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Overview of Indian IT Industry
The Indian IT industry is growing steadily despite the global meltdown in the year 2009. When the
whole of the world witnessed negative growth, Indian IT industry still managed to register a growth of
5.5%. The industry is about to register the historic landmark of US $ 50 billion exports this year,
according to NASSCOM President, Som Mittal. The domestic market is also slotted to witness 12%
growth, this year. Potential size of India’s off shoring industry is estimated at US $ 120 to 180 billion
by 2015. The industry currently employs around 1 million people and provides indirect employment
to around 2.5 million people. It is expected to add another 1, 50,000 jobs in the next fiscal according
to NASSCOM.
Indian IT/ ITes sector is growing substantially with its
Expansion into varied verticals
Well differentiated service offerings
Increasing geographic penetration
The phenomenal success of the Indian IT- ITES industry can be attributed to the favorable
government policies, burgeoning demand conditions, healthy growth of related industries and
competitive environment prevalent in the industry. The interplay of these forces has led to putting the
industry on the global map.
INDIAN IT INDUSTRY
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8P’s of IT Industry
1.Product: The product aspects of marketing deal with the specifications of the services, and how it
relates to the end-user's needs and wants. The scope of a product generally includes supporting
elements such as warranties, guarantees, and support
2. People: To deliver the satisfactory services, the employees of a company have to play an important
role. Employees must possess personal qualities, ability to understand and satisfy customer needs,
flexibility, skills and knowledge. Friendly and warm employees increase customer loyalty
3. Place: In service place refers to location and use of distribution channels. It is referring to the
channel by which a service is sold (e.g. online vs. retail), which geographic region or industry, to
which segment (young adults, families, business people), etc. also referring to how the environment in
which the product is sold and can affect sales.
4. Process: IT relies on processes to consistently deliver high quality solutions while executing a
growing number of engagements from multiple locations. Value, vision and policies from the first
level of our three-tiered process architecture.
5. Physical Evidence: The environment in which service is delivered and where the firm and
customers interact. Physical evidence enhances consumers’ perception about quality. Example:
Exterior design, parking, Interior Design, Surrounding environment Equipment etc.
6. Productivity: Productivity refers to the success or failure of any business, so the quality of the
product should be very good for his companies have different quality standards which are certified by
the quality department and are approved all over the world. If one does not have approved quality
standards then he develops its own to meet the quality that are demanded by the customers
7. Pricing: the pricing decision is one of the most critical decisions. Software pricing has been
concentrated the internal business objectives of vendors such as costs, specified margins, and the
competition
8. Promotion: Over here, services and project consulting is through contract or agreement between
the parties and promotions are carried out only for the particular client selected as upgrading and
extended service for a particular period, etc. This includes advertising, sales promotion, publicity, and
personal selling. Branding refers to the various methods of promoting the product, brand, or company
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Industry Trends
GROWTH
Woes in global IT spending continued
to persist in FY12 given the dire
economic situation in the US and
Europe. Businesses across the globe
started cutting on discretionary IT
budgets; this was particularly true for
the Banking, Financial Services and
Insurance companies. Indian IT
industry, however, managed to weather
the storm to some extent on the back of
superior quality, cost and execution
efficiencies and between FY2008 and
FY2012, the industry grew from Rs 2,534 bn to Rs 4639 bn, registering a CAGR of 16%.
India’s IT industry can be divided into five main components, viz. Software Products, IT services,
Engineering and R&D services, ITES/BPO (IT-enabled services/Business Process Outsourcing) and
Hardware. Export revenues primarily on project based IT Services continue to drive growth with IT
Services accounting for 59% of total revenues followed by BPO and Engineering services at 22% and
Software Products at
19%. Multi-year annuity
based outsourcing
agreements are expected
to increase going
forward. In terms of total
export and domestic
revenues, Application
Development and
Maintenance (ADM) still
continue to be the bread
and butter for Indian IT
companies, contributing
to roughly 60% of their
total revenues.
