4.3,4 TCS Case
4.3,4 TCS Case
4.3,4 TCS Case
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the Asian Business Case Centre
As a global IT services company, Tata Consultancy Services Limited (TCS) was confronted with
issues of growth, attrition, cultural diversity and management of intellectual capital. TCS had
undertaken Knowledge Management (KM) initiatives with the belief that they could leverage its
existing resources for growth, but had the company been successful in this aspect? How could the
company transform itself into a formidable learning organisation if it was not already one? Could
KM be a key differentiator for TCS when competitors such as Infosys Wipro, Accenture and IBM
had built up their KM infrastructure? The company was at the crossroads even as it celebrated the
launch of its new one-stop KM platform with much fanfare.
Associate Professor Ravi S. Sharma of Wee Kim Wee School of Communication and Information, NTU and Shirley
Koh prepared this case. The case is based on public and internal company sources. The authors would like to
acknowledge the contributions of S P Jain Institute of Management students Aijaz Siddiqui, Atul Sharma, Rajdeep
Singh, Ravi Kamat, Sachin Kaushal and Siddharta Banerjee for their assistance. They also gratefully acknowledge
the support of key TCS personnel. As the case is not intended to illustrate either effective or ineffective practices or
policies, the information presented reflects the authors’ interpretation of events and serves merely to provide
opportunities for class discussion.
COPYRIGHT © 2008 Nanyang Technological University, Singapore. All rights reserved. Not to be reproduced,
stored, transmitted or altered in any way without the written consent of Nanyang Technological University.
For copies, please write to The Asian Business Case Centre, Nanyang Business School, Nanyang Technological
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Phone: +65-6790-4864/5706, Fax: +65-6791-6207, E-mail: asiacasecentre@ntu.edu.sg
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BACKGROUND OF TCS TCS had set up over 160 offices and 41 delivery
centres in countries around the world. More than 90
The National Association of Software and Service percent of TCS’s international workforce was Indian
Companies, the premier trade body and chamber of while other nationalities such as Chilean, Brazilian,
commerce for the IT software and services industry British, Chinese and American made up the rest.
in India, estimated that India exported US$18 billion Women formed 28 percent of the international
worth of IT services annually, employed 1.6 million IT workforce. Besides India, TCS had software
engineers and contributed 28 percent of the global development centres located in China, Brazil and
talent pool of knowledge workers. While universities Uruguay – countries with low labour costs and surplus
in India added 300,000 engineering graduates to the IT expertise.
workforce each year, India’s IT industry had to grapple
with an average attrition rate of 25 percent.
BUSINESS CHALLENGES
In the 1990s, India had emerged as one of the main
offshore destinations for IT outsourcing as the tasks In the three years since the company had gone public,
of fixing COBOL, FORTRAN and C programming it had achieved an annual growth of 36 percent or
codes were relegated to Indian IT professionals. Since more. The key business challenge facing TCS was
then, the Indian software service vendors had gone how it could sustain or even improve on this growth
on to offer other products and solutions to clients rate. One school of thought was for TCS to pursue 10
located in many geographic regions. In September large deals in the US$50-100 million range in the next
2006 report, Morgan Stanley ranked TCS, Infosys and five to 10 years. This could prove to be more lucrative
Wipro as among the world’s largest IT services than raising billing rates or inducing customer
providers in terms of market capitalization. Indeed, spending with more pre-sales activities. As the
firm size and global presence were important criteria company derived more than half of its revenue from
in winning IT contracts of multinational companies North America, it had been impacted by the
with revenues of US$100 billion or more. depreciation of the US dollar in 2007.
