is SIX sigma level. Candidates will be tested in their communication and vocabulary during technical and HR interviews. Round 4: Placement Upon Joining, the incumbent shall be given an employee code number by Manager(HR) and he shall fill up the joining forms and shall submit the same to the Manager(HR) for further course of action. Wipro recruit 40% employees from

55

campus recruitment. Another popular source for Wipros Recruitment is the Online Placement through NSR (National Skill Registry).

TRAINING
The term training refers to the acquisition of knowledge, skills, and competencies as a result of the teaching of vocational or practical skills and knowledge that relate to specific useful competencies.

TCS TRAINING MODE

Types of training: TCS basically provide training for technical employees where for management trainees, they provide development programmes. TCS conduct 10 weeks of training which is divided into 4 parts 1. FRP(fundamental readiness programme) 2. PRP(project readiness programme) 3. CRP(corporate readiness programme) 4. RLL(real life lab) 3 weeks 7 weeks

Apart from that there is some common training which come under induction is called College to corporate. They took assessment of all training that consists of 70 MCQ questions After the test, your score will be calculated and your salary is reviewed SCORE= (30%FRP) + (50%PRP) + (20% RLL) If the score is 60-70, least slab will be awarded If the score is 70-85, middle slab will be awarded

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If the score is 85+, highest slab will be awarded.

DEVELOPMENT
TCS Leaders Qualities Survey, which started in 1992, is one of our oldest leadership development initiatives. It has successfully contributed in our endeavor to nurture top class business leaders in Wipro. Wipro has developed an approach for Life Cycle Stage Development Plan. Training and development programs at various stages have been designed by mapping the competencies to specific roles. Competencies specify the Specific success behaviors at every role. Entry-level program (ELP) - The program covers the junior management employees with the objective of developing managerial qualities in the employee. The target group is campus hires and lateral hires at junior level. New Leaders Program (NLP) - It is popularly known as NLP and aims at developing potential people managers, who have taken such roles or are likely to get into those roles in the near future. Wipro Leaders Program (WLP) - This program is for middle level leader with people, process, business development and project management responsibilities. These leaders are like the flag bearers of Wipro values and Wipro way of doing business. Business Leaders Program (BLP) - This is for senior leaders with business responsibility. At this level, people are trained up for revenue generation; and Profit & Loss responsibilities. The program covers commercial orientation, client relationship development, and team building and performance management responsibilities among other things. Strategic Leaders Program (SLP) - This program covers top management employees. The focus is on Vision, Values, Strategy, Global Thinking and Acting,

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Customer Focus and Building Star Performers. Wipro ties up with leading business schools of international repute to conduct this program for Wipro leaders.

PROMOTION:
A promotion is the advancement of an employee's rank or position in an organizational hierarchy system. Promotion may be an employee's reward for good performance i.e. positive appraisal. Before a company promotes an employee to a particular position it ensures that the person is able to handle the added responsibilities by screening the employee with interviews and Tests and giving them training or on-the-job experience.

BASES OF PROMOTION
1. Seniority:Seniority simply depends upon how long the employees is doing job with the company. The length of service and talent are both interrelated with each other. It is based on the tradition of respect for older people. It creates a sense of security among employees and avoids conflict arising from promotion decision. 2. Merit:Merit implies the knowledge, skill and performance records of an employee. It helps to motivate competent employee to work hard and acquire new skills. It helps to attract and retain young and promising employees in the organization.

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EMPLOYEE WELFARE
According to the Oxford dictionary, employee welfare or labour welfare means the efforts to make life worth living for workmen. Labour Welfare means anything done for the comfort and improvement, intellectual or social, of the employees over and governmental, which is not a necessity of the industry.