Labor arbitrage has been the competitive edge of the Indian software sector over the last few years.
However, this seems to be threatened now by MNCs’ who are replicating the Indian outsourcing
model and setting up bases in the country. Going forward, the advantage of low employee costs could
peter out and the sector could get commoditized.
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Increasing competition, pressure on billing rates and increasing commoditization of lower-end ADM
services are among the key reasons forcing the Indian software industry to make a fast move up the
software value chain by providing higher value-added services like consulting, product development,
R&D, mobile, cloud computing and end-to-end turnkey solutions.
With the Indian government emphasizing on better technology enabled delivery mechanisms for a
multitude of government projects like e-passport, Unique Identification Scheme, etc., the domestic
market connected with software services looks equally promising. Domestic IT-ITES market
increased revenues from Rs 886 bn in FY2008 to Rs 1,475 bn in FY2012 registering a CAGR of 14%,
with Software and Services contributing to 60% of domestic revenue and Hardware contributing to
the balance 40%
Internet trends
More recently, online retailing, cloud computing and e-commerce are leading to rapid growth in the
IT industry. Online shopping is fast gaining popularity with the emergence of internet retailing and e-
commerce.
According to the Internet and Mobile Association of India (IAMAI) the number of Internet users in
the country is more than 121 million, out of which 17 million are online shoppers. Increasing internet
penetration and affordability for personal computers has led to this rapid numbers, and these are
expected to triple by 2015.
According to IAMAI, online sales of branded apparel almost doubled in volume to 4.99 million pieces
during April 2012, as against 2.54 million in the same month a year ago. Also, E-ticketing continued
to grow with irctc.com recording 5.56 million bookings in April, 2012, as compared to 2.26 million
bookings in April 2011.
Employment trends
As per the Economic Survey 2011-12, the IT/ITES industries has added 7.96 lakh jobs in one year, in
the period ending September 2011. According to NASSCOM, employee base in the rural areas is
expected to increase by over 10 times by 2013-14, compared to 5000 in 2009-10.
According to a customer poll conducted by Booz and Co, India is the most preferred destination for
engineering off shoring, which is an encouraging foreign company to offshore complete product
responsibility to Indian ITES companies.
Hyderabad is fast becoming the IT/ITES hub of India with new players hankering to get a foothold
here, and existing players continuing to hire aggressively. Large companies such as Infosys, TCS,
Genpact, Deloitte, Facebook, Bank of America, Thomson Reuters, Amazon, Google, Cognizant, and
Franklin Templeton among others are growing their presence in the state. According to Andhra
Pradesh Government's estimates, the total IT/ITES sector hiring for 2012-13 could be at about 50,000
professionals.
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Company Profile
TATA CONSULTANCY SERVICES (TCS)
Tata Consultancy Services Limited (TCS) is a global IT services, business solutions and outsourcing
company which was founded in 1968 by F.C. Kohli, who was its first General Manager. It is
headquartered in Mumbai. It is a subsidiary of the Tata Group in India. One of TCS first assignments
was to provide punch card services to a sister concern, Tata Steel (TISCO). It later bagged the
country’s first software project, the Inter-Branch Reconciliation System (IBRS) for the Central Bank
of India. It is the largest technology service company in Asia based on its record of outstanding
service, collaborative partnerships, innovation, and corporate responsibility. Their mission reflects the
Tata Groups longstanding commitment to provide excellence as well as to help customers achieve
their business objectives by providing innovative, best-in-class consulting, IT solutions and services,
and to actively engage all stakeholders in a productive, collaborative, and mutually beneficial
relationship.TCS ability to deliver high-quality services and solutions is unmatched. They are the
world’s first organization to achieve an enterprise-wide Maturity Level 5 on both CMMI and P-CMM.