TCS started as a privately-held subsidiary of the Tata The high attrition rate in the IT industry and the rising
Group in 1968. The Tata Group was one of India’s labour costs had become a major challenge for all IT
oldest conglomerates with interests in the sectors of companies in India. Analysts had begun to question
energy, telecommunications, financial services, whether increasing the IT professional headcount in
chemicals, engineering and materials. TCS had been a company could continually increase revenue and
listed on the Bombay Stock Exchange since 2004, profits without diminishing marginal returns. At TCS,
and it was the first Indian IT company to achieve the number of associates had more than tripled from
revenue of over US$4 billion (see Exhibit 1). A 23,000 in 2002 to over 84,000 in 2007. However, only
BusinessWeek magazine report had rated TCS as 48 percent of the associates (consultants) had been
one of the 10 most profitable Information with the company for more than three years. The
Communications Technology (ICT) companies in the company had added 32,462 new employees in
world. The company’s business goal was to be ranked financial year 2007 alone. Thus, another challenge
among the world’s top 10 IT enterprises in terms of facing the company was how it could leverage its
revenue by 2010. In 2007, TCS derived more than 70 existing knowledge base to grow new capabilities.
percent of its revenue from the high-growth sectors of
banking, financial services and insurance, The prevailing belief at TCS was that excellence had
telecommunication, and manufacturing. Its main to be replicated within the company through
business was Applications Development and continuous knowledge sharing and organic growth.
Maintenance (ADM), which contributed more than 48 However, TCS had embarked on a merger-and-
percent of its revenue. Within ADM, TCS had moved acquisition growth strategy. It acquired a 75 percent
up the value chain from fixing COBOL code to stake in Switzerland-based TKS-Teknosoft SA for
developing new Computer-Aided Software Engineering SF100.5 million (approximately US$80 million) and
tools and applications so as to compete against also made smaller acquisitions in South America and
bigger and more established international rivals. As Eastern Europe. While the acquisitions had helped
part of its business strategy, TCS had also focused TCS to scale up its business in Europe by providing
on Business Process Outsourcing (BPO) which was direct access to clients in Switzerland and France,
of higher value than ADM. they also raised an important issue. The acquisition
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KNOWLEDGE MANAGEMENT Early in its corporate growth, TCS saw the need to
inculcate aspects of KM (such as explicit
Knowledge Management (KM) refers to a range of documentation, creation and use of templates,
practices and techniques used by an organisation to coaching and mentoring, ‘ego-less’ project teams and
help build know-how, expertise and intellectual capital process-driven practices) within the organisation
for leveraging, reusing and transferring knowledge and culture. Ideally, KM would provide systems,
learning across the organisation. Knowledge-intensive repositories and corporate processes for capturing
firms are confronted with the dilemma of balancing and enabling access to all organisational knowledge
knowledge exploration (discovering and creating at three stages – before, during and after project
knowledge for driving core business ahead of the activities.
competition) and knowledge exploitation (leveraging
existing knowledge to derive competitive advantage).1 At TCS, KM encompassed operations from human
Therefore, the fundamental motivation for building a resource (recruitment and training) to quality
KM platform stems from the philosophy that assurance (delivery and innovation). Each
knowledge is of little value unless it can be shared competency or line of business managed its own
and re-used (as opposed to rediscovered) when specific knowledge base which was shared across
opportunities for exploitation arise. Typical KM the organisation, globally. Thus, consultants
programmes include apprenticeship, coaching and undertaking a new project could ‘hit the ground
mentoring, training, expert systems, corporate running’ with knowledge resource (both explicit and
libraries, knowledge repositories and peer-to-peer tacit) made available on an enterprise portal. The
learning. These programmes have the common goal knowledge resource would present best practices,
of enabling an organisation to learn to share best lessons learnt from similar projects and expert
practices and avoid repeating mistakes. guidance from senior executives. For example, in pre-
sales and sales activities, executives could draw on
In an organisation, knowledge is dichotomized as knowledge from past collateral, client engagement
explicit (or codifiable) and implicit (or tacit). Unlike and mock-ups of deliveries. Apart from bringing new
explicit knowledge which can be well articulated consultants up to speed with the exploitable
especially in the written form, tacit knowledge is not knowledge base that resided within TCS, a KM
codifiable and resides as expertise in the minds of platform also allowed TCS to retain intellectual capital
knowledge workers. There are differences in how the especially when consultants resigned. KM tools such
two types of knowledge are created, captured, as Mastercraft™ and Assent™ allowed TCS to
organised, stored, searched and transferred for re- automate its software development process and
use. IT infrastructure such as web portals and reduce R&D costs by reusing designs, codes,
wireless Local Area Networks are suited for explicit components and solutions.