Education Facility Medical allowances Housing facility Canteen in the campus Sports ground Club membership Insurance policy

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Self Competency Mapping For Compatibility Check

Basic requirement to hire management trainees for Wipro (2010 data)
PARAMETERS AGE: Education: Marks Range: Experience: Mobility: Technical skills: Human skills: REQUIRED 21-27Years PGDM/MBA with 60% 60% through out the Academia 0-2 years in IT field Anywhere in India MS Office, MIS reporting Excellent communication/interpersonal skills, Team player Work environment: Mandatory skills: Official / Voice processing Mathematics/ statistics/physics / computer science Work shift: Work load: Day/Night 9 hours with 1 hour break Partially Fulfilled Fulfilled Fulfilled Fulfilled Fulfilled Fulfilled Fulfilled Partially Fulfilled Partially Fulfilled Partially Fulfilled Partially Fulfilled PRESENT

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ALTERNATIVE CAREER PATH

RECRUITMENT PROCESS OUTSOURCING:

Recruitment Process Outsourcing (RPO) is a form of business process outsourcing (BPO) where an employer outsources or transfers all or part of its recruitment activities to an external service provider. Outsourcing the human resource (HR) processes is the latest practice being followed by middle and large sized organizations. It is being witnessed across all the industries. In India, the HR processes are being outsourced from nearly a decade now. Outsourcing industry is growing at a high rate. Human Resource Outsourcing refers to the process in which an organisation uses the expert services of a third party (generally professional consultants) to take care of its HR functions while HR management can focus on the strategic dimension of their function. The functions that are typically outsourced are the functions that need expertise, relevant experience, knowledge and best methods and practices. This has given rise to outsourcing the various HR functions of an organization.
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The non-core recruitment processes such as database searching, job advertisements, head hunt research, internet mining, etc. involve 50 - 60% of the recruiters time, energies and costs. Outsourcing the non-core recruitment process creates additional efficiencies, while simultaneously allowing for a focus on building relationships with candidates and clients. Major consultancy firms are predicting a big boom for HR outsourcing as a whole. According to Gartner, McKinsey and others the outsourcing market is expected to touch US$ 78 billion by 2004. Gartner predicts that the worldwide HR outsourcing market will grow from $21.7 billion in 2000 to $58.5 billion in 2005 1. HR outsourcing is expected to be the fastest growing segment in the outsourcing market. 80 percent of companies now outsource at least one HR activity, and the number is growing fast. Though some analysts argue that by outsourcing major HR activities, the number of HR jobs is decreasing, others feel that on the contrary by outsourcing these kinds of repetitive and administrative jobs, higher-level HR professionals get the time they need to tackle strategic workforce challenges.

With the growing market there are a number of vendors available who cater to the diverse needs of various markets and provide HR services, including staffing, payroll, benefits administration, training, employee relations, and compensation.

Consequently, what started in the 1980s as a simple payroll outsourcing has exploded into a $32 billion a year business involving all facets of HR. In just four years, one HR services provider-Exult-has grown from a start-up with a handful of people to an established company with 1,500 employees and more than $400 million in annual revenues. Other big players include Accenture HR Services, ADP, Fidelity, Hewitt, and Convergys.

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HR OUTSOURCING AT MA FOI MANAGEMENT CONSULTANTS Chennai based Ma Foi is a perfect example of a company that has profited by effectively tapping the HR outsourcing market. The firm which initially began just by providing outsourcing services in recruitment is moving into other areas like compensation management, psychometric evaluation, training exit interviews, and outsourcing of personnel including sales staff and manual labor. The firm is a public limited company with revenues of $10.2 million for the financial year ending 2003. Such is the potential of the HR outsourcing market that if handled with expertise and integrity can be a highly profitable market. The company has identified that its potential markets range from pharma to FMCG. Its major clients include Coca Cola India, Thomson Electronics, Madura Garments, Alstom group and a major Healthcare recruiter in the UK. The firm recently launched three products, MRMS (Ma Foi Resume Management Systems), HRMS (Ma Foi Human Resource Management Systems, and DAREM (Daily Activity Reporting and Expense Management). According to Rajiv Krishnan, the director and CEO of the Ma Foi, these products will considerably reduce the time that corporate spend on regular transactional work. For example, the MRMS offers tracking, complete word-by-word search facility, automated e-mail notification, user-friendly interface, total security and consolidated reports. A major software company can get one lakh resumes and this can be a useful tool for tracking these resumes.

