COMPANY PROFILE -Tata Consultancy Services (TCS)
Business Sector :Information Technology Services, Consulting and Solutions.
Operating Geography :Asia, India, Global
About Tata Consultancy Services (TCS) :Tata Consultancy Services, founded in 1968, is a Indian multinational company, specializing in Information Technology services and Technology and Business Consulting solutions. The company is headquartered in Mumbai, India and has over 387,000 employees globally as of March 2017.
Tata Consultancy Services (TCS) Revenue :INR 1.18 Tn (US $17.58 billion) – FY ending March 31st 2017
Competitive Analysis of Tata Consultancy Services (TCS)
|1. Healthy balance sheet with strong financials |
2. Flagship company of reputed TATA group
3. Strong dominance in domestic market
4. Comprehensive business portfolio with end-to-end technology service offerings
5. Impressive client base with 37 US $100 million clients as of FY16
|1. Major products absent, largely dependant on services
2. Largely dependent on North American and European markets and limited presence in Asia Pacific (APAC) region
|1. Business consulting has the potential to drive upstream growth|
2. Pursuing inorganic growth by acquisitions in strategic areas
|1. Intense competition from domestic and international players
2. Visa fees and legislations to impact the operating model
3. Brexit to impact projects in EU markets
4. Penalty from lawsuits will impact TCS’ reputation and financial performance
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Detailed SWOT Analysis of Tata Consultancy Services (TCS)
1) Healthy Balance Sheet with Strong Financials: TCS has a healthy balance sheet with strong financials. Its FY17 revenues stood at $17.58 billion, a growth of 6.2% over FY 2016. It is a zero debt company with around US $5 billion (Rs. 32,533.76 crores) in investible funds as of March 2016.
2) Flagship Company of Reputed TATA Group: TCS is the flagship company of the US $ 110 billion TATA Group. The brand of ‘TATA’ has always provided credibility and reliability to TCS and has helped it win many clients.
3) Strong Dominance in Domestic Market: TCS commands a strong dominance in the domestic market as it can be seen from its order book that it bags most of the government projects in India. Though these projects command a low operating margin, it helps TCS in keeping high resource utilization. Also being an Indian company, it has the advantage of securing confidential government projects, which may not be outsourced to a foreign firm.
4) Comprehensive business portfolio with end-to-end technology service offerings: TCS has a comprehensive business portfolio spanning across geographies, industry verticals and services. Thus it can be the end-to-end technology consulting and services provider for its clients. It leverages its Global Network Delivery Model (GNDMTM) to provide round-the-clock services to its clients.
5) Impressive Client Base with 37 US $100 million clients as of FY16: TCS has a total of 37 clients who contribute US $100 million or more to its annual revenues, with 8 clients added in FY16. 73 clients fall in the US $50 million+ revenue band and TCS has overall 298 clients which fall into US $10 million+ revenue band.
1) Major products absent, largely dependent on services: Services segment contribute to 90 per cent of the revenue for TCS. Also Application Development and Maintenance (ADM) contribute a major portion of services. The product segment is not well established which has a huge potential to be untapped both in the local and in the international markets and brings licensing revenues.
2) Largely dependent on North American and European markets and limited presence in Asia Pacific (APAC) region: TCS is largely dependent on North America for its business with 53.28% of its FY16 revenues being generated from the geography (1). It should focus more on Europe and Middle East regions which are lucrative markets and have further growth potential. It will help in business diversification and reduce impact in case of any adverse economic events in North America.
TCS has a comparatively low presence in the Asia Pacific region which is fast growing market. China, Indonesia, Singapore, Indonesia are some of the markets which will grow further in the next decade and companies like IBM and Accenture currently dominate these markets. It needs to build a strong market presence in the region to leverage on the potential opportunities.
1. TCS Annual Report 2016: http://www.tcs.com/investors/Documents/Annual%20Reports/TCS_Annual_Report_2015-2016.pdf
2. TCS Q4 2017 - PressRelease: http://investors.tcs.com/investors/Documents/Presentations/TCS_Factsheet_Q4_17.PDF
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