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 - – central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , there is increasing trade war between United States & China, increasing commodity prices, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, geopolitical disruptions,
wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, 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 -
Diverse revenue streams
– Tata Software is present in almost all the verticals within the industry. This has provided firm in Tata Consultancy Services: Globalization of Software Services case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
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.
Learning organization
- Tata Software is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Tata Software is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Tata Consultancy Services: Globalization of Software Services Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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.
Effective Research and Development (R&D)
– Tata Software has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Tata Consultancy Services: Globalization of Software Services - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
Training and development
– Tata Software has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Tata Consultancy Services: Globalization of Software Services Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
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.
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.
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.
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 -
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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Tata Consultancy Services: Globalization of Software Services HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Tata Software has relatively successful track record of launching new products.
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.
Need for greater diversity
– Tata Software has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High operating costs
– Compare to the competitors, firm in the HBR case study Tata Consultancy Services: Globalization of Software Services has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Tata Software 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Tata Software has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Tata Software even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
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.
Capital Spending Reduction
– Even during the low interest decade, Tata Software has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Workers concerns about automation
– As automation is fast increasing in the segment, Tata Software needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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.
Lack of clear differentiation of Tata Software products
– To increase the profitability and margins on the products, Tata Software needs to provide more differentiated products than what it is currently offering in the marketplace.
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 -
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.
Using analytics as competitive advantage
– Tata Software has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Tata Consultancy Services: Globalization of Software Services - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Tata Software to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
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.
Manufacturing automation
– Tata Software can use the latest technology developments to improve its manufacturing and designing process in Global Business segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Creating value in data economy
– The success of analytics program of Tata Software has opened avenues for new revenue streams for the organization in the industry. This can help Tata Software to build a more holistic ecosystem as suggested in the Tata Consultancy Services: Globalization of Software Services case study. Tata Software can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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.
Learning at scale
– Online learning technologies has now opened space for Tata Software to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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.
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.
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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Tata Software to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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 -
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 .
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.
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.
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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Tata Software business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Tata Software needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Global Business industry regulations.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Tata Software.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Tata Software in the Global Business industry. The Global Business industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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.
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.
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 .
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.