knowledge sharing (or codification). As for tacit
knowledge sharing (or personalisation), a combination To compete with small niche players, the company
of traditional and IT-based communication and needed the organisation flexibility to provide
collaboration is required. heterogeneous services customized to different
market conditions, practices and technological
KM is viewed as a strategy for managing an alignment of a particular industry or business. Hence,
organisation’s intellectual capital and assets as the company had set up Global Network Delivery
individuals leave and new employees join the Centres in several hubs so as to serve the specific
1 Choo, Chun-Wei & Brontis, Nick [eds.] (2002). The Strategic Management of Intellectual Capital and Organizational Knowledge.
UK: Oxford University Press.
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needs of delivery consultants at their geographic communicate with associates in other locations. As
regions and to create new knowledge capital for re- the company globalized, training initiatives that
use. focused on cultural sensitization and diversity
management, became more important in preparing
Besides undertaking internal KM initiatives, TCS also the associates for the demands of operating in an
provided external clients with KM services, which were international environment.
a source of revenue. The company offered KM
solutions that had been integrated with software TCS had implemented its Integrated Quality
packages from vendors such as IBM, EMC, Microsoft, Management System (iQMS) that incorporated the
SAP, Oracle and Opentext. practices and standards of quality assurance
frameworks such as IEEE, ISO 9001:2000, CMMI,
In many organisations, the Chief Information Officer SW-CMM, P-CMM, BS 15000 and Six Sigma. TCS’s
often took charge of KM. At TCS, responsibility for Integrated Competency and Learning Management
KM was located in departmental functions – human System which was designed to help associates
resource (which managed learning, development and personalise their learning, was equipped with
incentives) and IT, as well as in the individual units. competency definitions, role definitions and online
Major KM initiatives were championed by the Global classroom learning objects.
Head of Learning and Development, the Vice-
President for Corporate KM or the head responsible KM Methodologies
for providing KM services to external clients.
SIGMARG™, an acronym for Strategy Implementation
Learning and Development Programmes Governance Model for Acquisition, Retention and
Growth of knowledge assets, was TCS’s methodology
TCS had a classification scheme that graded the for conceptualizing, designing and executing a KM
expertise level of its associates from E0 to E4, with initiative. It was based on three building blocks –
E0 representing entry level and E4 representing the planning, execution and monitoring. Hence, its three
most profitable (billable) expertise. E3/E4 technical key modules were strategy definition, implementation
experts were rotated from one account or project to and governance. It also detailed the critical success
another on a regular basis as they brought with them factors and performance measurements of the
the expertise and the experience required to kick- initiative.
start a project. They also served as mentors to their
team members. One challenge for TCS was to have TCS’s other KM methodology was the 5iKM3 Maturity
as many E3/E4 associates as possible and the Assessment Model, which assessed and evaluated
company had developed a series of learning and the state of acceptance and maturity of a KM initiative
development programmes for meeting this objective and its human participants. 5iKM3 also measured
(see Exhibit 2). the benefits of the KM initiatives, as well as identified
and defined mid-course corrections in managing
Fresh university graduates and professional engineers knowledge in the organisation. The approach of this
who joined the company, were put through the 47- methodology was that knowledge maturity could be
day Initial Learning Programme (entry level induction) achieved by systematically addressing the three
where they learnt a mix of technical and soft skills. pillars of KM – people, process and technology.
