Tcs Competency Management b2k14
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September 21, 2010
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Tata Consultancy Services: Global Talent Leverage —A Profile Introduction
In the software consulting services industry, companies sell more than innovative products. They sell knowledge. Tapping into the best knowledge—wherever it may be—is crucial to the success of businesses in this industry. China’s and India’s growing working-age populations have necessitated that companies with global business models be prepared to leverage talent from anywhere in the world. Thus, Human Resources (those that manage talent within firms) have assumed a central role in effective global service delivery and innovation.
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This is a profile about a well-known Indian company, Tata Consultancy Services (TCS), and its innovative management of HR. The sections that follow will describe the capabilities of the company’s HR model, which include leveraging knowledge around the world, the capacity to constantly recruit thousands of new people, the coordination of teams of executives in different geographies to meet milestones for a specific project plan, the mediation of cross-cultural and cross-country interactions, the transparency of talent and skills within the company, the creation of a community for innovation, etc. TCS’s ability to recruit and dynamically reconfigure its talent to deliver services globally and fuel innovations of both products and processes is among the company’s key competitive advantages in winning business.
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Company Background
Established in 1968 as a division of Tata Sons Limited (the holding company of the Tata Group), Tata Consultancy Services is India’s top software services firm. It went public in 2004 and is listed on the Indian exchanges as one of the country’s largest IPOs ever. TCS operates in 42 countries in the Americas, Europe, Middle East, South Africa, Asia Pacific, and India. In 2009, the company reported revenues from four geographic segments: Americas (56.2%), Europe (29.5%), India (7.8%) and other countries (6.5%). This extensive global reach provides the company with new growth opportunities and a diverse revenue base,
Published by GlobaLens, a division of The William Davidson Institute at The University of Michigan. © 2010, Professor M.S. Krishnan and Professor C.K. Prahalad. This profile was prepared by MBA students Nissan Dar Halpert, Nathan Jew, and Moshe Steinmetz under the supervision of Professor M.S. Krishnan and Professor C.K. Prahalad of the Ross School of Business at the University of Michigan.
Unauthorized reproduction and distribution is an infringement of copyright. Please us for permissions: [email protected] or 734-615-9553.
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which helps mitigate the impact of downturns in specific regions. TCS’s historical performance and financial reports were very strong. The company’s revenues and net profit grew at a compounded annual growth rate (CAGR) of 31% and 25.7% respectively.i Throughout the 1980s and 1990s, TCS invested heavily in software engineering practices and standards, quality assurance, project management, and process and allied metrics, as well as research and development in software engineering and technology.
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In the 2000s, management sought to aggressively expand the company’s breadth and depth of reach. In May 2007, the company gained full ownership in the t venture IT services company TCS do Brasil. In October 2007, it launched a subsidiary, TCS South Africa. And in December 2008, it bought Citigroup Global Services Limited from Citigroup Inc.1 By the end of 2008, TCS’s portfolio of services included business consulting, information technology, business process outsourcing, infrastructure, engineering, and productbased solutions. TCS was India’s biggest Information Technology outsourcing company. Its market segments included banking, financial services and insurance, manufacturing, retail and distribution, telecom, life sciences and healthcare, energy and utilities, and media and entertainment. Since its inception, TCS has transformed from a programming and development house (or a turn-key subcontractor company) to a consulting and services company. TCS has become one of the key global IT consolidators by taking advantage of the low-cost talent that India offers and creating a delivery capability that adapts to the local needs of global customers.
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Company Size, Employees, and Revenues TCS is headquartered in Mumbai, Maharashtra, India, and had 143,761 employees in March 2009.2 The average age of its employees is 28.3 The company recorded revenues of approximately $6 billion for the fiscal year 2009, an increase of 6.8% from the previous year. Revenue from the Americas, TCS’s largest geographic market, was about $3.4 billion. The company’s net profit was approximately $1.12 billion. TCS has issued dividends every quarter since it went public. An important factor behind the company’s success is its ability to nurture raw talent from India. TCS has applied a variety of innovative practices to build its vast talent base in India.
Building a Scalable Workforce through an Innovative HR Model
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In the 2000s, advancements in technologies allowed businesses to reduce the cost of product and service customization. The old model of business involved grouping customers into large sets and providing a standard product or service. By the 2000s, business cycles were accelerating at an unprecedented rate, and businesses were beginning to be more customer-centric. As a result, businesses were moving toward co-creating and partnering with former rival companies. The key question for businesses was how to make themselves more flexible and scalable to meet the needs of individual customers. In the world of consulting, high-velocity positioning and scaling of resources were becoming essential competitive advantages. Companies like TCS were developing innovations in human resources to enable rapid flexibility and the capacity to reconfigure resources in accordance with market needs. Management at TCS also considered ways to ensure that it hired and groomed the best employees. The company ensured appropriate compensation. It also focused on excellent training, career development, skill mapping, and i Revenues and Net Income grew in a five-year period from approximately $1.9 billion in 2004 to approximately $5.68 billion in 2008 and from approximately $422 million in 2004 to approximately $1.25 billion in 2008, respectively.
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transparency of talent and domain expertise. HR management was seen as central to TCS’s success, since the company was competing with other firms against a backdrop of decreasing knowledge lifespan. Thus, TCS’s innovative human resources model enabled the company to become a leading, world-class consulting firm. The model involved 1) leveraging global resources and 2) a human resource structure that used innovations in hiring, resource management, training, continuous learning, talent management, and building a culture of caring.
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Leveraging Global Resources: TCS’s Unique Replenishment Model (RPM) TCS was able to deliver up-to-date, scalable personnel resources for its global projects by using its Integrated Network Delivery Model, part of its Replenishment Model (RPM). RPM was a single-source system with an intuitive graphical interface and an integrated database, which leveraged collaborative resource planning. The key to the RPM was that it allowed TCS to merge the demands of the market with the company’s internal capabilities. The Replenishment Model was comprised of three major phases:
Create Opportunity The initial phase was called Create Opportunity (see Exhibit 1). The business development team entered data about a project proposal onto an online form comprised of dropdowns and text boxes with required fields. Primary form fields included client name, customer name, geography, current or new customer, and industry. Once data was entered into the system, a unique ID for the project proposal was generated, which served as the identifier throughout the multiple stages of the next phase of the RPM, Stage-wise Data Capture.
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Stage-wise Data Capture The second phase consisted of a nine-stage process that the business development team followed. The first stage was the Prospect Stage, which involved monitoring the initial project proposal screen and updating data. The next two stages were the Request for Information In (RFI) and Out. In these stages, the business development team entered in the RFI details, including estimated FTE (full-time equivalent) requirements, the probability of winning a proposal, and the estimated value of the project. Stage four was the Request for Proposal-In. In this stage, the business development team entered in customer type, process type, practice type, demographics, owner, and estimated project revenue.
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Stage five was the Request for Proposal–Out. TCS’s Resource Management Group (RMG) began to look at its global resources, which included overall talent availability, flexible talent, and competencies and requirements for specific opportunities. Given that TCS had over 143,000 employees of 67 different nationalities, this process could become very lengthy and time-consuming without an integrated system. With the RPM database, however, the RMG could automatically source talent resources based on a project’s requirements. In stage six, Shortlist, the business development team checked the status of the proposal and determined the chances of winning the project in the context of the overall market and competition. Stage seven, Selection, involved the business development team entering in the amount of onsite training required, visa status, and an updated probability of winning the project. Stage eight was Contract Negotiation. The business development team entered in the contract pricing and project duration. Finally, in stage nine, WIN, final details about the project were entered, including customer name, total contract value, FTE size, contract length, and the practice and geography where the sale originated.
