INDIA BUSINESS WORLD - FEBRUARY 1st - FEBRUARY 15th - 2008
TCS REJIGS $6-B BIZ INTO 20 UNITS
Call it the United States of Tata. India’s No. 1 software exporter and the largest private sector employer, Tata Consultancy Services, has just converted its large mansion into several smaller dwelling units. In a bid to become more nimble and speed up customer service, TCS has restructured its $6-billion business into about 20 semi-autonomous units. The new units signal company’s break with the past when it was organised along geographical borders, industry domains and service groups. Now, the company will be a conglomerate of groups organised around business opportunities. Each group will have a revenue size in the range of $250-500 million and staff of up to 5,000, be accountable for its own profits and pursue its own human resources and market strategies.
“It is good for us as we think the modular structure will simplify our interface with customers and drive agility in all areas of operations along with sharpening accountability to customers,” chief operating officer N Chandrasekaran said. For customers, the benefit is simplicity. They can now interact with the chief executive of a small organisation and have their needs met with better speed and closer understanding. For employees, the benefit is leadership prospects. The growth for top performers would be all-round, giving them a chance to lead a whole organisation with staffing, financial, operation and technology challenges, rather than going up and up along just one of those lines. “It is also great for the employees as the accountability would mean that they would get to work in more holistic manner,” Mr. Chandrasekaran said.
For shareholders, it will bring improved productivity and longterm profitability, even while enabling TCS minimise the impact of recession in a particular continent or a given business line. It will also clearly show which part of the business is bringing in money and which is not. “What TCS is looking to do through this is to create smaller TCSs within the bigger organisation, as the company itself is getting to be big in size,” said Macquarie Research analyst Suveer Chainani.
By April 1, when the change would be consummated, the TCS head office in Mumbai’s Fort area will be a lean machine. The individual integrated units will be able to fall back on HQ for support in new technology, shared services, quality and other processes and resource management. New strategic initiatives, too, will become separate units. In the new scheme, platform-based BPO will be a separate unit. The changes may also signal an increasing role for Mr. Chandrasekaran, two analysts said. Years ago, Infosys Technologies had undertaken a similar exercise, bequeathing profit and loss responsibility on middle managers and giving them a free hand to develop their domains.
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