They use the most rigorous assessment methodology - SCAMPISM and 6Sigma.It is largest IT
employer in India, having 142 offices across 47 countries with total manpower strength of 2, 38,583
employees as of March 2012. It generates around 30 percent of India’s IT exports and provides
services to wide range of segments like banking& financial services, energy, resources & utilities,
government, telecom, media &information services, etc. TCS has over 143,000 of the world’s best
trained IT consultants in 42 countries. Revenues for the fiscal year ending 31 March, 2011 were to the
order of $6 billion.
Company Facts
Listed on NYSE, BSE and NSE.
Revenue of $10.17 billion expected by FY 2014-15.
Gross addition of 19,000 employees.
Employee Utilization Rate (excluding trainees) is 80.6 %.
Employee Utilization Rate (including trainees) is 71.3 %.
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Leadership Team
TCS is an Information Technology (IT) services, consulting and business solutions company that
delivers measurable results to global enterprises. Established in 1968, Tata Consultancy Services has
grown to its current position as the largest IT services firm in Asia on the basis of its outstanding
service record, collaborative partnerships, innovation and corporate responsibility.
Physical Presence- TCS has corporate offices in Mumbai, Kolkata, Bangalore and Hyderabad.
Turnover-Revenue for 2011-12 grew by 31% to 48,894 Crore ($10.17 billion),
Geographic footprint.
21 offices across USA and Canada
15 offices across 8 countries in Latin America
19 offices across UK and Ireland
22 offices across 12 countries in Europe
19 offices across 12 countries in Asia Pacific
8 offices across 7 countries in the Middle East and Africa
79 offices across India
As at March 31, 2012, TCS had 183 offices in 43 countries and 117 delivery centres in 21
countries.
Products
S. Ramadorai, Chief Executive Officer and Managing Director
N. Chandrasekaran, Chief Operating Officer and Executive Director
S. Mahalingam, Chief Financial Officer and Executive Director
Phiroz A Vandrevala, Executive Director and Head, Global Corporate Affairs
TCS BaNCS-
•enables transformation in financial services through a superior and holistic suite of solutions
for banks, capital market firms, insurance companies and diversified financial institutions.
TCS MasterCraft-
•a comprehensive suite of products, provides extensive self-help and SLA-based support that enable
the optimization of all services encompassing development, deployment, maintenance, support
and transformation.
TCS Technology Products
•-TCS’ technology products can help you achieve superior operational efficiency and optimize your
time, cost and energy investments.
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Services
Assurance Services
Business Intelligence & Performance Management- TCS’ Business Intelligence &
Performance Management (BIPM) solutions help your enterprise get agile, adaptable and
efficient.
Business Process Outsourcing
Cloud Services-enables organizations to operate more efficiently, while also further enables a
service-based IT delivery model, resulting in improved responsiveness to business needs.
Connected Marketing Solutions
Consulting
Eco-sustainability Services-TCS' Eco-sustainability services help you integrate sustainability
into your business strategies to drive growth and innovation, profitability and brand reputation.
Engineering & Industrial Services
Enterprise Solutions
iON- Small & Median Business-iON, the TCS cloud-based comprehensive business automation
platform for small and medium businesses (SMB), launched in February 2011, gained momentum
in fiscal 2012. iON uses the very latest in scalable cloud-computing technology to deliver a
shared, centrally-hosted, TCS-built world-class business automation suite to SMBs, eliminating
the need for them to invest in any IT assets or employ IT staff. Clients pay a monthly rental for
the software, as per usage, instead of the traditional one-time license.
IT Infrastructure Services
IT Services
Mobility Solutions and Services
Platform Solutions-TCS’ Platform Solutions leverage their IT, IS and service delivery
capabilities, infrastructure strengths, and access to new technology and process acumen to provide
you with pay-as-you-use business solutions that enable scalability, flexibility and cost
predictability to cope with dynamic business needs.