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MIS Reports The final phase of the RPM model was the MIS report, which showed the effect of the deal or the opportunity on the company. With the RPM process, TCS was able to have a one-stop shop for tracking project status and requirements. ing teams could get constant project status updates and adjust needs accordingly, utilizing a pull process for the various resource supply chains. See Figure 1 for an example of how TCS was able to utilize its RPM model to deliver optimal service to a customer from multiple countries. Figure 1
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TCS: Global Network Delivery Model Solutions for a High-Tech Customer
A customer asked TCS to submit a proposal for ing global Oracle applications in two of its major businesses (referred to as Business A and Business B.) The customer was looking for the following CTQs (Critical to Quality Requirements) from prospective vendors: • 24*7 Production of Global Applications • Optimized Cost • Quality Assurance and Control • Knowledge Management
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• Operational Excellence
• Oracle Apps Excellence
TCS submitted a winning proposal by leveraging its Global Network Delivery Model in its sales stategy. Below are the proposal value propositions: 1. Integrated Global Service Delivery
2. Knowledge Management and Retention
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3. Preventive Maintenance Initiatives 4. Business Continuity and Disaster Recovery Plan 5. SLA Sustainability and Improvements 6. Continuous Improvements
In this example there are a number of TCS innovative solutions. For example, using the 24*7 production of global applications, TCS was able to apply its replenishment model to deliver global excellence from mulitple countries while maintaing all-access 24/7 coverage. In addition, TCS created a smooth transition of information across the different geographic regions with its strategic organization structure. The following are the details for both Business A and Business B. continued
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Business A Project profile
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Project type – 24/7 Prod Project Length - 30 Months Project Size - 11 person years Tech Stack - ERP – Oracle Apps Peak Team size – 37 India 25 China 5 Mexico 6 Europe 1
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Business B Project profile
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Project type – 24/7 Prod Project Length - 30 Months Project Size - 75 person years Tech Stack - ERP – Oracle Apps Peak Team size – 25 India 13 China 5 Mexico 1 Europe 2 US 4
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TCS’s Human Resource Structure Behind TCS’s unique Replenishment Model was a human resource structure that allowed for fast deployment of global resources. This was no small feat. TCS hired thousands of people per year, and it planned to hire over 24,800 people during financial year 2009-10, the majority of whom would be trainees.4 The key to TCS’s human resource structure was that it enabled transparency to talent. In other words, the seamless system captured employees’ full descriptions (which skills they possessed, what type of training they had, etc.) so that the company could quickly assess what type of talent was available internally. Hiring TCS’s hiring process was a carefully planned talent acquisition strategy that ensured the best candidates were considered. This process began with sourcing from four major channels: direct applicants, lateral hire programs, referrals, and campuses (see Exhibit 2).
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The campus channel was a special process that involved the Academic Interface Program (AIP) group. TCS’s AIP was considered an investment in top-tier universities that included internships for students, workshops in academic institutes, sponsorships of academic events, professor sabbaticals to TCS, sponsorship of TCS associates to acquire higher qualifications, and sponsored software engineering courses for select finalyear students.
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The recruitment process focused on screening for the right fit. Specifically, applications and interviews involved a rigorous four-stage evaluation. The first stage in this evaluation was the initial screening, which incorporated a combination of human resources and technical factors as well as an aptitude test for those with less than two years of work experience. After the initial screening was a technical interview. The third stage was a management review interview, which was a behavioral assessment of a candidate’s attitude and of where he or she might fit in within the organization. The final stage was ing the candidate, which included a background check and a medical test. If the candidate ed all four stages, they received an offer. If the offer was accepted, the candidate was then transitioned to the on-boarding phase. Resource Management: A Digital Dashboard In order to improve the transparency of talent within the value chain, TCS used a digital dashboard. This dashboard enabled managers to make better decisions using a common dataset.
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When a talent resource was needed, a sales team would first submit a resource request, which would be sorted either on-site or offshore. Next, this request was sent to be evaluated against the current talent pool. The talent pool consisted of employee descriptions, which included competency reports, the available pool within one of TCS’s Industry Solutions Units (ISU), the recruitment pipeline, deputations, transfers, rotations within/across ISUs, a fluidity plan for each ISU, visa-ready associates in each ISU, and crosstraining. Once the resource request was processed, the ISU RMG proposed suitable profiles for the requirement (see Exhibit 3). Next, there was an internal screening by the ISU teams on candidate suitability. When the ISU teams decided, the employee was shortlisted. The customer would then confirm the employee. If the customer did not confirm, the employee would go back into the resource pool. If the employee was confirmed, he or she would go to the next stage. Also, if there was an on-site requirement, then the employee would go through visa and travel formalities and travel to the site. If there was no on-site requirement, the employee stayed offshore in India. The whole process was digitized and driven by the dashboard and utilization metrics. As a result, TCS could accelerate its project scalability with transparency and certainty. 7
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Training and Continuous Learning In parallel with resource management, TCS employees were given training and continuous learning opportunities. Training was a key benefit valued by employees and a reason why many ed the company. The training platform was an easy-to-use, digital platform known as the Integrated Competency and Learning Management System (iCALMS). This system greatly improved the speed and efficiency of training employees to match the fast-paced requirements of business knowledge. Within iCALMS there were several different aspects of learning that were customizable for each TCS employee. New recruits were managed through the Initial Learning Process. This was a two-month intensive program held at a dedicated training facility in Trivandrum, India, incorporating technical capabilities, process mindset, quality mindset, systems approach, domain expertise, analysis and synthesis skills, crosscultural skills, and communication. See Exhibit 4 for a diagram of all of the aspects of iCALMS.
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Additionally, there was a Continuous Learning Program (CLP) that worked closely with Centers of Excellence to keep employee training updated on the newest technologies. There was also a just-in-time component to CLP that ensured that adaptive training focused on the newest business opportunities and needs. Aside from traditional academic training, TCS also had a Leadership Development Program (LDP), which was primarily intended for building future leaders for the organization. These were on-the-ground ‘sergeants’ who could take charge of diverse global teams and lead them to high performance and excellence. Moreover, LDP served as the gateway to TCS’s Management Development Programs (MDPs). The MDPs focused on building deeper strengths in various leadership aspects.
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Further, TCS implemented initiatives that helped candidates develop interpersonal skills. The Foreign Language Initiative was one such initiative at TCS. Through iCALMS, employees could learn languages such as German, Japanese, French, and English. Another initiative was centered on communities of learning and sharing. Finally, external programs were provided to employees. Information on these could be found on iCALMS. They included certifications, workshops, conferences and seminars, and higher education opportunities. Informal learning—on-the-job learning, learning through reading, and professional hips—was also facilitated through iCALMS.
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By providing an easy-to-use and customizable training system, TCS ensured that its workforce had built-in flexibility to meet the changing demands of global projects. Talent Management TCS also focused on maintaining employees’ well-being through various talent management initiatives. Talent management encomed compensation, evaluation, performance, promotion and career management, and employee services. It was an effort driven by and focused on value-added metrics. To reward employees, TCS used a compensation framework based on Economic Value Added. Using this metric, employees could be compensated in three specific ways: a fixed salary, statutory payments, and rewards and recognition. All three ways involved from internal and external stakeholders. For fixed salaries and statutory payments, TCS took into multiple influencers, such as company objectives, geographical location and local compliance, industry and competitive trends, benchmarks, and 8
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internal parity. These influencers led to employment models such as the following: a full-time Indian employee model, a local hire model, a deputation model, flex arrangements, business associates, and contractual agreements. Rewards and recognition also aligned with TCS’s business strategy. They promoted excellence through teamwork, learning and sharing, leading change, leading by example, following the TCS mission, following TCS values of giving back to society, participating in knowledge sharing, and commitment.
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In addition to rewards, there was also a leadership potential identification process. This high potential program consisted of three tiers of employees—high potential, leadership potential, and identified leaders. The high potential pool was made up of about 40% of the workforce. Key identifiers for this tier were high performance, special competencies, and key positions. The leadership potential pool consisted of roughly 20% of the high potential pool. This tier was made up of three levels of leadership—operational, tactical, and strategic. Lastly, the identified leaders pool was about 10% of the leadership potential pool and was marked by individuals who had experience, exposure, and education.
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Building and Promoting a Culture of Caring Still other initiatives promoted employee well-being and improved employee engagement. TCS’s wellbeing initiative incorporated four facets: social, health, mental, and workplace well-being. The social well-being facet consisted of events, celebrations, community service, volunteerism, and common interest groups. The health well-being facet consisted of medical check-ups, workplace hygiene, health insurance, health lectures, and fitness centers. The mental well-being facet consisted of grievance redresses, stress and serenity activities, gender harmony in the workplace, town hall meetings, and management access. Finally, the workplace well-being facet took into consideration the ergonomics, air, water, noise and light, pantry services, general safety, and security of the workplace. Lastly, in addition to creating and maintaining superior talent acquisition and management processes, TCS strove to build a great community for its employees and their families. The TCS Maitree Network was one related program. It extended beyond the corporate life by providing a venue for building a sense of community and giving back to society. Taken together, these initiatives helped build intrinsic motivation among TCS employees and provided a culture of caring that improved the overall work environment.
