Tata Consultancy Services, Globalization of IT Services

In February 2008, as S. Mahalingam (Maha), the CFO of Tata Consultancy Services considered the strategic challenges facing TCS, challenges faced only by the elite segment of IT services companies: IBM Global Services, Computer Sciences Corporation, Accenture, KPMG, and others. The key issue was how to maintain a breathtaking annual growth rate of 35 to 40 percent without sacrificing 25 to 30 percent margins. Maha: “By 2010 we want to become a $10 billion-a-year company producing 25 percent margins”. The company’s strategy and positioning, combined with excellent execution and a fair number of macro factors breaking its way, had placed it front and center in the leadership competition for global IT services. Since the early 1990s, TCS had grown faster, made more money, created a better brand and reputation, and invested more heavily (as a percentage of revenues) in its future than its Indian or international competitors. The question on Maha’s mind was whether TCS had the right strategy to continue to outmaneuver its competitors as it aimed to become the first Indian technology company to join the $10B revenue club.