TCS, Infosys, Wipro run Indian IT show: Forrester

Large IT services companies have widened the gap with their smaller peers in terms of revenue, strategy and differentiation, a report by Forrester research says.

The country’s top three IT vendors, TCS, Infosys and Wipro—accounted for 46.4% of exports from India during FY08 compared to 26% in FY04, according to the study ‘Understanding the new grip of vendor polarisation.’

The top-tier firms have been outperforming the rest on all counts, including profitability, revenue-per-employee and growth while the sub-$1 billion firms have not shown any differentiation either in terms of capability or providing specialised IT services, according to the research outfit’s senior analyst Sudin Apte.

Small and mid-sized IT companies are also struggling to grow the base of their existing clients and bag large orders. On the other hand, those with revenue above $1 billion are growing their revenue by 30% despite tougher economic conditions.

TCS plans new organisational structure

The country's largest software exporter Tata Consultancy Services has planned to reorganise its global operations, with an aim to cater to customers in a focused way and boost its revenue growth.

"As we scale up over 100,000 employees, TCS needs a structure that allows us to build a nimble organisation to capture new growth opportunities," TCS CEO and Managing Director S Ramadorai said.

Besides, this would also help the company in providing customers a clear and better understanding of TCS's project delivery, TCS said in a filing to the Bombay Stock Exchange.

As part of the reorganisation plan the company has constituted a new unit for its BPO segment, in addition to TCS Financial Solutions and the Small & Medium Business Solutions.

These three businesses would operate as independent units and help in leveraging sales and customer relationships, the company said adding that, the new structure would lead to non-linear revenue growth.

"This will create a framework that is scalable for growth across markets and provide focus on strategic initiatives like asset leveraged solutions, platform-based BPO as well other new initiatives," he added.

Shares of the company were trading at Rs 869, down 3.79 per cent in the afternoon trade on the BSE.

TCS employees quit after appraisal

Coinciding with cost-cutting drive in Indian IT space amid fears of recession in the United States, the country's largest software exporter Tata Consultancy Services [Get Quote] on Tuesday said that about 500 members of its staff have 'voluntarily resigned' after an annual performance check.

"Employees with experience of two years and above across the company who were unable to meet the performance requirements of our company are asked to look for other jobs commensurate with their abilities," TCS spokesperson Pradipta Bagchi said.

However, he asserted that no employee has been sacked or fired. As a policy the only time that TCS dismisses people is for disciplinary reasons, he added.

"This is not an exceptional thing, it happens every year and it is part of our annual performance exercise. In TCS, everyone has to go through an appraisal cycle where they are rated between 1 and 5 depending on their performance. If in one appraisal cycle anyone is rated below 2, we put them on PIP (performance improvement plan). Read More>>

TCS wage cut worries tech workers

Tata Consultancy Services’s decision to pare staff wages has triggered rumblings in the Indian outsourcing landscape with employees beginning to wonder if indeed they are circling the drain before the slowdown in the world’s largest economy drags them into a quagmire.

Even as employees shuffle uneasily in their seats, top officials at Indian outsourcers closed ranks and sought to allay concerns claiming there was no generic parallel that can be drawn from the action of the country’s largest software exporter.

On Tuesday, TCS in an email communique to its 100,000 plus employees said a combination of internal and external factors saw it failing to meet its Economic Value Added target—a financial performance method calculated as the net operating after taxes profit minus a charge for the opportunity cost of capital invested.

Infosys Technologies, the closest Indian rival of TCS, chose not to read anything into the missive. “It is not an industry issue,” said Infosys Chief Financial Officer V Balakrishnan.

On its part, TCS said, though it met its revenues targets, the EVA target forms the basis for the variable pay computation and has been given in advance, each month during Oct-Dec period.

Based on the audited results, the EVA-based variable payout amounts to Rs 293 crore for the quarter. The actual variable payout based on expected EVA given in advance amounts to Rs 376 crore.

Therefore, the advance payment that has to be adjusted amounting to Rs 83 crore, will be recovered during the current quarter from the employees.

The recovery would be reflected in employee wages in the months of February and March 2008.

“I think it is a company specific strategy. And right now, if you look at our own quarter and the way that business, is growing, I think volumes are not an issue at all,” said Ganesh Natarajan, vice-chairman of industry body Nasscom and managing director of Zensar Tech.

The success stories of TCS

Subramanium Ramadorai, also known as Ram, joined Tata Consultancy Services or TCS in 1972. Instrumental in setting up TCS' operations in New York in 1979, Ramadorai took over as the CEO in 1996 and since then he has played an integral role in building TCS into India's first $1 billion IT services company.More>>