Major customers
Recently TCS have added 41 clients. Few names are as follows
ABB
Philips
Semiconductor
ABN
Tata power
Allianz Life
United Biscuits
AVIVA
Sony
British Airways
NPG
Chrysler
National Grid
Cisco
Thames Water
Deutsche Borse
Group
Nature Education
Hays
Radian Store
Motorola
Microsoft
Competitors
1) Infosys
2) Wipro
3) Accenture
4) HCL Technologies
5) IGATE Patni
6) Mphasis
7) L&T Infotech
8) Oracle IBM
9) Mahindra Satyam
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Service
Marketing
Mix
Product
Price
Place
PromotionPeople
Process
Physical
Evidence
Service Marketing Mix of TCS
The service marketing mix is also known as an extended marketing mix and is an integral part of a
service blueprint design. The service marketing mix consists of 7 P’s as compared to the 4 P’s of a
product marketing mix. Simply said, the service marketing mix assumes the service as a product
itself. However it adds 3 more P’s which are required for optimum service delivery.
The product marketing mix consists of the 4 P’s which are Product, Pricing, Promotions and
Placement. The extended service marketing mix places 3 further P’s which include People, Process
and Physical evidence. All of these factors are necessary for optimum service delivery.
In TCS the physical evidence of the service they provide is the most critical factor. Clients are
regularly updated about the progress made on their project through client calls and meetings. Also the
projects which are already delivered are monitored with their performance being evaluated.
1. Product: In case of services, the ‘product’
is intangible, heterogeneous and perishable.
Moreover, its production and consumption are
inseparable. Hence, there is scope for
customizing the offering as per customer
requirements and the actual customer
encounter therefore assumes particular
significance. However, too much
customization would compromise the
standard delivery of the service and
adversely affect its quality. Hence
particular care has to be taken in designing the
service offering.
TCS being a services company focuses on providing
customized solutions to its clients.
2. Pricing: Pricing of services is tougher than
pricing of goods. While the latter can be priced easily by taking into account the raw material
costs, in case of services attendant costs - such as labor and overhead costs - also need to be
factored in. Thus a restaurant not only has to charge for the cost of the food served but also has to
calculate a price for the ambience provided. The final price for the service is then arrived at by
including a mark-up for an adequate profit margin.
TCS practices two kind of pricing schemes:
a) Per hour Based
b) Project Based
3. Place: Since service delivery is concurrent with its production and cannot be stored or
transported, the location of the service product assumes importance. Service providers have to
give special thought to where the service would be provided. Thus, a fine dine restaurant is better
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located in a busy, upscale market as against on the outskirts of a city. Similarly, a holiday resort is
better situated in the countryside away from the rush and noise of a city.
TCS has always tried to locate itself near the clients. A lot of projects TCS is associated with are
on done on the client site. Also TCS uses lot of technology to provides its clients with sufficient
resources and minimize special limitations.
4. Promotion: Since a service offering can be easily replicated promotion becomes crucial in
differentiating a service offering in the mind of the consumer. Thus, service providers offering
identical services such as airlines or banks and insurance companies invest heavily in advertising
their services. This is crucial in attracting customers in a segment where the services providers
have nearly identical offerings.
5. People: People are a defining factor in a service delivery process, since a service is inseparable
from the person providing it. Thus, a restaurant is known as much for its food as for the service
provided by its staff. The same is true of banks and department stores. Consequently, customer
service training for staff has become a top priority for many organizations today.TCS maintains a
large pool of human resources. This can be realized by the fact that it is largest employer of India.
The employees of TCS are its face since they coordinate with the clients directly.
6. Process: The process of service delivery is crucial since it ensures that the same standard of
service is repeatedly delivered to the customers. Therefore, most companies have a service blue
print which provides the details of the service delivery process, often going down to even defining
the service script and the greeting phrases to be used by the service staff.
