IDC analyst Douglas Hayward sent me an interesting article he wrote, with other IDC analysts, about TCS. This followed an analyst day at TCS.
It is interesting to see how big TCS is in the UK. We know it is India’s biggest IT services firm with over 250,000 staff globally and billions in revenues. But in the UK it is now a billion pound company. It had sales worth a total of £1.18bn in the UK in 2012.
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Hayward points out that TCS, unlike many rivals, grew faster in the UK during 2012 with 25% growth in dollar terms during. He said it is now the eighth largest IT services supplier in the UK and has 9,500 UK employees.
And believe it or not it is an IT supplier that understates its cloud offering, according to IDC.
Here are some excerpts from the paper.
On cloud computing IDC believes TCS actually has actually understated its story. While this makes a refreshing change from every Tom, Dick and Harry having a cloud story, it is interesting to read IDC’s thoughts.
“While executives confirmed that they do not chase standalone cloud services contracts, they will certainly provide cloud services as part of “end-to-end” outsourcing deals (particularly where the customer wants outsourced infrastructure), and cloud is therefore playing an interesting and innovative part in some key deals. For example, the NEST contract, in which TCS runs the newly established default national pension scheme for U.K. workers, has the IT infrastructure provided through a secure private cloud hosted by partner Cable & Wireless. That’s impressive — yet it’s not something that’s generally known.”
IDC also asks: where will TCS go next to continue its growth?
It needs to ramp up its consultancy business.
“TCS has an established business consulting practice, spanning both traditional areas such as process transformation and change management and newer areas such as the Digital Enterprise Group (see above). Still, executives concede that TCS has to scale the group up in future, and it also needs to get it more integrated — meaning driving closer collaboration both across the consulting practices and between the consulting organization and the mainstream and IT services and BPO businesses. It also has to inject more “consulting DNA” into the mainstream TCS organisation, supplementing the traditional technology excellence with a focus on driving IT and technology transformation among clients — at least for those employees willing and able to combine these two realms.
It must adapt its services to meet public sector demand.
“Winning major contracts such as NEST and DBS based in part on innovative technology solutions rather than labor arbitrage has helped TCS establish a reliable brand that can compete for major deals at the central government department level against traditional incumbents. And to the winners go the spoils: having onshore delivery centers for BPO and IT service delivery will help TCS win more deals, giving it reference customers and gaining points in the procurement process, not to mention making migration of customers coming from new contract wins smoother. Further growth in central government would benefit from TCS strengthening the packaging of its industry-specific offerings and from strengthening its cloud positioning to meet the U.K. government’s G-Cloud objectives. To speed up those initiatives, especially in an environment that cannot afford the cost and risk of ‘big bang’ custom development any longer, TCS should consider partnering with local solution providers or specialty software vendors. It has traditionally built its offerings in-house from scratch or repurposed them from other verticals, such as taking the BaNCS offering and adapting it for the UK life and pensions industry (for both commercial customers and for the NEST project). While this works well enough, it may need to be supplemented in future with more partnering-led approaches if TCS is to accelerate its drive into the public sector, so some business models and organisational changes should be considered. In local government, the Digital Enterprise Group is making what we consider an initially somewhat timid approach to the ‘smart cities’ market with the Intelligent City (iCity) framework. TCS has strong legacy of state and local government customers in India which provides a solid foundation for digital service delivery, but to break into the crowded “smart cities” arena in Europe requires a strong point of view, offerings, and customer successes in specific areas that are in high demand, such as transportation, environment, public safety and health, besides generic eservices platforms, such as the one being deployed for Cardiff Council.”
See my recent interview with TCS’s UK head: Inside Outsourcing interview: TCS public sector win shows that offshoring is not about labour arbitrage, but service innovation.