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Why are these innovative processes effective? TCS’s systematic human resources approach ensured that the best-suited people were matched with the right projects and that they were provided with the proper training. This, in turn, allowed TCS the scalability to source projects from around the world with the correct number of people throughout a project’s lifecycle. Moreover, these processes built employee commitment. They ensured that knowledge was sustained and that innovative ideas from internal R&D, industry trends, and academia were all utilized to provide the customer with cutting-edge solutions that had measurable results. (See Exhibit 5 for a comparison of TCS and its competitors.) As a result, TCS has won numerous awards (see Exhibit 6). TCS’s process approach to talent development also exposed both the strengths and weaknesses in the company’s capabilities: While TCS excelled in technical solutions to known problems at customer sites, TCS management recognized that this model to compete was not sustainable. It was clear that identifying new opportunities for customers and delivering novel solutions were significantly important to differentiate a company in the marketplace. Hence, innovation became a crucial element of its value proposition to its customers. TCS expanded its talent leverage effort to a wider pool of talent. The company created the Tata Research Development and Design Centre, a lab that was among the first and largest software labs in Asia. 9
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Later, TCS set up 19 innovation labs around the world. These labs hired highly qualified scientists, explored the latest technologies, and leveraged resources across geographic markets to deliver superior value to customers in the form of innovative solutions that met their pressing challenges. The labs helped capture knowledge from all areas of the company and from its customers. The next section describes the structured approach to building innovation capability at TCS.
Innovation
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In the last decade, the word “innovation” has become a type of mascot in the business world, enabling top executives to convince the press, shareholders, and analysts that their products and services will fuel their companies’ future growth plans and lead to a brighter and more sustainable future. However, approximately 95% of all innovative ideas fail to advance beyond the ideation stage. This has led to questions such as: Do all companies efficiently utilize their efforts at innovation? What are these efforts? When is innovation considered a success? Many companies have found it difficult to understand and internalize the innovation process. And yet another challenge is how to control and nurture the innovation process. Management at TCS believed that creativity was enhanced by the right level of freedom and constraints, backed by a good governance process. TCS’s innovation frameworks and models attempted to impose these ideal constraints in order to spur creative thinking and meaningful innovation, which would result in continuous value creation that was mutually beneficial to both the client and TCS.
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TCS set up the Corporate Technology Organisation under a Chief Technology Officer (CTO). The CTO defined what innovation meant, how it would be governed, metrics that would be measured, and transparent processes that would be required for honing a solution from the research bed to market readiness. TCS also set up an internal monitoring body, called the Corporate Technology Board, that consisted of TCS Innovation Lab heads and senior associates from the Industry Solutions Units. It also created the Research Advisory Board, comprised of leading technologists external to TCS who reviewed TCS’s research.
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Innovation Architecture The primary tool TCS used to identify and channel the flow of innovative ideas was the Technology Market Map, developed by Professor Clayton Christensen at Harvard Business School. The map was a threeby-three matrix tool that allowed TCS to identify and segment its innovations according to three distinct innovation categories (see Table 1). Each had a different impact on the market (see Exhibit 7).
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Table 1
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The Three Innovation Categories
Each category also had a systematic IT metric or a combination of processes that ed disciplined and focused frameworks in all innovation stages—starting from the ideation stage, to budgeting and planning, to execution. TCS had an innovative approach to leverage both internal and external talent in order to enable the three categories of innovation. An example of an innovation from each category is presented in Figure 2.
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COIN: The Co-Innovation Network When TCS launched COIN (see Exhibit 8), it was a radical idea. Instead of depending solely on inhouse research, TCS believed that in a globalized world its customers had to benefit from technology and innovation available anywhere. In response, it formed a network that connected its own labs to research departments in universities, technology partners, start-up companies, and venture capitalist companies that were doing innovative work in information technology. Essentially, COIN built collaborative frameworks to enable innovation across the technology ecosystem. COIN enabled TCS to expand its innovation spectrum and to significantly enhance the chances of identifying winning ideas.
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COIN Channels: Ecosystem and Resource Leverage TCS Innovation Labs were the anchor of all R&D activity in TCS. The global labs enabled TCS to showcase the benefits of its innovations to customers in all geographies. Senior lab heads formed a part of the R&D Committee, which governed TCS Innovation Labs’ overall work process. Proposals for innovations were evaluated based on two dimensions—research quality and business impact. The Academia Channel provided a close collaboration between universities and industry. This collaboration enabled new technologies developed in university labs to solve industry’s challenges. The Emerging Technologies Channel connected TCS to several new companies experimenting with technology. While TCS helped the companies find a large customer network and provided technology and market diligence for the start-up solutions, the new technology companies helped TCS increase their range of offerings to customers. TCS set a revenue threshold for any new start-up technology prior to releasing it to outside customers, in order to maximize customers’ value creation. The Strategic Partners Channel provided a unique collaboration between the major technology vendors in the ecosystem (e.g. Intel, Cisco), who all shared the same goal of enhancing value creation. This 11
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collaboration was not a marketing alliance but rather a research partnership, bringing new technologies and IT services into the market. Overview of TCS’s Innovation Life Cycle TCS developed processes to manage ideas. Each year, hundreds of innovative ideas flowed from different internal sources (the Innovation Labs, Industry Solution Units, and individual employees). COIN also fostered a constant flow of ideas from the technology ecosystem external to TCS. All ideas were carefully reviewed to test applicability, impact, business utility, and market generation. These ideas were filtered and channeled according to one of the three innovation categories. Breakthrough innovations largely stemmed from COIN and in-house R&D; platform innovations came mainly from in-house R&D; derivative innovations came mainly from industry-specific internal business units.
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High-level budgetary guidelines were based on a 40%: 40%: 20% (Derivative, Platform, Breakthrough) rule. The top projects selected were then evaluated by various metrics and advanced through TCS’s technology and business review processes. Those that proved to be the best ideas received the necessary funding to begin incubation. The final stage of an innovation was to search for a future business sponsor, whether internal or external. About four or five projects were commercialized and scaled up each year. See Exhibit 9 for a simple snapshot of TCS’s innovation life cycle.
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The innovation life cycle was governed by themes that addressed both IT concerns and business concerns. This gave direction and purpose to the innovation process and anchored it in the value proposition to the customer. IT concerns addressed IT expectations—improving operational efficiency and productivity, promoting business agility, simplifying and transforming, managing enterprise risk and compliance, and enabling the understanding of markets and customers. Business concerns addressed outcomes for businesses and social goals—enriching experience, enabling the understanding of markets and customers, fostering information ubiquity, enhancing healthcare, and conserving the environment.
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Other Initiatives TCS initiated annual Innovation Forums in the UK, the US, and Asia. The forums served as a meeting place where leaders in technology and subject matter experts could discuss emerging technology trends. COIN partners and key customers were also invited to these exclusive events. Brainstorming sessions around new technologies, and experiences with such technologies, were part of the forums. Participants discussed case studies and shared best practices. This invigorated productive discussions and resulted in new partnerships and new ideas. TCS also launched another highly successful initiative (headed by the CTO) with its customers— Innovation Days. An Innovation Day was a high-profile, tailor-made event for important customers. Its goal was to harness customers’ cooperation in the co-creation process and to share with them existing and future ideas as well as trends relevant to their businesses and fields. Each year, about 30-35 Innovation Days took place, resulting in value creation to all participants.
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Figure 2 Three Innovations at TCS 1 - MasterCraft Developing software applications has always been a very time-consuming process, often involving hundreds of hours of programming and thousands of lines of code. Consequently, the software companies that win in the marketplace are those that are able to develop and bring new software programs to the marketplace in a timely manner.
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In the mid 1990s, researchers at TCS’s Innovation Labs tried to develop a tool to help TCS programmers reduce their development lead-times. After analyzing many different software applications and interviewing many programmers, the researchers noticed that certain code patterns repeated themselves. The researchers asked, “Why should one write the same piece of code at multiple places? Can’t we specify the pattern once at a higher level and generate code from this specification as many times as required?” In response to this, the researchers created a code generator that could find patterns and match code. The researchers also made the generator highly customizable. Programmers could change either the pattern to be searched or the code to be written for a pattern. The final output of this initiative was a tool called MasterCraft. This tool has freed TCS developers from many mundane and repetitive tasks. Since the tool was developed, TCS programmers have developed over 50 business-critical systems. Today, MasterCraft is widely used at TCS and is a key enabler for TCS’s business.
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2- TCS InstantApps In business, information technology is seen as a tool not just to reduce business costs, but also to enable innovation and a dynamic business environment. To address their companies’ IT needs, many Chief Information Officers (CIOs) have turned to Software as a Service (SaaS) packages. In a SaaS model, a software provider licenses software to a customer as needed. The software application may be hosted on a vendor’s server or on a customer’s platform for a specified amount of time.
