MGMT8055 International Business Project
Task
Tata Consultancy Services is an Indian multinational IT services and consulting firm headquartered in Mumbai, Maharashtra. A major provider of IT consulting and business solutions, Tata Consultancy Services has been acknowledged as the world's fastest growing IT services brand. Across a wide range of industries and markets, TCS has built a solid reputation for providing industry-leading IT services and digital transformation initiatives. The main objective of this report is to analyse the organisation’s international performance by applying a range of tools, frameworks, models and theories.
Company Overview
Information Technology, outsourcing, and business solutions are the domains of Tata Consultancy Services Ltd (TCSL). Various IT infrastructure, externalisation, and corporate solutions are offered. They also provide services in IT management, business process consulting, manufacturing and production facilities, eco-sustainability services, corporate security, regional advice, and resource leveraged services, among other areas. Accountancy, investing, insurance, engineering, retail and distribution, as well as telecommunications make up the divisions. As part of the Tata Group, the company is one of the world's most well-known corporations. Mumbai, India, is home to the company's headquarters. In 42 countries, it has 142 branches, and in 20 countries, it has 105 logistics facilities TCS. (2021). Throughout addition to North America and Europe, subsidiaries operate in the Middle East and Africa. The National Stock Exchange and the Bombay Stock Exchange reveal the Group's ownership. According to corporate records from 1968, Tata Sons Ltd. founded the firm as a subsidiary of electronic data processing (EDP) requirements and management consulting services TCS. (2021).
On the occasion of its 50th anniversary, TCS was recognised as one of the world's top three IT services businesses, and as one of the top 60 corporations in the United States across all industries. It was also the world's fastest-growing corporation in terms of value, with a 14.4% annual growth rate (Barla & Prasad, 2021). To assist clients achieve their innovation and development goals, TCS launched the Business 4.0 thought leadership framework, which leverages four key aspects of digital technology: knowledge, connection, automation, and cloud TCS. (2021). In addition, the Business 4.0 system outlines four organisational principles that have been adopted by the system. There is a benefit in this since it allows surroundings to be scaled to the size of the user. Many industry-specific significant contracts have come TCS's way because of its full stakeholder management strategy, research and innovation initiatives, as well as a solid strategic grasp of the consumer sector TCS. (2021).
Business Performance
TCS's business performance over the last year is also a reflection of its inherent flexibility and resilience. Secure Borderless Workspaces (SBWS) was TCS's new operating paradigm during the early months of the COVID19 pandemic when the worldwide lockdown hampered economic activity across nearly all industries. In addition to maintaining business continuity during peak disruption, the teams also helped customers accelerate their development and transformation thereafter, all while working from home (G&T). TCS's workers' devotion, adaptability, and creativity have garnered the company praise from clients, as well as more business TCS. (2021).
A significant drop in sales in the first quarter was offset by a steady increase in demand for the company's services in the second half of the year, which allowed it reach revenues of 2,232.59 million in FY 2021, up 4.6 percent in reported figures and down 0.8 percent in constant currency terms. Because of this unequal influence on different industries, segmental reporting by the firm makes it quite obvious TCS. (2021). Over the last year, three of the six industry verticals exhibited growth (in constant currency). The company's Life Sciences and Healthcare sector grew 17.1 percent, as expected in a year of pandemics when consumers relied on pharmaceutical firms. Financial services and insurance rose 2.4 %, while technology and services grew 0.2 percent. With an operating margin of 25.9 percent, the firm continues to dominate the industry. This is an increase of 1.3 percent over the preceding year's performance. 453.97 million in net profit equates to 20.3 percent. This year's cash conversion ratio was 116.2 percent, and free cash flow was 484.91 million, up 21.8 percent over the preceding year's cash flow.
Two major developments came together to increase demand. In response to consumer demand for contactless digital transactions, many companies have increased their reliance on digital channels, and in some cases, have gone entirely online-only. This has led many companies to invest heavily in not only front-end transformations and customer experience personalization, but also in the back-end to simplify and digitise processes, reduce turnaround times for customer service requests, and enhance the end-to-end customer experience. As the pandemic unfolded, it became clear that carrying technological debt had its drawbacks and that companies needed to be more resilient and agile. Multiple engagements were created around developing a lean, secure and adaptable digital core, which included operational and data-related issues as well as cyber security TCS. (2021).
