Current macro environmental opportunities and threats facing Tata Consultancy Services

Tata Consultancy Services

The more complex and challenging global business becomes, the greater the demand for unique and highly specific expertise. Given the accelerating pace of change regarding compliance, cost reductions and efficiency strategies, lean manufacturing and process improvement, many organizations do not have the internal resources to meet these challenges alone. The rapid rise of outsourcing providers is being fueled by these developments, leading to one of the fastest growing consulting and services industries globally (Pandit, 2005). Tata Consultancy Services is one of the leaders in the area of business process management (BPM), business process outsourcing (BPO), information systems development, and the relatively new areas of outsourcing research & development (R&D) (Oshri, van Fenema, Kotlarsky, 2008). The intent of this analysis is to evaluate the macro-environmental opportunities and threats for the company.

Evaluating Tata's Macro Environmental Opportunities and Threats

Tata Consultancy Services was established in 1968 as the main services component of the Tata Group. In 1995, TCS America was launched to seek out BPO and BPM projects throughout the North American markets. Tata Consultancy Services operates today in 42 countries, with offices in 140 cities, and is managed primarily on a geographic basis. The four geographic divisions in place today include the Americas, Europe, India and rest of word or other countries. Tata has also found that defining their most dominant industry segments as verticals is very effective. As a result, they operate verticals in banking, financial services, insurance, manufacturing, retail and distribution, and telecom (Sharma, Siddiqui, Sharma, Singh, Kumar, Kaushal, Banerjee, 2007). Over the last two decades Tata has emerged as a leader in the areas of consulting, IT services, infrastructure services, BPO and BPM outsourcing. They also have extensive experience in outsourcing R&D projects as well, having worked with IBM, Microsoft, oracle and others on future development initiatives (Oshri, van Fenema, Kotlarsky, 2008). Based on this unique combination of strengths and talents the company has, they have a unique set of strategic or macro-environmental opportunities and threats. The intent of this analysis is to evaluate each of these from the context of Tata's core capabilities today and the ones they are in the process of improving for the future.

Assessment of Opportunities

The rapid growth of spending on healthcare Information Technologies (IT) continues to escalate up as the U.S. Government begins investing in universal healthcare, which is re-ordering this entire industry on a global scale (Oshri, van Fenema, Kotlarsky, 2008). This increased spending on healthcare is also increasing the level of process re-engineering and process outsourcing as well. These two areas are where Tata excels in providing insights and expertise, far greater than many of the healthcare providers are capable of providing on their own. The healthcare IT market therefore continues to expand globally, with a strong focus on BPO and BPM efficiencies to ensure a high level of accuracy of treatment combined with cost reductions over time. These factors are making the healthcare IT market one of the most profitable for Tata, with the exception of governance and compliance, which had its beginnings with the Sarbanes-Oxley Act of 2002 (Sharma, Siddiqui, Sharma, Singh, Kumar, Kaushal, Banerjee, 2007).

The second macro-economic or macro-environmental opportunity that Tata has is the growing demand for BPO services globally. According to Gartner Group the demand for BPO services across the procurement, purchasing and pricing areas is expected to grow through 2013 (Oshri, van Fenema, Kotlarsky, 2008). As Tata has specialized in BPO projects in the purchasing and procurement markets, their ability to quickly move on and close new opportunities is considered to be among the strongest in their area of the outsourcing industry (Sharma, Siddiqui, Sharma, Singh, Kumar, Kaushal, Banerjee, 2007).

A third major opportunity is to provide outsourcing services for global engineering research & development (R&D) (Sharma, Siddiqui, Sharma, Singh, Kumar, Kaushal, Banerjee, 2007). Inherent in this area of outsourcing is the need for having strong cross-functional membership across the entire consultancy, as R&D is often a highly interrelated, difficult to coordinate activity. It takes exceptional project management to make outsourcing R&D also work as well, a core strength of Tata as seen by the many Sarbanes-Oxley compliance and auditing projects done in the early 21st century (Oshri, van Fenema, Kotlarsky, 2008). The outsourcing of R&DF also has major threats to any company's culture over time, which requires Tata to anticipate these issues and create the right mix of expertise to earn and keep credibility. The focus on bringing R&D back into a company is crucial for the entire consulting arrangement to be effective over time. Tata works to create shared task ownership on R&D projects to ensure that resistance to change is minimize and their clients attain the desired outcomes.

Assessment of Threats