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Small- to medium-sized businesses often look to SaaS packages for cost effective solutions to their IT needs. The reason for this is that SaaS applications are relatively straightforward to implement. A subscriber customizes the application, s s within the company, and starts using the application. Today, many large enterprises also use SaaS, as security features for SaaS packages have improved and the cost of implementation continues to remain low. TCS has been committed to providing its clients with quick rollout, flexibility, and low-cost solutions. In addition, TCS has worked to create adaptable SaaS platforms to meet the real, changing needs of its clients. continued
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To stay ahead in the marketplace, TCS developed TCS InstantApps, a tool that allows TCS to deliver significant cost, quality, and time improvements to clients using its SaaS applications. The flexibility of the tool allows programmers to make quick software changes, even late in the development cycle. In addition, with its multi-tenancy capability, TCS InstantApps can service multiple applications in a single hosted deployment. This means that TCS can deploy SaaS inside a corporate firewall, a security feature that many larger businesses require. The TCS InstantApps innovation has opened up new service streams outside of India, thus increasing exports. The application has also shown savings of 30%-70% in development costs and has reduced the time to market.
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3- TCS Mobile-Based Innovative Platform to Deliver Personalized and Integrated Services to Farmers and Their Stakeholders (mKRISHI) mKRISHI was developed as an integration of various technologies to provide customized advice to farmers in developing countries on their crops, soil, and farming techniques. mKRISHI also enabled experts to give personalized advice on poultry, cattle, micro-credit, crop insurance, markets and government policies. A TCS team developed this innovation in response to the need of farmers for better and more accurate farming information and other ing services. In India, rural communities (which are largely agricultural) have not experienced the same rate of growth as that of urban areas. In the past 10 years, the agricultural sector has lagged behind other industries in India. As a result, many social problems in rural communities continue to persist. For example, every 30 minutes, a farmer commits suicide.
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At TCS, a team of consultants wanted to explore ways to leverage technology to address the needs of rural farmers. To better understand the issues, the team met with farmers in different parts of India and interviewed them to learn their common questions and concerns. The responses ranged from questions on what types of crops were best to grow on certain soils, to the type of fertilizers and seeds to use, to how to get fair and reasonable commercial loans. In most cases, farmers received general advice from sources such as TV, newspapers, or farmer gatherings. Unfortunately, the general advice was often not very helpful. What was needed was advice tailored to the farmer and specific plot of land.
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To address the information asymmetries, a TCS team created a mobile phone, agriculture sensor, and network-based IT platform to remove the “last mile gap” between the farmers and other parties, such as farming experts, financial institutions, the market, and government. The idea was conceived in 2006, and a subsequent pilot project was launched to gauge its effectiveness. The mobile platform allowed farmers to send questions to farming experts in a local language using a mobile phone. These questions could be sent using text or voice messages. That way, farmers who were illiterate could send and receive information through voice messages.
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The entire platform consisted of the following: • Mobile handsets to send and receive text or voice queries. The handsets were also outfitted with cameras to allow farmers to send high-resolution images of crops to an expert. • Local weather stations and sensors to provide experts information on local soil type and weather conditions • A web platform to allow farming experts to review farmer inquiries and send back advice
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The intended beneficiaries of this innovation were rural farmers. However, TCS understood that all stakeholders in the rural economy would benefit as the supply chain became more efficient. Benefits included reduced farming costs, increased farming productivity, and better prices for produce.
Note: Since piloting and launching mKRISHI, the platform has won numerous international awards. In 2007, mKRISHI won the grand prize under Qualcomm’s Wireless Reach Program. In 2008, the application won The Wall Street Journal Technology Innovation Award and was recognized as one of the Top 50 Innovations for the Year 2008 by NASSCOM (National Association of Software and Services Companies). NASSCOM Foundation also honored mKRISHI with a NASSCOM Social Innovation Honors Award in 2010.
Future Challenges
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Strong financials, revenues, and net profits enhanced confidence in TCS for investors. Further, TCS had two major strengths related to HR and innovation: 1) Its sophisticated employee management skills became its competitive advantage in an industry that sold services and in which the most important assets were people; and 2) In 2009, the company had one of the lowest employee attrition rates, 11.4% (including BPO). Strong employee-management skills helped TCS attract and retain the best talent in the IT services industry.
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The global IT services market, which included outsourcing, development, integration, IT management, and process management, was forecasted to grow rapidly in the future. In the market for global IT offshoring, India and China established themselves as preferred destinations. According to NASSCOM, in fiscal 2007, the Indian IT software and services export revenue was roughly $30 billion and was expected to increase to $60 billion by the end of 2010. TCS’s innovations and HR practices positioned the company to benefit from the growing IT services markets. TCS has been through major changes over the years. It has transformed its services from programming and development to consulting and outsourcing. Although leading the Indian market in consulting operations, TCS has a small consulting operation relative to top international firms like Accenture and IBM. In 2007 and 2008, 3.4% of TCS’s revenues were derived from consulting operations. In comparison, roughly 60% and 18.5% of revenues came from consulting in 2007 for Accenture and IBM, respectively. One of the threats to TCS’s competitive advantages is the rising costs of India’s work force. Approximately 91% of TCS’s workforce is Indian. The company is the largest Indian IT employer and had a headcount of 143,761 in March 2009. Analysts reported in fiscal year 2009 that the company’s salaries and wages represented 35.6% of revenues.5
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Exhibit 1
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Screen Shot of the Initial Phase: Create Opportunity
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Exhibit 2
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TCS’s Talent Acquisition Strategy (March 2009)
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Exhibit 3
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TCS’s Resource Request Processes
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Exhibit 4 Aspects of iCALMS
Initial Learning • Common Induction + Integration (stream specific) Other Inductions • Branch • Practice • Geography
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External Programs • Certification • Sponsoring to Conferences or Seminars • Higher Education
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Learning & Sharing • Communities of Practice • Process Assets Library • KnowMax
Leadership Development • Project Management • Management Development • Role specific Programs
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Informal Learning • On the Job Learning • Learning through Reading • Professional hip (IEEE, ACM, etc.)
Continuous Learning • Technology • Domain • Behavioral
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Foreign Language Initiative • German • Japanese • French • English & Others
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Exhibit 5
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Rankings and Scores: TCS vs. Competitors
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Exhibit 6 Rewards • Top IT provider by American Banker, Bank Technology News, and IDC Financial Insights for the third year in a row, November 2009 • Asia’s and India’s Most ired Knowledge Enterprise (MAKE) for the fifth time, October 2009 • Recruiting and Staffing Best in Class Awards (RASBIC) 2008-09 for “Best Use of Technology in Recruiting” and “Most Innovative Program/Initiative in Recruiting”
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• One of Asia’s top Blue Chip Companies of 2009 by FinanceAsia in the annual FA100 guide (TCS was ranked among the best in the following categories: Best Managed Company, Best Corporate Governance, Best CSR, and Most Committed to a Strong Dividend Policy.) • Champion of Learning certification from ASTD to TCS UK & India • Investor in People certification to TCS UK & India
• Best Technical Training Award at Skillsoft Annual Conference 2009
• Second in the overall rankings of the “Most ired Companies In India” in the Asia 2000 survey of The Wall Street Journal Asia. (TCS topped the category for being “Innovative in Responding to Customers’ Needs”, came in second for “Corporate Reputation in India”, and were fourth for “Long-Term Vision” in India.) • TCS China won “Best Performance Review Management” and “100 Best HRM Company” in the Annual Best HR Management Practices in China by Job 51
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• Finalist for the Best Employee Referral Programme at ERE Expo 2009 in the USA, by showcasing the Bring Your Buddy Programme in India • TCS BPO was ranked fifth in the ITES sector of the “Great Place to Work® Survey” 2009 • First in HR Ranking in Data Quest – IDC Best Employer Award 2008 • Number One in the DQ-IDC IT Best Employer Study 2004, 2005, 2006 & 2007 • Number One in the Hewitt Best Employer Study 2004
• TATA Business Excellence Award 2004 (Similar to the Malcolm Baldridge National Quality Award Programme in the USA)
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• CII-EXIM Bank Award for Business Excellence 2006 • Assessed Enterprise wide-PCMM Level 5 in 2004
• “SkillSoft Industry Achievement Award” for Asia Pacific in 2004 for using training and education to leverage its most valuable assets—people and knowledge • Golden Peacock National Training Award from The World Quality Council/Institute of Directors for “Outstanding Commitment to Training & Development of Human Resource”
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Exhibit 7
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Technology Market Map
Exhibit 8
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COIN
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Exhibit 9
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TCS’s Innovation Life Cycle
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Endnotes DataMonitor, Tata Consultancy Services, 13 Aug 2008
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Reuters
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Survivor with a mission to reassure, Joe Leahy, Financial Times, January 25, 2009
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http://investmoneyinindia.com/tcs-may-go-slow-on-lateral-hiring/
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DataMonitor, Tata Consultancy Services, 13 Aug 2008
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Notes
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September 21, 2010
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Tata Consultancy Services: Global Talent Leverage —A Profile Introduction
In the software consulting services industry, companies sell more than innovative products. They sell knowledge. Tapping into the best knowledge—wherever it may be—is crucial to the success of businesses in this industry. China’s and India’s growing working-age populations have necessitated that companies with global business models be prepared to leverage talent from anywhere in the world. Thus, Human Resources (those that manage talent within firms) have assumed a central role in effective global service delivery and innovation.