The second product, HRMS, encompasses a wider spectrum of employee HR needs. It helps capture, track, store, and modify all information concerning an employee in an organization. It has the ease of use for multiple user access and helps in integrating employee information. The third product DRAM helps companies to keep a track of the daily activity reporting.

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HR Outsourcing Human Resource Outsourcing: Scope for India

One very important trend in the recent times has been the growth of human resource outsourcing. HR outsourcing is the outsourcing of peripheral but necessary administrative tasks such as payroll, benefits, education/training, recruiting personnel, administration, to realize economies of scale and achieve standardization of services. However, the future seems to be very promising. It's set to become a $ 51 billion market worldwide in 2005, representing 39 per cent of the total business process outsourcing revenue. Estimates show that the latent size of HR outsourcing in India is about $ 2 billion with a current market of $ 27 million and it is growing at an alarming rate of about 50 per cent. India has immense potential as more than 80% of fortune 1,000 companies are discussing HR outsourcing as a way to cut costs and increase productivity. Right now, India is barely skimming the surface of the HR outsourcing market potential. Indian life Hewitt (ILH), FIDELITY, EXULT and MAFOI are some of the prominent HR outsourcing services providers in India and the clients include giants of manufacturing, software and service industries like GE Capital, Ford Motors, Hyundai Motors, Satyam Group, Infosys, Enron, Haldia Petrochemicals and HSBC, to name a few HR outsourcing has a huge potential for employment also. Nasscom numbers are a million software jobs by 2008; HRO would be about a 25 per cent of that.

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THE FUTURE AHEAD

The future of HR outsourcing in India is poised to be very effective because of its intrinsic advantages such as low cost, ready pool of English speaking manpower and geographic positioning is emerging as a viable destination for HR outsourcing companies to set up their businesses. While currently there are only a few major players (table 1.2) the trend seems to be catching up as companies are showing marked interest to improve on services such as pay roll benefits as well as complete HR delivery. Companies are looking to outsourcing the complete range of HR delivery and designing products on policies, compensation, structure, and recruitment. Indian companies are not only providing services for the clients abroad but are also catering to the local market. Moreover these players are moving up the value chain. Mafoi has emerged as a major HR outsourcing center. It is estimated that currently the organized sector of HR is catering to only 5% of the whole market . This is the right time for the players to tap this emerging market.

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CONCLUSION
At the end of the project it can be said that there is an ample opportunity for TCS to grow and be the top most company in the world business scenario. If we see the overall performance of TCS it is very much satisfactory in terms of employee engagement & Contribution to the Indian GDP. It is also found that WIPRO is one of the market leaser in Indian IT Segment by innovation new dimension of services and technology. They remain successful to tie up with Microsoft Ltd. for consecutively Two years for project work outsourcing. Therefore, we can also say that TCS is the leading name of Globalization. They also provide the equal opportunity to employees by which they are going to be the pioneer of employee retention and talent management. On the social point of view, this company contributes a lot to the socioeconomic sectors, NGO, Education, Poverty reduction by its corporate social responsibility. Further more it is my own belief that the company will be able to bring the reformation of Indian Business sector.

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BIBLIOGRAPHY

Annual Report of TCS Limited for Financial Year 2004-05, 2006-07,2007-08, 2008-09, 2009-10. Tata Consultancy Services www.tcs.com (Investors section) Forrester reports www.forrester.com Gartner reports www.gartner.com IT-ITeS Market & Opportunities IBEF (India Brand Equity Foundation) report Tata Consultancy Services A Company Profile www.datamonitor.com Newspaper Mint www.livemint.com http://www.infinancialsanalytics.com/freegprv/en/financial

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Annexure

68

69