Tag: TCS

The Buzz and Promise around TCS’ New Tagline | Blog

What’s in a brand tagline? These catchy slogans with only a few words can say a lot about a company and its future direction.

With the announcement by TCS (Tata Consultancy Services) on March 30 of its new brand statement, this leading IT services, consulting, and business solutions organization has created quite a bit of buzz moving to “Building on Belief” from “Experience Certainty.”

While customers and competitors alike recognize that TCS has been true to its original tagline with its execution efficiency, pragmatic expectation setting, and adherence to contractual commitments, a change was needed after 15 years.

Why change now?

As all global organizations pivot to uncertain environments, preparing for a nebulous future has become everyone’s new mantra. The rebranding was long overdue. Although TCS may be a known brand in execution, in honesty, it is not recognized for owning risks or thriving in abstract situations.

Also, we have seen most of the competition already aligned to the “pivot to the fuzzy future” notion with taglines such as:

  • Infosys: “Navigate your next”
  • Accenture: “Let there be change”
  • Capgemini: “Get the future you want”
  • Wipro: “Empowering a resilient future”

It was just a matter of time before TCS as one of the industry leaders (it was ranked second in this year’s annual ITS Service Provider of the Year awards) would respond to this market dynamic.

What’s the buzz all about

Any brand expert will tell you that in branding, boring means dead. However, if folks are debating anything related to your brand (as long as it is not damning), it is creating what is called a buzz.

And word of mouth about this tagline is that it is way too abstract for a firm that has stood for “experience certainty.”

In the analyst community, some of my peers went so far as to suggest that TCS has perhaps “overshot the mark here,” with several in the community posing such pertinent questions as:

  • Is TCS asking clients to “believe” in it?
  • Is TCS expecting clients to “build” a business case for the future based on “beliefs”?

The most interesting part of this tagline right now is that everybody is debating it. Because of the conversation, in no time, the new TCS tagline is poised to reach a far larger audience than would normally follow this news. Whether or not TCS consciously thought of this strategy, it’s a brilliant move.

Tagline thoughts

Back to the controversy – has TCS overshot its mark by going for something too abstract? My assessment gives TCS the benefit of doubt. Here is why: Most high-end problem-solving in this world starts with an initial hypothesis (“belief”). As the journey proceeds, facts are collected that prove or disprove that premise to arrive at a solution.

In my opinion, TCS wants to convey the mutual trust it has with its clients to solve problems together and transform their businesses. Let’s remember that “belief” is an important component that keeps us on track when dealing with many of today’s fuzzy concepts such as blockchain, quantum computing, and cognitive, to name a few.

Net-net: TCS is already known for execution or “building.” Its new mission statement, “Building on Belief,” communicates its intention to execute while taking risk ownership, which is essential in these times. Given that TCS lived up to its last tagline, I have confidence it will work hard to make its brand promise more than just an interesting slogan to talk about and a new reality.

TCS is now valued more than Accenture | In the News

Tata Consultancy Services (TCS) not only touched $100 billion in market capitalization on Monday, but it also in the process overtook the market cap of Accenture, a company whose revenue is almost twice that of TCS.

Rod Bourgeois, head of research in US-based DeepDive Equity Research, said that the root driver of TCS’s success is that it has built a position as the low-cost value player at scale – backed by the execution ability to maintain low costs while still delivering quality work. “This industry positioning by TCS supports good revenue growth, and this low-cost execution supports distinctive margins. Good growth plus distinctive margins over many years produces a huge market cap,” he said.

Peter Bendor-Samuel, CEO of IT consulting firm Everest Group, however, wonders if TCS’s valuation premium would persist over the next few years. Accenture, he said, is further along than TCS in its move into the new digital marketplace. “We anticipate that it will be difficult for TCS to maintain its traditional margins in digital as the business model as we understand it seems likely to demand lower margins. However, if TCS is able somehow to maintain the margin premium by some combination of IP ownership, and digital labour arbitrage, then it will be able to maintain its equity premium,” he said.

Read more in Gadgets Now

TCS wins $6 billion in contracts under a month | In the News

For several years under its previous CEO N Chandrasekaran, TCS achieved growth rates of 15 per cent-16 per cent even when it had hit $10 billion in revenues, way more than the No. 2 player in the Indian IT industry. Then, in the past couple of years, the company slowed down dramatically as customers looked at newer digital technologies that TCS and others were not fully prepared for.  Now, Chandrasekaran’s successor, Rajesh Gopinathan, looks to be bringing the company back to its winning ways.