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This is a profile about a well-known Indian company, Tata Consultancy Services (TCS), and its innovative management of HR. The sections that follow will describe the capabilities of the company’s HR model, which include leveraging knowledge around the world, the capacity to constantly recruit thousands of new people, the coordination of teams of executives in different geographies to meet milestones for a specific project plan, the mediation of cross-cultural and cross-country interactions, the transparency of talent and skills within the company, the creation of a community for innovation, etc. TCS’s ability to recruit and dynamically reconfigure its talent to deliver services globally and fuel innovations of both products and processes is among the company’s key competitive advantages in winning business.
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Company Background
Established in 1968 as a division of Tata Sons Limited (the holding company of the Tata Group), Tata Consultancy Services is India’s top software services firm. It went public in 2004 and is listed on the Indian exchanges as one of the country’s largest IPOs ever. TCS operates in 42 countries in the Americas, Europe, Middle East, South Africa, Asia Pacific, and India. In 2009, the company reported revenues from four geographic segments: Americas (56.2%), Europe (29.5%), India (7.8%) and other countries (6.5%). This extensive global reach provides the company with new growth opportunities and a diverse revenue base,
Published by GlobaLens, a division of The William Davidson Institute at The University of Michigan. © 2010, Professor M.S. Krishnan and Professor C.K. Prahalad. This profile was prepared by MBA students Nissan Dar Halpert, Nathan Jew, and Moshe Steinmetz under the supervision of Professor M.S. Krishnan and Professor C.K. Prahalad of the Ross School of Business at the University of Michigan.
Unauthorized reproduction and distribution is an infringement of copyright. Please us for permissions: [email protected] or 734-615-9553.
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which helps mitigate the impact of downturns in specific regions. TCS’s historical performance and financial reports were very strong. The company’s revenues and net profit grew at a compounded annual growth rate (CAGR) of 31% and 25.7% respectively.i Throughout the 1980s and 1990s, TCS invested heavily in software engineering practices and standards, quality assurance, project management, and process and allied metrics, as well as research and development in software engineering and technology.
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In the 2000s, management sought to aggressively expand the company’s breadth and depth of reach. In May 2007, the company gained full ownership in the t venture IT services company TCS do Brasil. In October 2007, it launched a subsidiary, TCS South Africa. And in December 2008, it bought Citigroup Global Services Limited from Citigroup Inc.1 By the end of 2008, TCS’s portfolio of services included business consulting, information technology, business process outsourcing, infrastructure, engineering, and productbased solutions. TCS was India’s biggest Information Technology outsourcing company. Its market segments included banking, financial services and insurance, manufacturing, retail and distribution, telecom, life sciences and healthcare, energy and utilities, and media and entertainment. Since its inception, TCS has transformed from a programming and development house (or a turn-key subcontractor company) to a consulting and services company. TCS has become one of the key global IT consolidators by taking advantage of the low-cost talent that India offers and creating a delivery capability that adapts to the local needs of global customers.
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Company Size, Employees, and Revenues TCS is headquartered in Mumbai, Maharashtra, India, and had 143,761 employees in March 2009.2 The average age of its employees is 28.3 The company recorded revenues of approximately $6 billion for the fiscal year 2009, an increase of 6.8% from the previous year. Revenue from the Americas, TCS’s largest geographic market, was about $3.4 billion. The company’s net profit was approximately $1.12 billion. TCS has issued dividends every quarter since it went public. An important factor behind the company’s success is its ability to nurture raw talent from India. TCS has applied a variety of innovative practices to build its vast talent base in India.
Building a Scalable Workforce through an Innovative HR Model
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In the 2000s, advancements in technologies allowed businesses to reduce the cost of product and service customization. The old model of business involved grouping customers into large sets and providing a standard product or service. By the 2000s, business cycles were accelerating at an unprecedented rate, and businesses were beginning to be more customer-centric. As a result, businesses were moving toward co-creating and partnering with former rival companies. The key question for businesses was how to make themselves more flexible and scalable to meet the needs of individual customers. In the world of consulting, high-velocity positioning and scaling of resources were becoming essential competitive advantages. Companies like TCS were developing innovations in human resources to enable rapid flexibility and the capacity to reconfigure resources in accordance with market needs. Management at TCS also considered ways to ensure that it hired and groomed the best employees. The company ensured appropriate compensation. It also focused on excellent training, career development, skill mapping, and i Revenues and Net Income grew in a five-year period from approximately $1.9 billion in 2004 to approximately $5.68 billion in 2008 and from approximately $422 million in 2004 to approximately $1.25 billion in 2008, respectively.
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transparency of talent and domain expertise. HR management was seen as central to TCS’s success, since the company was competing with other firms against a backdrop of decreasing knowledge lifespan. Thus, TCS’s innovative human resources model enabled the company to become a leading, world-class consulting firm. The model involved 1) leveraging global resources and 2) a human resource structure that used innovations in hiring, resource management, training, continuous learning, talent management, and building a culture of caring.
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Leveraging Global Resources: TCS’s Unique Replenishment Model (RPM) TCS was able to deliver up-to-date, scalable personnel resources for its global projects by using its Integrated Network Delivery Model, part of its Replenishment Model (RPM). RPM was a single-source system with an intuitive graphical interface and an integrated database, which leveraged collaborative resource planning. The key to the RPM was that it allowed TCS to merge the demands of the market with the company’s internal capabilities. The Replenishment Model was comprised of three major phases:
Create Opportunity The initial phase was called Create Opportunity (see Exhibit 1). The business development team entered data about a project proposal onto an online form comprised of dropdowns and text boxes with required fields. Primary form fields included client name, customer name, geography, current or new customer, and industry. Once data was entered into the system, a unique ID for the project proposal was generated, which served as the identifier throughout the multiple stages of the next phase of the RPM, Stage-wise Data Capture.
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Stage-wise Data Capture The second phase consisted of a nine-stage process that the business development team followed. The first stage was the Prospect Stage, which involved monitoring the initial project proposal screen and updating data. The next two stages were the Request for Information In (RFI) and Out. In these stages, the business development team entered in the RFI details, including estimated FTE (full-time equivalent) requirements, the probability of winning a proposal, and the estimated value of the project. Stage four was the Request for Proposal-In. In this stage, the business development team entered in customer type, process type, practice type, demographics, owner, and estimated project revenue.
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Stage five was the Request for Proposal–Out. TCS’s Resource Management Group (RMG) began to look at its global resources, which included overall talent availability, flexible talent, and competencies and requirements for specific opportunities. Given that TCS had over 143,000 employees of 67 different nationalities, this process could become very lengthy and time-consuming without an integrated system. With the RPM database, however, the RMG could automatically source talent resources based on a project’s requirements. In stage six, Shortlist, the business development team checked the status of the proposal and determined the chances of winning the project in the context of the overall market and competition. Stage seven, Selection, involved the business development team entering in the amount of onsite training required, visa status, and an updated probability of winning the project. Stage eight was Contract Negotiation. The business development team entered in the contract pricing and project duration. Finally, in stage nine, WIN, final details about the project were entered, including customer name, total contract value, FTE size, contract length, and the practice and geography where the sale originated.