7. Physical Evidence: Since services are intangible in nature most service providers strive to
incorporate certain tangible elements into their offering to enhance customer experience. Thus,
there are hair salons that have well designed waiting areas often with magazines and plush sofas
for patrons to read and relax while they await their turn. Similarly, restaurants invest heavily in
their interior design and decorations to offer a tangible and unique experience to their guests. TCS
believes in providing physical evidence at each and every level in the project. They are in the
form of timely reports, work sheets and progress memos.
Current Trends
Mobility Products and Services
Mobile products provide a richer, more personalized experience for your customers by using the full
feature set of smart phones or tablets. However, in spite of all the potential benefits, creating mobile
systems that are deeply integrated into existing enterprise infrastructure poses significant IT and
operational challenges. Years of deployment experience with several enterprises across different
industries has helped TCS build a rich knowledge base and expertise of many back-end systems,
enabling us to offer differentiated and robust mobile products and services.
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Connected Marketing Solutions
As consumers embrace new technologies and emerging channels, these provide newer means for
marketers to connect with them. The key challenge for today’s marketers is to provide the right
message at the right time through the right channel. Maintaining brand consistency, coordinating with
multiple internal and external service providers, developing actionable insights that reflect a complete
and accurate understanding of the customers and speed-to-market are clear challenges.
TCS’ Connected Marketing Solutions aim to bridge marketing and IT, providing reality-based
innovations—delivered in partnership with TCS customers’ marketing organization, leveraging global
best practices and deep domain expertise, thus enabling you to engage, measure and optimize
interactions with target audiences across all the touch-points. The solutions allow for enhanced
marketing velocity, an overall increase in Return on Marketing Investment (RoMI) and enable you to
tap the evolving digital channels such as mobile and social media marketing. TCS solutions include
consulting services, business solution frameworks and cloud-based platforms, all of which are backed
by strong domain and delivery expertise in areas including social business solution, connected digital
experience solution and voice of customer analytics.
Big Data Solutions and Services
Data has become ubiquitous with the exponential growth of emerging digital technologies. Managing
this burgeoning volume of data every day is the latest challenge for enterprises wanting to harness it
for business value. Big Data is more than a factor of size; it opens a world of opportunities to find new
and valuable insights from the myriad data sources, generating data at varying speeds and types. TCS
provide with the best big data solutions and services is achieved through the research labs, and the
association with product vendors and leading research universities to deliver best-in-class solutions
and services in big data.
Cloud Services
Organizations are embracing cloud to benefit from the scalability, responsiveness and cost-
efficiencies that cloud computing offers. The transformation to a cloud environment is a significant
enterprise undertaking that has a tremendous impact on the way IT organizations operate and the way
services are delivered to business users.TCS view cloud as a paradigm that enables organizations to
operate more efficiently, while also further enables a service-based IT delivery model, resulting in
improved responsiveness to business needs. TCS offers end-to-end cloud computing services with
strategic consulting to further transform the way organizations leverage IT. Incorporating the strategic
transformation of processes, technologies and capabilities, our approach ensures the optimal mix of
enhanced agility, reduced Total Cost of Ownership (TCO) and maximum Return on Investment
(ROI).
FUTURE TRENDS OF THE INDIAN IT INDUSTRY:
Current Scenario & Problems plaguing the Indian IT Industry:
So far, the Cost Advantages and the Offshore Delivery Model had been seen as a major advantage for
the Indian IT companies who had been contributing majorly to India’s growth.
However, even before the global financial meltdown, many analysts felt that the cost advantages and
the offshore delivery model perfected by Indian companies might not remain an advantage in the long
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run. For one, the cost arbitrage was bound to come down. Global players such as IBM, Accenture, HP
and Capgemini have started their own India centres and are also aiming for the same customers.
Finally, many of the customer verticals which propelled growth in the past decade — BFSI (banking
and financial services) or telecom — are showing signs of slowing down.
Activities associated with Infrastructure Development of tier 2 and 3 cities have not taken off in a
planned and structured manner.
