TCS Looks West - IBM Eyes East: Switching Homelands for Revenues



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Code :BSM0043

Year :
2009

Industry : Information Technology and IT Enabled Services

Region : Global

Teaching Note:Available

Structured Assignment :Available

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Introduction:By 2007, India's IT industry has gained significantly with an annual growth rate of nearly 30%, representing 5.4% of the country's GDP. Tata Consultancy Services (TCS), Infosys and Wipro have marshalled their huge local workforces to supply high-quality services at a low-cost. They have been able to innovate by building a sophisticated human supply chain, in the process, forcing their global peers to follow suit. However, with the appreciation of Indian currency and downturn in the US economy, these IT companies are forced to change their business models and adapt to western IT giants, who have leapfrogged to India, challenging the domestic firms in terms of cost and scale by tapping the low-cost workforce.

TCS, one of the top IT companies, has been losing out in the domestic market as companies like IBM and Accenture are moving ahead through high-end consulting. Analysts felt that the company must move faster on the value chain ladder and get more involved in strategic consulting, R&D and provide more web-based and electronic commerce kind of interactive services to the customers. However, few are sceptical of the company's ability to overcome the hindrances, mainly caused due to the low-cost image and the huge investments involved to compete globally.

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