Case Study Description of Tata Consultancy Services: Globalization of Software Services
Tata Consultancy Services (TCS), a subsidiary of Tata Enterprises, a member of the House of Tata group, is a Bombay-based 1.6 billion-rupee (1991) developer of software for both domestic and international customers. The case describes the software services industry in India and globally, the role of off-shore software developers in providing customer-specific software, and the basics of the Indian economy. It then examines TCS's basis for international competitive advantage and the strategy and organization of the firm as it seeks to expand globally while still developing its home market. Can be used in courses in international business and strategic management, business in the developing countries, technology management, or management of service operations.
Authors :: D. John Roberts, Sanjeev Dheer, V. Brian Viard
Swot Analysis of "Tata Consultancy Services: Globalization of Software Services" written by D. John Roberts, Sanjeev Dheer, V. Brian Viard includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tata Software facing as an external strategic factors. Some of the topics covered in Tata Consultancy Services: Globalization of Software Services case study are - Strategic Management Strategies, Technology and Global Business.
Some of the macro environment factors that can be used to understand the Tata Consultancy Services: Globalization of Software Services casestudy better are - – cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, central banks are concerned over increasing inflation,
geopolitical disruptions, increasing energy prices, etc
Introduction to SWOT Analysis of Tata Consultancy Services: Globalization of Software Services
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Tata Consultancy Services: Globalization of Software Services case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tata Software, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tata Software operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Tata Consultancy Services: Globalization of Software Services can be done for the following purposes –
1. Strategic planning using facts provided in Tata Consultancy Services: Globalization of Software Services case study
2. Improving business portfolio management of Tata Software
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Tata Software
Strengths Tata Consultancy Services: Globalization of Software Services | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tata Software in Tata Consultancy Services: Globalization of Software Services Harvard Business Review case study are -
Innovation driven organization
– Tata Software is one of the most innovative firm in sector. Manager in Tata Consultancy Services: Globalization of Software Services Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Tata Software is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by D. John Roberts, Sanjeev Dheer, V. Brian Viard can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Tata Software digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Tata Software has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Successful track record of launching new products
– Tata Software has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tata Software has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Sustainable margins compare to other players in Global Business industry
– Tata Consultancy Services: Globalization of Software Services firm has clearly differentiated products in the market place. This has enabled Tata Software to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Tata Software to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Tata Software has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Tata Consultancy Services: Globalization of Software Services HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Tata Software has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tata Software to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Tata Software in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Tata Software has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Low bargaining power of suppliers
– Suppliers of Tata Software in the sector have low bargaining power. Tata Consultancy Services: Globalization of Software Services has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tata Software to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Tata Software is one of the leading recruiters in the industry. Managers in the Tata Consultancy Services: Globalization of Software Services are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Tata Software are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses Tata Consultancy Services: Globalization of Software Services | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Tata Consultancy Services: Globalization of Software Services are -
Low market penetration in new markets
– Outside its home market of Tata Software, firm in the HBR case study Tata Consultancy Services: Globalization of Software Services needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Tata Software has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Aligning sales with marketing
– It come across in the case study Tata Consultancy Services: Globalization of Software Services that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Tata Consultancy Services: Globalization of Software Services can leverage the sales team experience to cultivate customer relationships as Tata Software is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, D. John Roberts, Sanjeev Dheer, V. Brian Viard suggests that, Tata Software is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tata Software is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Tata Consultancy Services: Globalization of Software Services can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Tata Software has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Tata Consultancy Services: Globalization of Software Services should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Tata Consultancy Services: Globalization of Software Services, is just above the industry average. Tata Software needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
No frontier risks strategy
– After analyzing the HBR case study Tata Consultancy Services: Globalization of Software Services, it seems that company is thinking about the frontier risks that can impact Global Business strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Tata Consultancy Services: Globalization of Software Services, it seems that the employees of Tata Software don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High cash cycle compare to competitors
Tata Software has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Tata Consultancy Services: Globalization of Software Services, in the dynamic environment Tata Software has struggled to respond to the nimble upstart competition. Tata Software has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Tata Consultancy Services: Globalization of Software Services | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Tata Consultancy Services: Globalization of Software Services are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Tata Software in the consumer business. Now Tata Software can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Tata Software has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Developing new processes and practices
– Tata Software can develop new processes and procedures in Global Business industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Tata Software can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Tata Software can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Tata Software can use these opportunities to build new business models that can help the communities that Tata Software operates in. Secondly it can use opportunities from government spending in Global Business sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Tata Software in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Low interest rates
– Even though inflation is raising its head in most developed economies, Tata Software can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Better consumer reach
– The expansion of the 5G network will help Tata Software to increase its market reach. Tata Software will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tata Software is facing challenges because of the dominance of functional experts in the organization. Tata Consultancy Services: Globalization of Software Services case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Leveraging digital technologies
– Tata Software can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Tata Software to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Tata Software to hire the very best people irrespective of their geographical location.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Tata Software can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Tata Consultancy Services: Globalization of Software Services External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Tata Consultancy Services: Globalization of Software Services are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tata Software can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Tata Consultancy Services: Globalization of Software Services .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Tata Software needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Tata Software has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Tata Software needs to keep up with the evolution of technology in the Global Business sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Consumer confidence and its impact on Tata Software demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Tata Consultancy Services: Globalization of Software Services, Tata Software may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Tata Software can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Tata Software high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Tata Software with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Tata Software in the Global Business sector and impact the bottomline of the organization.
Increasing wage structure of Tata Software
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Tata Software.
Stagnating economy with rate increase
– Tata Software can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Environmental challenges
– Tata Software needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Tata Software can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Weighted SWOT Analysis of Tata Consultancy Services: Globalization of Software Services Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Tata Consultancy Services: Globalization of Software Services needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Tata Consultancy Services: Globalization of Software Services is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Tata Consultancy Services: Globalization of Software Services is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Tata Consultancy Services: Globalization of Software Services is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Tata Software needs to make to build a sustainable competitive advantage.