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MIS Reports The final phase of the RPM model was the MIS report, which showed the effect of the deal or the opportunity on the company. With the RPM process, TCS was able to have a one-stop shop for tracking project status and requirements. ing teams could get constant project status updates and adjust needs accordingly, utilizing a pull process for the various resource supply chains. See Figure 1 for an example of how TCS was able to utilize its RPM model to deliver optimal service to a customer from multiple countries. Figure 1
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TCS: Global Network Delivery Model Solutions for a High-Tech Customer
A customer asked TCS to submit a proposal for ing global Oracle applications in two of its major businesses (referred to as Business A and Business B.) The customer was looking for the following CTQs (Critical to Quality Requirements) from prospective vendors: • 24*7 Production of Global Applications • Optimized Cost • Quality Assurance and Control • Knowledge Management
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• Operational Excellence
• Oracle Apps Excellence
TCS submitted a winning proposal by leveraging its Global Network Delivery Model in its sales stategy. Below are the proposal value propositions: 1. Integrated Global Service Delivery
2. Knowledge Management and Retention
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3. Preventive Maintenance Initiatives 4. Business Continuity and Disaster Recovery Plan 5. SLA Sustainability and Improvements 6. Continuous Improvements
In this example there are a number of TCS innovative solutions. For example, using the 24*7 production of global applications, TCS was able to apply its replenishment model to deliver global excellence from mulitple countries while maintaing all-access 24/7 coverage. In addition, TCS created a smooth transition of information across the different geographic regions with its strategic organization structure. The following are the details for both Business A and Business B. continued
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Business A Project profile
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Project type – 24/7 Prod Project Length - 30 Months Project Size - 11 person years Tech Stack - ERP – Oracle Apps Peak Team size – 37 India 25 China 5 Mexico 6 Europe 1
continued
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Business B Project profile
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Project type – 24/7 Prod Project Length - 30 Months Project Size - 75 person years Tech Stack - ERP – Oracle Apps Peak Team size – 25 India 13 China 5 Mexico 1 Europe 2 US 4
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TCS’s Human Resource Structure Behind TCS’s unique Replenishment Model was a human resource structure that allowed for fast deployment of global resources. This was no small feat. TCS hired thousands of people per year, and it planned to hire over 24,800 people during financial year 2009-10, the majority of whom would be trainees.4 The key to TCS’s human resource structure was that it enabled transparency to talent. In other words, the seamless system captured employees’ full descriptions (which skills they possessed, what type of training they had, etc.) so that the company could quickly assess what type of talent was available internally. Hiring TCS’s hiring process was a carefully planned talent acquisition strategy that ensured the best candidates were considered. This process began with sourcing from four major channels: direct applicants, lateral hire programs, referrals, and campuses (see Exhibit 2).
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The campus channel was a special process that involved the Academic Interface Program (AIP) group. TCS’s AIP was considered an investment in top-tier universities that included internships for students, workshops in academic institutes, sponsorships of academic events, professor sabbaticals to TCS, sponsorship of TCS associates to acquire higher qualifications, and sponsored software engineering courses for select finalyear students.
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The recruitment process focused on screening for the right fit. Specifically, applications and interviews involved a rigorous four-stage evaluation. The first stage in this evaluation was the initial screening, which incorporated a combination of human resources and technical factors as well as an aptitude test for those with less than two years of work experience. After the initial screening was a technical interview. The third stage was a management review interview, which was a behavioral assessment of a candidate’s attitude and of where he or she might fit in within the organization. The final stage was ing the candidate, which included a background check and a medical test. If the candidate ed all four stages, they received an offer. If the offer was accepted, the candidate was then transitioned to the on-boarding phase. Resource Management: A Digital Dashboard In order to improve the transparency of talent within the value chain, TCS used a digital dashboard. This dashboard enabled managers to make better decisions using a common dataset.
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When a talent resource was needed, a sales team would first submit a resource request, which would be sorted either on-site or offshore. Next, this request was sent to be evaluated against the current talent pool. The talent pool consisted of employee descriptions, which included competency reports, the available pool within one of TCS’s Industry Solutions Units (ISU), the recruitment pipeline, deputations, transfers, rotations within/across ISUs, a fluidity plan for each ISU, visa-ready associates in each ISU, and crosstraining. Once the resource request was processed, the ISU RMG proposed suitable profiles for the requirement (see Exhibit 3). Next, there was an internal screening by the ISU teams on candidate suitability. When the ISU teams decided, the employee was shortlisted. The customer would then confirm the employee. If the customer did not confirm, the employee would go back into the resource pool. If the employee was confirmed, he or she would go to the next stage. Also, if there was an on-site requirement, then the employee would go through visa and travel formalities and travel to the site. If there was no on-site requirement, the employee stayed offshore in India. The whole process was digitized and driven by the dashboard and utilization metrics. As a result, TCS could accelerate its project scalability with transparency and certainty. 7
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Training and Continuous Learning In parallel with resource management, TCS employees were given training and continuous learning opportunities. Training was a key benefit valued by employees and a reason why many ed the company. The training platform was an easy-to-use, digital platform known as the Integrated Competency and Learning Management System (iCALMS). This system greatly improved the speed and efficiency of training employees to match the fast-paced requirements of business knowledge. Within iCALMS there were several different aspects of learning that were customizable for each TCS employee. New recruits were managed through the Initial Learning Process. This was a two-month intensive program held at a dedicated training facility in Trivandrum, India, incorporating technical capabilities, process mindset, quality mindset, systems approach, domain expertise, analysis and synthesis skills, crosscultural skills, and communication. See Exhibit 4 for a diagram of all of the aspects of iCALMS.
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Additionally, there was a Continuous Learning Program (CLP) that worked closely with Centers of Excellence to keep employee training updated on the newest technologies. There was also a just-in-time component to CLP that ensured that adaptive training focused on the newest business opportunities and needs. Aside from traditional academic training, TCS also had a Leadership Development Program (LDP), which was primarily intended for building future leaders for the organization. These were on-the-ground ‘sergeants’ who could take charge of diverse global teams and lead them to high performance and excellence. Moreover, LDP served as the gateway to TCS’s Management Development Programs (MDPs). The MDPs focused on building deeper strengths in various leadership aspects.
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Further, TCS implemented initiatives that helped candidates develop interpersonal skills. The Foreign Language Initiative was one such initiative at TCS. Through iCALMS, employees could learn languages such as German, Japanese, French, and English. Another initiative was centered on communities of learning and sharing. Finally, external programs were provided to employees. Information on these could be found on iCALMS. They included certifications, workshops, conferences and seminars, and higher education opportunities. Informal learning—on-the-job learning, learning through reading, and professional hips—was also facilitated through iCALMS.
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By providing an easy-to-use and customizable training system, TCS ensured that its workforce had built-in flexibility to meet the changing demands of global projects. Talent Management TCS also focused on maintaining employees’ well-being through various talent management initiatives. Talent management encomed compensation, evaluation, performance, promotion and career management, and employee services. It was an effort driven by and focused on value-added metrics. To reward employees, TCS used a compensation framework based on Economic Value Added. Using this metric, employees could be compensated in three specific ways: a fixed salary, statutory payments, and rewards and recognition. All three ways involved from internal and external stakeholders. For fixed salaries and statutory payments, TCS took into multiple influencers, such as company objectives, geographical location and local compliance, industry and competitive trends, benchmarks, and 8
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internal parity. These influencers led to employment models such as the following: a full-time Indian employee model, a local hire model, a deputation model, flex arrangements, business associates, and contractual agreements. Rewards and recognition also aligned with TCS’s business strategy. They promoted excellence through teamwork, learning and sharing, leading change, leading by example, following the TCS mission, following TCS values of giving back to society, participating in knowledge sharing, and commitment.
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In addition to rewards, there was also a leadership potential identification process. This high potential program consisted of three tiers of employees—high potential, leadership potential, and identified leaders. The high potential pool was made up of about 40% of the workforce. Key identifiers for this tier were high performance, special competencies, and key positions. The leadership potential pool consisted of roughly 20% of the high potential pool. This tier was made up of three levels of leadership—operational, tactical, and strategic. Lastly, the identified leaders pool was about 10% of the leadership potential pool and was marked by individuals who had experience, exposure, and education.
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Building and Promoting a Culture of Caring Still other initiatives promoted employee well-being and improved employee engagement. TCS’s wellbeing initiative incorporated four facets: social, health, mental, and workplace well-being. The social well-being facet consisted of events, celebrations, community service, volunteerism, and common interest groups. The health well-being facet consisted of medical check-ups, workplace hygiene, health insurance, health lectures, and fitness centers. The mental well-being facet consisted of grievance redresses, stress and serenity activities, gender harmony in the workplace, town hall meetings, and management access. Finally, the workplace well-being facet took into consideration the ergonomics, air, water, noise and light, pantry services, general safety, and security of the workplace. Lastly, in addition to creating and maintaining superior talent acquisition and management processes, TCS strove to build a great community for its employees and their families. The TCS Maitree Network was one related program. It extended beyond the corporate life by providing a venue for building a sense of community and giving back to society. Taken together, these initiatives helped build intrinsic motivation among TCS employees and provided a culture of caring that improved the overall work environment.