In less than a month, TCS has announced deal wins of nearly $6 billion, including a $690-million contract with Europe’s M&G Prudential that it announced on Tuesday. It’s a stellar feat that has left many in the Indian IT sector in awe of the company’s deep client connects and robust execution engine.

Peter Bendor-Samuel, CEO of outsourcing consulting firm Everest Group, said TCS is taking on the market with new vigour. “Last year, TCS rolled out a comprehensive strategy to address the markets’ move into a digital-first orientation. This involved increased investments in digital, reorganization of its operations to address the new realities of a digital marketplace, and new messaging for its marketing and sales teams,” he said.

Read more in The Times of India

Gazing into the Global Services Crystal Ball: Sometimes you get it Right, and Sometimes, Not so Much | Sherpas in Blue Shirts

When I visited India for the first time in the early 2000s, the country was largely unknown in terms of business. The airports were small and dingy. The upscale hotels were really nice but also scarce. That meant they could charge insanely expensive rates…I remember paying US$700 per night at the Leela Palace!

My U.S. colleagues and I were on a mission to visit largely unknown service providers like Infosys, TCS, and Wipro, all of which had around 10K employees. At the end of the trip, we concluded that this was going to be real, and big…very big.

So we, and the other industry analysts in the space, pulled out our crystal ball to see what specifics we could predict. How clear, or cloudy, were our sixth senses back then?

What we got right

We did well in this category. India, along with many, many other low-cost locations, is absolutely capable of doing the global services job with scale. It’s also capable of doing many sophisticated processes (full disclosure: we might have underestimated this one a bit.) And those “unknown” companies I mentioned above? They’ve become truly global players, by some measures even surpassing the original powerhouses like Accenture, ACS, CSC, EDS, IBM, and HP (many of which have already consolidated).

What we got wrong

While inflation slowed in the U.S., it did even more dramatically in recent years in India. This, in turn, slowed the arbitrage difference, creating relatively smaller impacts on our models. And currency moves – such as a change from around 45 to 64 rupees – created a large positive impact, offsetting inflation by roughly 50 percent.

What we got really wrong

Labor supply was the biggie. All of us in the analyst community completely underestimated the impact of the available supply, which created an ongoing downward pressure on entry-level salaries. Using the best available data, the number of college students in India has risen from 13.6 million in 2008 to more than double that (28.5 million) in 2016.

While we didn’t predict it in the earliest years of the global services industry, by the end of the 2000s we were forecasting the end of labor arbitrage. India salaries were rising at double digit rates, and it seemed that it was only a matter of time before we reached parity (for offshoring purposes, 70 percent of U.S.-based salaries was considered parity.) As you see, we were miles off on that one.

What we got really wrong | Supply of labor

Increased labor in India as well as other locations have ensured limited salary increase, especially for junior roles

Future of Global Services

Looking forward (through our much more mature crystal ball) on the cost question

  • Temporary shortages of key skills, particularly digital, will create upwards pressures on salaries. But as the education and corporate systems retool their training curriculums, I expect the resulting surge in available talent will allow a cap and perhaps drive down salaries. Still and all, India is still a viable place to get low cost labor, albeit not quite as good as it was 15 years ago. (Review our Executive Briefing, India Global Services Industry: A Look Back at the Last Decade and Our Future Outlook, to drill down into the supporting analytics for this analysis.)
  • Many functions and processes have reached an offshoring saturation point. This doesn’t mean a complete stoppage of work moving offshore, just that many of the big, concentrated moves have already happened.
  • New automated solutions like RPA are going to create significant process labor efficiencies, in turn increasing headcount pressures.
  • The tipping point in this equation will go back to the supply side, where the ongoing wave of college students will keep pressure on wage advances far into the future, especially for the entry level positions.

Gazing forward to at least a 2040 – 2050 timeframe, other low-cost locations such as eastern Europe may get tapped out, since they don’t have as large a stream of graduates as does India. So, I say: advantage to India in keeping the wages compelling with its tidal wave of ongoing supply. But the looming question will be, what to do with all of those freshly minted grads?

My next blog will tackle the interesting another aspect of my looking back and looking forward retrospectives: “Are the India Heritage Services the new Global Leaders? The answer isn’t obvious. Stay tuned…

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