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IT Industry & TCS

Strategic Analysis


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1. Analysis of Internal Strategic Context: SWOT Analysis


TCS offer wide range of services such as digital enterprise, iON-small and medium businesses, eco-sustainability services, IT infrastructure services, enterprise security and risk management, business process services, consulting, IT services, engineering and industrial services, platform solutions, and supply chain management. TCS forms strategic partnership with global major technology player like SaS, Adobe, CA, Symantec, NetApp, Oracle Bosch, Cisco, Networks, SAP and many others.

This joint partner helps TCS to deliver innovative solution, build competitive advantage over the peers and provide collaborative platform for technology advancement. Introduction of Business 4.0 leadership framework enable TCS to change buying behaviour of market to attract more buyer from market.

TCS is well known brand as it is subsidiary of TATA group. TCS has revenue growth at CAGR of 19.3% during 2013-2018 (Refer Exhibit-1). These improves investor confidence for further investment in company and provide returns to shareholder.

TCS expanded its service to different segment of market line (Refer Exhibit-2). For better accessibility company operates in Europe, Americas, the Middle East and Africa Asia-Pacific. Diversified business helps company to reduce risk of dependence on any business and allows service to wide range of customers. Also mitigate risk to business from political issues of different countries. TCS has ties with prime educational institute for R&D in technology transformation, it has started ‘Ignite My Future in School’ program in US to make career in digital technology. Customer-centric strategy used to focus on delivery performance, offering full services and drives investment decision. (Refer Exhibit-3)

HR strategy focus on talent development, talent acquisition through recruitment and training program. TCS has become a global top employer across 24 countries. Increase of local hiring reduce dependency of on-site based professionals.


Operational performance of TCS has decline in year of 2018. Sometimes this makes shareholder doubtful in terms of return on investment and may decline future investment in long term projects. SG&A expenses increase from INR 692 in year 2017 bn to INR 744 bn in year 2018. Net profit margin decreased from 22.3% in 2017 to 20.9% in 2018. Rapid digital transformation increases company spending on various digital technologies.


Global IT service market is expected to grow at CAGR 6.3% from 2017-2022. US has maximum market share for IT service industry (Refer Exhibit-4). Acquisition of established start-ups helps company to increase market share, develop new business opportunity and increase product extension line. Continuous improvement in current technology can improve customer satisfaction rating. Forecast technology change to sustain in market. Focus on talent development program to provide cutting edge technology. Diversify talent in terms of geography and gender. Focussed on customer-centricity to align organisation structure as per customer needs. Build network with global law firms in which company operates in. Increase investment in cyber-security, threat detection and prevention. Re-skilling of employee to adopt technology change


Changing political scenario in US, European countries and uncertainty in these markets can affect investment in technology which can affect growth of company. Visa restriction increases threat to transfer of skilled employee to other countries. Rapid change in technology can obsolescent current technology, business model. Global presence increases litigation risk. Litigation can attract media attention and increases risk to reputation. Cyber-attack can be possible on company’s network which can damage company’s reputation. Yearly complexity in global regulatory compliance is increasing and noncompliance can damage reputation and heavy penalties. Company has attrition rate of 11%. High attrition rate which is lowest among competitors. Increase in attrition rate leads to loss of well experienced employees, increase cost of hiring.

Maxi-Maxi Strategies (SO)

Company have strong performance in terms of revenue which increase financial stability and allocation of capital to investment in new technology. Strategic partnership with global leading technology company helps in innovating new technology, valuable network with client. Collaborative work on problem solving, product development by brining different teams.

Mini-Maxi Strategies (WO)

Increase business dependency on technology. Change in technology to meet customer expectation and improve operational efficiency.

Maxi-Mini Strategies (ST)

Diversified talent across world. Retention rate smallest in IT industry. Strong customer-centricity strategy. Successful adoption of technology change in business model. Understanding of countries legality, proper implementation of policy especially labour policy.

Investment in prevention and detection-based solutions.

Mini-Mini Strategies (WT)

Invest in reskilling employee. Research agreement with prime educational institutes. Student engagement program. Recruit local talent. Build strong legal network in global market

(Refer Annexure E1, E2)


Business Strategy8:

TCS delivers low cost Global Service delivery.

BFSI contributes more 40 percent to consolidated revenues. HYPERLINK ” l “gs.l1fvYlw” t ” 7 Definitely, TCS should reconsider its business strategy for increasing its revenue from other verticals of its business. Market penetration strategy:

TCS has diversified its business on global scale. It has penetrated its services in USA, Europe, India, Middle-East and Australia etc. It is providing its services in software products, BPO, ADM, KPO, consultancy services (in BFSI, manufacturing and retail).