The lack of a supportive fiscal environment with a long- term policy framework is also leading to a
potential erosion of India’s opportunity against its global competitors, like China, Philippines and
others.
In a nutshell, the USD 108 billion India IT-ITeS industry faces challenges like employability,
infrastructure, favourable policies and competition from other low cost countries.
Future Trends:
A new trend that has taken notice among many experts in the industry is the rise in the number of
Start-Ups and how well they’ve performed, considering their scale and other factors. These emerging
IT players are not only setting new benchmarks in operational excellence, they are drawing vital VC
and angel funding, building diverse product portfolios and foraying both the domestic and overseas
markets, including non-traditional regions.
Sectors such as Infrastructure Requirement in Public Sector, Capital-Intensive nature of
manufacturing firms and Increasing need or Modernization of banks has been driving the spending of
these 3 verticals. While these 3 verticals lead the market in the current scenario, sectors such as
Communications and Media, Financial Services and Healthcare are expected to ride the next wave of
growth witnessing impressive growth rates.
Although the segment is promising and has immense potential, the increasing demand-supply gap
remains to be a cause of concern. While the demand for hardware was estimated to be USD 13 billion
in FY12, the production of goods stood merely at USD 6 billion. Growing demand for hardware
fuelled by modernization across verticals, clubbed with the slow rate of increase in domestic
production, is widening the demand-supply gap. While this is seen as a challenge, it is also unveils a
plethora of Opportunities for Hardware Manufacturers, be it global or India, who can gain
significantly while bridging this chasm.
As said above, it’s worth repeating that the IT hardware industry can play a big role in providing
products and solutions to aid the India growth story. It has the potential to leapfrog India to next
generation of technology adoption and holds immense transformational potential for various industry
verticals. Following is a list concerning the same:
Industry Vertical Present state Future potential
Access No digital connectivity Wireless connectivity
Education Limited equipment Digital classrooms
Healthcare Accessibility and cost
Telemedicine reduces cost,
improves access
Digitization Analog to Digital Electronic society, Unique ID
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The industry is also repositioning itself to leverage the emerging opportunities, technology
megatrends, re-architect its value proposition for customers, focus on IP led growth and expand the
market. Following are the five key levers that are driving this transformation and those that TCS,
among the other players in the Industry, are working on:
IP creation: The industry is transitioning from enterprise services to a world best-described as
‘enterprising solutions’. The industry is leading the drive to design solutions incorporating Social,
Mobile, Cloud, Analytics (SMAC) to offer innovative offerings
Reinvented business models: The industry is altering its business and delivery models in tune with
dynamic customer needs. Customers want solutions that minimise capex and today vendors have to
design them as a ‘pay as you go model’, and recover their costs on a ‘gain-share basis’
Expanding the market: The industry is expanding into untapped verticals, while exploring emerging
markets. Whether it is healthcare, utilities, education or legal, the industry is tapping business
opportunities being created in these verticals. At the same time, it is foraying into markets like Africa,
Asia, China, Latin America, amongst others
The relationship chain: Customer centricity is the key driver for the industry and as the focus shifts
beyond cost, the industry has expanded and built client relationships across business, finance and IT.
These relationships are helping the industry understand the customer priorities and deliver solutions
beyond cost
Together with positives such as improved security and attention to skills development, the Indian IT-
BPM industry is reshaping itself to maintain its growth trajectory. Its outlook remains bright and the
sector will remain a game changer in this decade.
Suggestions:
Analysts have given the following suggestions for the Revival of an Industry that, single-handedly,
drove India to the top and made it shine on the World map:
At one level, it needs to change its model of operations — and move away from the old-fashioned
ADM (application, development and maintenance) model that has delivered the bulk of the growth in
the past. Whether the new model involves innovations such as outcome-based billing or opening near-
shore canters depends on the company.
At another level, the Indian IT industry needs to focus on the new, high-growth areas — cloud
services, mobility services, big data, etc. — if it plans to remain relevant in the marketplace.
