Business Models: Individual Assignment

Business Models
Individual Assignment
On
Differentiation Strategy and Value Creation of TATA Consultancy Services Ltd.
Submitted to:
Prof. Prashant Salwan
Report By:
SHUBHAM PAL – 2021EPGP048
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SHUBHAM PAL | 2021EPGP048 Business Models-Task 1
TATA CONSULTANCY SERVICES LTD.

Tata Consultancy Services is an IT services, consulting and business solutions organization that delivers
software solutions and services to global business, ensuring a level of certainty no other can match. TCS is a
consulting-led, integrated portfolio of IT and IT-enabled infrastructure, engineering and assurance services.
This is delivered through its unique Global Network Delivery Model, recognized as the benchmark of
excellence in software development. TCS has partnered with the world’s largest businesses in their
transformational journeys for the past five decades. It has a worldwide presence, deep domain expertise in
multiple industry verticals, and a comprehensive portfolio of offerings aimed at every C-suite stakeholder,
including service integration and consulting, digital transformation services, cognitive business operations,
cloud services, and products and platforms.
Differentiation Strategy: TCS uses differentiation strategy by providing low end services in terms of cost,
resources. TCS also differentiate its high-end services such as consulting in term of niche offerings,
knowledge management system and resources. This differentiation strategy is the strength of TCS by which
they are successful in reaching the overall cost leadership in the IT industry across the globe. TCS has
developed a resolute strategy where they are providing IT services according to the requirements of
customer and the nature of business and targeting new markets like Middle East, Europe, and Asia-pacific in
new growth offerings. Currently, TCS Focus on Centres of Excellence (CoE) to hold ability so as to
construct technologies such as service-oriented architecture, Artificial Intelligence, Digital Transformation,
automation testing using context based neural networks, and virtualization which will help TCS to attempt
outsized projects so as to alter customer's IT applications.
Value Creation Model for Customers: The company's customer-centric, industry-aligned organisational
structure has resulted in substantial domain depth for every business unit, as well as enormous customer-
specific contextual expertise for the account teams inside those units. Domain expertise, domain consulting,
contextual knowledge, project management experience, and technical competence gained on the job
constitute the transformation of human capital into intellectual capital. TCS invests some of its intellectual
resources in research and innovation (R&I), which looks at how newer technology might be creatively
applied to solve business problems in a range of industries. TCS collaborates with well-known technology
companies, start-ups, and academic researchers to tap into their intellectual capital and create solutions that
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complement their own. Some of R&I's breakthrough software solutions that are deemed to have a significant
market potential are productized, adding to TCS' extensive product and platform portfolio. These increase
the organization's intellectual capital, generate new revenue sources, and improve the organization's brand
posture (relationship capital).
TCS' strategy, organisational structure, and investment decisions are all centred on the customer. TCS'
customer-centric perspective enables the company to identify trends early, capitalise on economic
opportunities by making the proper investments, and mitigate risks while meeting its ethical and
environmental obligations. TCS is constantly seeking for new areas in their value chain where it can offer
value, proactively investing in establishing fresh skills, reskilling its employees, and releasing newer
services, solutions, products, and platforms in order to widen and deepen client relationships. TCS is now
profiting from the departmental budgets of various stakeholders within the clients' companies, including
business heads, CMOs, CROs, COOs, CFOs, and even CEOs, in addition to IT expenditures. As indicated
by the client KPIs published every quarter and year, this has not only integrated TCS deeper into their
operations, but has also resulted in higher quality revenues, stronger revenue growth, and more share of
wallet. Products and platforms, in combination with business model changes, constitute new, high-quality
income streams that are rapidly expanding. This strategy has yielded deep and long-lasting client
relationships, as well as a continual expansion of the addressable market.
Value Creation Model for the Firm: Human capital, which represents talent and innovation, is at the heart
of TCS' value generating engine. TCS hugely invests in upskilling individuals with the latest technology in
the market and provides them with career paths that matches their aspirations by acquiring the best available
talent in each market it serves, providing a supportive and vibrant workplace in which to engage that talent.
Over the previous five decades, TCS has successfully navigated through many technological cycles,
pivoting and adapting each time to establish relevant new capabilities by reskilling the workforce at scale
and aiding clients in the process realising the benefits of emerging technologies, thanks to a strong belief in
organic talent development and investing in people. Even the largest supplier has a mid-single digit market
share, indicating that the global market for IT services is highly fragmented. TCS is one of the major IT
services companies in the world, with a market share of 1.6 percent. Over the previous decade, TCS has
outpaced the market, increasing at twice the rate of the market.
On a consolidated basis, the revenue for FY 2021 was Rs.164,177 crore, higher by 4.6 percent over the
previous year’s revenue of Rs.156,949 crore. The profit after tax (PAT) attributable to shareholders and non-
controlling interests for FY 2021 Rs.33,520 crore and Rs.32,447 crore, respectively. The profit after tax
(PAT) attributable to shareholders for FY 202 was Rs.33,388 crore. TCS grew at the rate of 4.4 times over
the last decade. The operating margin of TCS is at 25.9% which is industry leading. TCS has also invested
in funds with a value of Rs. 50,430 crores which can be harnessed during distress. TCS has a 116.2%
operating cash flow to Net Income ratio. TCS also has a 101.5% shareholder pay-out to net income ratio.
TCS has a market capitalisation of $200 billion. TCS has the best-in-class profitability and a strong balance
sheet provides greater ability to invest in newer capabilities and to weather economic downturns. Its
consistent high dividends/stakeholders return enhances relationship capital.
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Business Models

Prof. Prashant Salwan

SHUBHAM PAL – 2021EPGP048

TATA CONSULTANCY SERVICES LTD.

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