A continuous and robust flow of transactions of all sizes, across all industry verticals, was the outcome of these developments. As a result of two big deals with Deutsche Bank and Prudential Financial Inc., TCS was able to enhance their German footprint and develop a strong local presence in Ireland, respectively (Barla & Prasad, 2021). Every quarter, the number of orders signed was larger than the previous year. There was a record quarterly TCV of $9.2 billion by the time TCS wrapped off the year in 2011. This was the company's highest-ever order book of $31.6 billion, up 17.1 percent from the previous year TCS. (2021).
Financial Performance
TCS's yearly income has steadily increased over the past four years. From Fiscal Year 2017 to 2018, there was an increase of 53.79 million, and from Fiscal Year 2018 to 2019, there was an increase of 326.71 million. For the fiscal year 2019, net profit margins improved from 20.4 percent in fiscal year 2018 TCS. (2021). However, TCS has adopted steps such as minimising unnecessary travel and relocating employees from outside to India to decrease expenses on the other hand. Meetings with the company's executives are usually conducted via video conferencing TCS. (2021).
A major strength of TCS has been its ability to build value-added assets over time. A London-based award-winning digital design studio, W12 Studios, was purchased by the company in November 2018. With the addition of W12 Studios to TCS Interactive's service offerings, the company is able to assist major global brands in creating and delivering distinctive digital experiences across the whole user lifecycle TCS. (2021). In addition, TCS has just purchased several assets at the GMTC-I, which might boost its automotive engineering capability. As part of its relationship with GMTC-I in Bengaluru, TCS will also provide engineering design services to its worldwide vehicle programmes over the next five years TCS. (2021).
While a 15-20% return on a growing firm is generally considered good, TCS has already reached this ceiling ten years early. TCS surpassed all IT consulting and other service sectors in terms of return on equity, producing a greater 30.26 percent over the previous 12 months than the peer-average of 15.18 percentage points over the same period in the IT consulting industry. It is expected that TCS would increase its profitability in the years to come by spending more and using greater leverage to increase its revenues TCS. (2021).
TCS has been able to pay a fair dividend to its shareholders for several years, but in the latest fiscal year, the dividend decreased from 0.39 dollars per share in 2018 to 0.24 dollars per share in 2019. According to analysis, the steadily decreasing Indian economy is a key factor in the company's dividend decline. Unquestionably, the state of the country's economy has a direct influence on the dividends paid out by the corporations. As a result of this decrease, TCS has fared better than most of its competitors. The stock price of the firm decreased from 2018 to 2019 TCS. (2021). From 2017 to 2018, the company's stock price grew from 19.74 dollars to 27.62 dollars, a significant increase. With TCS shares ending 7 percent higher in April 2018, the company's market capitalization surpassed $98 billion. Due to higher-than-anticipated profits, the share price spiked in the fourth quarter of 2018 (January-March). Also, the freshly announced 1:1 bonus share issuance by TCS may have contributed to the increase in market sentiment TCS. (2021).
In April 2018, TCS became the first Indian IT business to reach this milestone of $100 billion market value, while Infosys, a key competitor in India, had a market capitalization of $40 billion. In spite of a weakening economy, the company's diversity in the American and European sectors has allowed it to remain strong. In June 2019, TCS eclipsed the worldwide market capitalization business behemoth IBM TCS. (2021). As of the end of trading, TCS had a market capitalization valued at $120.5 billion, while IBM had a market capitalization valued at $119.6 billion. More than $2 billion each year of TCS' digital income comes from its analytics division, which is currently rated as the world's fastest-growing IT brand (Barla & Prasad, 2021). One business in Pakistan is valued at $80 billion, yet that's just 80 percent of the total value of the Karachi Stock Exchange (Pakistan). To put that in perspective, the company's market value has grown so large that its market value is comparable to 130 nations' total GDP. TCS, which provides 75% of the profits in the TATA group, has reached this scale and status TCS. (2021).