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Why are these innovative processes effective? TCS’s systematic human resources approach ensured that the best-suited people were matched with the right projects and that they were provided with the proper training. This, in turn, allowed TCS the scalability to source projects from around the world with the correct number of people throughout a project’s lifecycle. Moreover, these processes built employee commitment. They ensured that knowledge was sustained and that innovative ideas from internal R&D, industry trends, and academia were all utilized to provide the customer with cutting-edge solutions that had measurable results. (See Exhibit 5 for a comparison of TCS and its competitors.) As a result, TCS has won numerous awards (see Exhibit 6). TCS’s process approach to talent development also exposed both the strengths and weaknesses in the company’s capabilities: While TCS excelled in technical solutions to known problems at customer sites, TCS management recognized that this model to compete was not sustainable. It was clear that identifying new opportunities for customers and delivering novel solutions were significantly important to differentiate a company in the marketplace. Hence, innovation became a crucial element of its value proposition to its customers. TCS expanded its talent leverage effort to a wider pool of talent. The company created the Tata Research Development and Design Centre, a lab that was among the first and largest software labs in Asia. 9
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Later, TCS set up 19 innovation labs around the world. These labs hired highly qualified scientists, explored the latest technologies, and leveraged resources across geographic markets to deliver superior value to customers in the form of innovative solutions that met their pressing challenges. The labs helped capture knowledge from all areas of the company and from its customers. The next section describes the structured approach to building innovation capability at TCS.
Innovation
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In the last decade, the word “innovation” has become a type of mascot in the business world, enabling top executives to convince the press, shareholders, and analysts that their products and services will fuel their companies’ future growth plans and lead to a brighter and more sustainable future. However, approximately 95% of all innovative ideas fail to advance beyond the ideation stage. This has led to questions such as: Do all companies efficiently utilize their efforts at innovation? What are these efforts? When is innovation considered a success? Many companies have found it difficult to understand and internalize the innovation process. And yet another challenge is how to control and nurture the innovation process. Management at TCS believed that creativity was enhanced by the right level of freedom and constraints, backed by a good governance process. TCS’s innovation frameworks and models attempted to impose these ideal constraints in order to spur creative thinking and meaningful innovation, which would result in continuous value creation that was mutually beneficial to both the client and TCS.
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TCS set up the Corporate Technology Organisation under a Chief Technology Officer (CTO). The CTO defined what innovation meant, how it would be governed, metrics that would be measured, and transparent processes that would be required for honing a solution from the research bed to market readiness. TCS also set up an internal monitoring body, called the Corporate Technology Board, that consisted of TCS Innovation Lab heads and senior associates from the Industry Solutions Units. It also created the Research Advisory Board, comprised of leading technologists external to TCS who reviewed TCS’s research.
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Innovation Architecture The primary tool TCS used to identify and channel the flow of innovative ideas was the Technology Market Map, developed by Professor Clayton Christensen at Harvard Business School. The map was a threeby-three matrix tool that allowed TCS to identify and segment its innovations according to three distinct innovation categories (see Table 1). Each had a different impact on the market (see Exhibit 7).
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Table 1
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The Three Innovation Categories
Each category also had a systematic IT metric or a combination of processes that ed disciplined and focused frameworks in all innovation stages—starting from the ideation stage, to budgeting and planning, to execution. TCS had an innovative approach to leverage both internal and external talent in order to enable the three categories of innovation. An example of an innovation from each category is presented in Figure 2.
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COIN: The Co-Innovation Network When TCS launched COIN (see Exhibit 8), it was a radical idea. Instead of depending solely on inhouse research, TCS believed that in a globalized world its customers had to benefit from technology and innovation available anywhere. In response, it formed a network that connected its own labs to research departments in universities, technology partners, start-up companies, and venture capitalist companies that were doing innovative work in information technology. Essentially, COIN built collaborative frameworks to enable innovation across the technology ecosystem. COIN enabled TCS to expand its innovation spectrum and to significantly enhance the chances of identifying winning ideas.
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COIN Channels: Ecosystem and Resource Leverage TCS Innovation Labs were the anchor of all R&D activity in TCS. The global labs enabled TCS to showcase the benefits of its innovations to customers in all geographies. Senior lab heads formed a part of the R&D Committee, which governed TCS Innovation Labs’ overall work process. Proposals for innovations were evaluated based on two dimensions—research quality and business impact. The Academia Channel provided a close collaboration between universities and industry. This collaboration enabled new technologies developed in university labs to solve industry’s challenges. The Emerging Technologies Channel connected TCS to several new companies experimenting with technology. While TCS helped the companies find a large customer network and provided technology and market diligence for the start-up solutions, the new technology companies helped TCS increase their range of offerings to customers. TCS set a revenue threshold for any new start-up technology prior to releasing it to outside customers, in order to maximize customers’ value creation. The Strategic Partners Channel provided a unique collaboration between the major technology vendors in the ecosystem (e.g. Intel, Cisco), who all shared the same goal of enhancing value creation. This 11
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collaboration was not a marketing alliance but rather a research partnership, bringing new technologies and IT services into the market. Overview of TCS’s Innovation Life Cycle TCS developed processes to manage ideas. Each year, hundreds of innovative ideas flowed from different internal sources (the Innovation Labs, Industry Solution Units, and individual employees). COIN also fostered a constant flow of ideas from the technology ecosystem external to TCS. All ideas were carefully reviewed to test applicability, impact, business utility, and market generation. These ideas were filtered and channeled according to one of the three innovation categories. Breakthrough innovations largely stemmed from COIN and in-house R&D; platform innovations came mainly from in-house R&D; derivative innovations came mainly from industry-specific internal business units.
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High-level budgetary guidelines were based on a 40%: 40%: 20% (Derivative, Platform, Breakthrough) rule. The top projects selected were then evaluated by various metrics and advanced through TCS’s technology and business review processes. Those that proved to be the best ideas received the necessary funding to begin incubation. The final stage of an innovation was to search for a future business sponsor, whether internal or external. About four or five projects were commercialized and scaled up each year. See Exhibit 9 for a simple snapshot of TCS’s innovation life cycle.
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The innovation life cycle was governed by themes that addressed both IT concerns and business concerns. This gave direction and purpose to the innovation process and anchored it in the value proposition to the customer. IT concerns addressed IT expectations—improving operational efficiency and productivity, promoting business agility, simplifying and transforming, managing enterprise risk and compliance, and enabling the understanding of markets and customers. Business concerns addressed outcomes for businesses and social goals—enriching experience, enabling the understanding of markets and customers, fostering information ubiquity, enhancing healthcare, and conserving the environment.
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Other Initiatives TCS initiated annual Innovation Forums in the UK, the US, and Asia. The forums served as a meeting place where leaders in technology and subject matter experts could discuss emerging technology trends. COIN partners and key customers were also invited to these exclusive events. Brainstorming sessions around new technologies, and experiences with such technologies, were part of the forums. Participants discussed case studies and shared best practices. This invigorated productive discussions and resulted in new partnerships and new ideas. TCS also launched another highly successful initiative (headed by the CTO) with its customers— Innovation Days. An Innovation Day was a high-profile, tailor-made event for important customers. Its goal was to harness customers’ cooperation in the co-creation process and to share with them existing and future ideas as well as trends relevant to their businesses and fields. Each year, about 30-35 Innovation Days took place, resulting in value creation to all participants.
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Figure 2 Three Innovations at TCS 1 - MasterCraft Developing software applications has always been a very time-consuming process, often involving hundreds of hours of programming and thousands of lines of code. Consequently, the software companies that win in the marketplace are those that are able to develop and bring new software programs to the marketplace in a timely manner.
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In the mid 1990s, researchers at TCS’s Innovation Labs tried to develop a tool to help TCS programmers reduce their development lead-times. After analyzing many different software applications and interviewing many programmers, the researchers noticed that certain code patterns repeated themselves. The researchers asked, “Why should one write the same piece of code at multiple places? Can’t we specify the pattern once at a higher level and generate code from this specification as many times as required?” In response to this, the researchers created a code generator that could find patterns and match code. The researchers also made the generator highly customizable. Programmers could change either the pattern to be searched or the code to be written for a pattern. The final output of this initiative was a tool called MasterCraft. This tool has freed TCS developers from many mundane and repetitive tasks. Since the tool was developed, TCS programmers have developed over 50 business-critical systems. Today, MasterCraft is widely used at TCS and is a key enabler for TCS’s business.
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2- TCS InstantApps In business, information technology is seen as a tool not just to reduce business costs, but also to enable innovation and a dynamic business environment. To address their companies’ IT needs, many Chief Information Officers (CIOs) have turned to Software as a Service (SaaS) packages. In a SaaS model, a software provider licenses software to a customer as needed. The software application may be hosted on a vendor’s server or on a customer’s platform for a specified amount of time.