Global Strategy:


It is a global engagement model of TCS which permits its customer to select the sourcing services which complements to their business needs. TCS take a follow-the-sun approach, meaning that no matter where your business is located, it help you keep it running 24/7, while providing a seamless services across all operations.

GNDM™ powers its diverse technical, language and domain-specific competences to deliver custom, quality solutions faster and in compliance with local regulatory requirements and cultural preferences9.

Global Strategic Partners:

TCS’s dedicated partner management, field alliance, business solutions, and infrastructure architect teams nurture relationships to drive efficiencies and predictable outcomes as its customers adopt Cloud, Automation and Agile9.

Strategic Partners –

IBM – Global System Integrator Partner

Oracle – Global System Integrator and Global Certified Advantage Partner

Microsoft – Global System Integrator Partner

SAP – Global Consulting Partner

Acquisition Strategy:

TCS has taken many companies under its acquisition to achieve proficiency, expertise and market share in the field in which TCS was not earlier or was lacking. TCS has acquired firms which allow it to attain horizontal and vertical integration. This is a perfect example of how a company can use acquisition as its strategy for expansion.

Analyzing Key Success Factors

Technology Related

Customer-centric innovation strategy helps to focus on delivery excellence. Developing in-depth domain expertise. Offer full service capability, globally distributed delivery model. Partnership with global technology leaders. Develop Co-Innovation Network (COIN) which have 150 ecosystem partners, 2000 startups, and 27 partnerships in academia.


Built position as the low-cost value player at scale. High asset turnover ratio for last five consecutive years which conclude efficient use of asset. Continuous focus on employee empowerment through training, re-skilling program. Wide range of service (Exhibit-5) offering develop flexibility in product range.


Customer-centric model helps to develop business model for efficient delivery to clients. Renowned brand position in competitive market.


Focused on talent development, talent acquisition. Re-skilling of employee. Third party auditing to ensure quality assurance. Increase spending on Digital technology to develop new product. Asset leveraged solutions helps to deliver service quickly.

Organizational capability

LDP program designed for managers. From inception company has three CEO and everyone had contributed significantly for growth of company. Company business model quickly adopt changes as per shift in technology.

Other types

Company has brand image in global market. Company provide learning, career development, safe environment to employees. Company has low debt-to-equity and high liquidity ratio. This ease access to raise capital fund. (Exhibit-6)

(Refer Annexure E7)

Exhibit-1 TCS Yearly Revenue Trend

Exhibit-2 Revenue by market segment (FY-2017)

TCS Accenture

Market % of Revenue Market % of Revenue

BFSI 40.3 Health & Public 18

Retail 17.3 Financial service 21

CMT 16.5 CMT 20

Mfg10.6 Resource 14

Others 15.3 Product 27

Total Rev $19.1 bn Total Rev $ 34.9 bn

Exhibit-3 Customer-centric model

Exhibit-4 Geographic Market share (FY-2017)

Market TCS Accenture

% of Revenue % of Revenue

America 56.1 47

UK 13.9 –

Europe 11.6 34

India 6.3 Other- 19

APAC 9.8 MEA 2.5 Exhibit-5 TCS service offering

Digital enterprise, Eco-sustainability services, Engineering and industrial services, Enterprise security and risk management, Business Process Services, Consulting, iON-small and medium businesses, IT services, IT infrastructure services, platform solutions, and Supply Chain Management

Exhibit-6 TCS financial Analysis

Ratios 2014 2015 2016 2017

Sales growth (%) 29.88 15.69 14.79 8.58

Net Profit Margin (%) 23.4 20.9 22.3 22.3

ROE (%) 38.9 35.4 34.2 30.5

Working Capital Turnover (Ratio) 3 2.7 2.2 1.7

Operating Costs (% of Sales) 70.8 75.5 73.4 74.2

Current Ratio 2.74 3.3 4.0 5.5

Debt to Equity Ratio 0.01 0.01 0 0

Asset turnover ratio 1.37 1.35 1.34 1.23

EPS (INR) 48.83 50.68 61.59 66.71

Return on Capital Employed (%) 46.2 39.8 39.2 34.2


TCS Annual Financial Reports

TCS GRI Corporate Sustainability Report

Accenture Annual Financial Reports

Accenture Sustainability Report

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