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Small- to medium-sized businesses often look to SaaS packages for cost effective solutions to their IT needs. The reason for this is that SaaS applications are relatively straightforward to implement. A subscriber customizes the application, s s within the company, and starts using the application. Today, many large enterprises also use SaaS, as security features for SaaS packages have improved and the cost of implementation continues to remain low. TCS has been committed to providing its clients with quick rollout, flexibility, and low-cost solutions. In addition, TCS has worked to create adaptable SaaS platforms to meet the real, changing needs of its clients. continued
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To stay ahead in the marketplace, TCS developed TCS InstantApps, a tool that allows TCS to deliver significant cost, quality, and time improvements to clients using its SaaS applications. The flexibility of the tool allows programmers to make quick software changes, even late in the development cycle. In addition, with its multi-tenancy capability, TCS InstantApps can service multiple applications in a single hosted deployment. This means that TCS can deploy SaaS inside a corporate firewall, a security feature that many larger businesses require. The TCS InstantApps innovation has opened up new service streams outside of India, thus increasing exports. The application has also shown savings of 30%-70% in development costs and has reduced the time to market.
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3- TCS Mobile-Based Innovative Platform to Deliver Personalized and Integrated Services to Farmers and Their Stakeholders (mKRISHI) mKRISHI was developed as an integration of various technologies to provide customized advice to farmers in developing countries on their crops, soil, and farming techniques. mKRISHI also enabled experts to give personalized advice on poultry, cattle, micro-credit, crop insurance, markets and government policies. A TCS team developed this innovation in response to the need of farmers for better and more accurate farming information and other ing services. In India, rural communities (which are largely agricultural) have not experienced the same rate of growth as that of urban areas. In the past 10 years, the agricultural sector has lagged behind other industries in India. As a result, many social problems in rural communities continue to persist. For example, every 30 minutes, a farmer commits suicide.
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At TCS, a team of consultants wanted to explore ways to leverage technology to address the needs of rural farmers. To better understand the issues, the team met with farmers in different parts of India and interviewed them to learn their common questions and concerns. The responses ranged from questions on what types of crops were best to grow on certain soils, to the type of fertilizers and seeds to use, to how to get fair and reasonable commercial loans. In most cases, farmers received general advice from sources such as TV, newspapers, or farmer gatherings. Unfortunately, the general advice was often not very helpful. What was needed was advice tailored to the farmer and specific plot of land.
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To address the information asymmetries, a TCS team created a mobile phone, agriculture sensor, and network-based IT platform to remove the “last mile gap” between the farmers and other parties, such as farming experts, financial institutions, the market, and government. The idea was conceived in 2006, and a subsequent pilot project was launched to gauge its effectiveness. The mobile platform allowed farmers to send questions to farming experts in a local language using a mobile phone. These questions could be sent using text or voice messages. That way, farmers who were illiterate could send and receive information through voice messages.
continued
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The entire platform consisted of the following: • Mobile handsets to send and receive text or voice queries. The handsets were also outfitted with cameras to allow farmers to send high-resolution images of crops to an expert. • Local weather stations and sensors to provide experts information on local soil type and weather conditions • A web platform to allow farming experts to review farmer inquiries and send back advice
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The intended beneficiaries of this innovation were rural farmers. However, TCS understood that all stakeholders in the rural economy would benefit as the supply chain became more efficient. Benefits included reduced farming costs, increased farming productivity, and better prices for produce.
Note: Since piloting and launching mKRISHI, the platform has won numerous international awards. In 2007, mKRISHI won the grand prize under Qualcomm’s Wireless Reach Program. In 2008, the application won The Wall Street Journal Technology Innovation Award and was recognized as one of the Top 50 Innovations for the Year 2008 by NASSCOM (National Association of Software and Services Companies). NASSCOM Foundation also honored mKRISHI with a NASSCOM Social Innovation Honors Award in 2010.
Future Challenges
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Strong financials, revenues, and net profits enhanced confidence in TCS for investors. Further, TCS had two major strengths related to HR and innovation: 1) Its sophisticated employee management skills became its competitive advantage in an industry that sold services and in which the most important assets were people; and 2) In 2009, the company had one of the lowest employee attrition rates, 11.4% (including BPO). Strong employee-management skills helped TCS attract and retain the best talent in the IT services industry.
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The global IT services market, which included outsourcing, development, integration, IT management, and process management, was forecasted to grow rapidly in the future. In the market for global IT offshoring, India and China established themselves as preferred destinations. According to NASSCOM, in fiscal 2007, the Indian IT software and services export revenue was roughly $30 billion and was expected to increase to $60 billion by the end of 2010. TCS’s innovations and HR practices positioned the company to benefit from the growing IT services markets. TCS has been through major changes over the years. It has transformed its services from programming and development to consulting and outsourcing. Although leading the Indian market in consulting operations, TCS has a small consulting operation relative to top international firms like Accenture and IBM. In 2007 and 2008, 3.4% of TCS’s revenues were derived from consulting operations. In comparison, roughly 60% and 18.5% of revenues came from consulting in 2007 for Accenture and IBM, respectively. One of the threats to TCS’s competitive advantages is the rising costs of India’s work force. Approximately 91% of TCS’s workforce is Indian. The company is the largest Indian IT employer and had a headcount of 143,761 in March 2009. Analysts reported in fiscal year 2009 that the company’s salaries and wages represented 35.6% of revenues.5
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Exhibit 1
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Screen Shot of the Initial Phase: Create Opportunity
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Exhibit 2
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TCS’s Talent Acquisition Strategy (March 2009)
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Exhibit 3
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TCS’s Resource Request Processes
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Exhibit 4 Aspects of iCALMS
Initial Learning • Common Induction + Integration (stream specific) Other Inductions • Branch • Practice • Geography
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External Programs • Certification • Sponsoring to Conferences or Seminars • Higher Education
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Learning & Sharing • Communities of Practice • Process Assets Library • KnowMax
Leadership Development • Project Management • Management Development • Role specific Programs
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Informal Learning • On the Job Learning • Learning through Reading • Professional hip (IEEE, ACM, etc.)
Continuous Learning • Technology • Domain • Behavioral
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Foreign Language Initiative • German • Japanese • French • English & Others
Tata Consultancy Services: Global Talent Leverage—A Profile
Exhibit 5
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Rankings and Scores: TCS vs. Competitors
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Exhibit 6 Rewards • Top IT provider by American Banker, Bank Technology News, and IDC Financial Insights for the third year in a row, November 2009 • Asia’s and India’s Most ired Knowledge Enterprise (MAKE) for the fifth time, October 2009 • Recruiting and Staffing Best in Class Awards (RASBIC) 2008-09 for “Best Use of Technology in Recruiting” and “Most Innovative Program/Initiative in Recruiting”
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• One of Asia’s top Blue Chip Companies of 2009 by FinanceAsia in the annual FA100 guide (TCS was ranked among the best in the following categories: Best Managed Company, Best Corporate Governance, Best CSR, and Most Committed to a Strong Dividend Policy.) • Champion of Learning certification from ASTD to TCS UK & India • Investor in People certification to TCS UK & India
• Best Technical Training Award at Skillsoft Annual Conference 2009
• Second in the overall rankings of the “Most ired Companies In India” in the Asia 2000 survey of The Wall Street Journal Asia. (TCS topped the category for being “Innovative in Responding to Customers’ Needs”, came in second for “Corporate Reputation in India”, and were fourth for “Long-Term Vision” in India.) • TCS China won “Best Performance Review Management” and “100 Best HRM Company” in the Annual Best HR Management Practices in China by Job 51
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• Finalist for the Best Employee Referral Programme at ERE Expo 2009 in the USA, by showcasing the Bring Your Buddy Programme in India • TCS BPO was ranked fifth in the ITES sector of the “Great Place to Work® Survey” 2009 • First in HR Ranking in Data Quest – IDC Best Employer Award 2008 • Number One in the DQ-IDC IT Best Employer Study 2004, 2005, 2006 & 2007 • Number One in the Hewitt Best Employer Study 2004
• TATA Business Excellence Award 2004 (Similar to the Malcolm Baldridge National Quality Award Programme in the USA)
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• CII-EXIM Bank Award for Business Excellence 2006 • Assessed Enterprise wide-PCMM Level 5 in 2004
• “SkillSoft Industry Achievement Award” for Asia Pacific in 2004 for using training and education to leverage its most valuable assets—people and knowledge • Golden Peacock National Training Award from The World Quality Council/Institute of Directors for “Outstanding Commitment to Training & Development of Human Resource”
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Exhibit 7
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Technology Market Map
Exhibit 8
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COIN
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Exhibit 9
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TCS’s Innovation Life Cycle
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Endnotes DataMonitor, Tata Consultancy Services, 13 Aug 2008
1
Reuters
2
Survivor with a mission to reassure, Joe Leahy, Financial Times, January 25, 2009
3
http://investmoneyinindia.com/tcs-may-go-slow-on-lateral-hiring/
4
DataMonitor, Tata Consultancy Services, 13 Aug 2008
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5
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Notes
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Notes
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