The associates (consultants) embarked on the
Continuous Learning Programme which had been put KM Tools and Technologies
together by company champions from various
practices and locations. To facilitate workplace TCS utilized a number of KM technologies and tools,
learning, the company had subscribed to a large which included the Enterprise Content Management
electronic library of e-Learning courses and online (ECM) technology, document management system,
books. The company also assigned mentors to the eKMS and Ultimatix. ECM supported the creation,
associates. Those who demonstrated leadership capture, organisation, storage, search and transfer
potential, were placed in the company’s Leadership of (predominately explicit) knowledge. However,
Development Programme which was designed to this had resulted in numerous knowledge islands and
cultivate leadership qualities and skills. TCS’s Foreign the challenge for TCS was to integrate the search
Language Initiative encouraged all its employees to and retrieval functions. TCS’s document management
pick up one or more foreign languages. Non-English system comprised a repository of proposals,
speaking associates could learn English in order to presentations and white papers – resource that had
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been developed for an internal audience but might be explicit and tacit knowledge source, and all types of
used as marketing collateral and training documents. data and information (see Exhibit 3). Knowmax in
TCS thought that it was the usage of such codified essence, was an amalgamation of past and future
knowledge and not the software platform that made KM activities at TCS and it would be accessible to all
the difference. associates with appropriate levels of built-in security.
However, due to the variance in the knowledge support
eKMS and Ultimatix were TCS’s proprietary KM tools required by the pre-sales and the delivery teams,
that were developed in-house. eKMS had been used Knowmax would not replace Ultimatix which was
in enforcing practices such as proposal tracking, suited for pre-sales and sales activities.
client database, document management, quality
assurance and performance monitoring. Its core What the designers of Knowmax had in mind was
principle was to explore possible means of sharing, that the associates (consultants) would access the
creating and managing knowledge. Ultimatix was a TCS intranet and find themselves looking at the
bigger platform than the silos of ECM repositories Knowmax homepage. Depending on their user profile
and it served a larger function namely, pre-sales and (competency, team and project affiliations) and level
sales activities. The Oracle-based Ultimatix was used of security access, the associates would be able to
to build a multimedia repository for explicit corporate view a host of TCS resource including deliverables,
knowledge. Ultimatix had its own taxonomy and financials and workspaces (such as e-studios and
indexing to capture and classify each unit of corporate wikis). All Knowmax users would use it as a portal to
knowledge that included directories, templates and access their email, calendar, project schedules,
marketing collateral. training material and performance tracking.
2 Krishna, S., Sahay, S., & Walsham, G. (2004). Managing cross-cultural issues in global software outsourcing. Communications
of the ACM, 47 (4), 62-66.
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However, auditing for cultural inconsistencies was methodologies, tools and programmes. The audit was
tricky and perhaps, even beyond the claims of KM the KM equivalent of the user needs definition phase
strategy. undertaken during traditional systems analysis and
design.
Finally, how could TCS carry out a knowledge audit
that would address the gap between its growth TCS could conduct either a material or an exhaustive
strategy and KM strategy? Research had found that knowledge audit. The material knowledge audit that
misalignment of business and knowledge strategies the company had in mind, would comprise structured
was a fairly common cause for poor organisational interviews with key executives, an optional walk-
performance3. through to map the significant knowledge flows and a
focus-group interview session for probing into the
The knowledge audit was described as a thorough responses received (see Exhibits 5 and 6). However,
investigation and analysis of the entire ‘life-cycle’ of the company was concerned that a material
corporate knowledge: what knowledge existed and knowledge audit might not be enough to produce
where it was, where and how it was being created, specific and valid diagnostic assessments as an
who owned it, and how it was stored, accessed, used, outcome. An exhaustive knowledge audit might be
disseminated and finally, disposed. 4 The major the way to go but it could be disruptive to TCS’s
outcome would be a diagnostic assessment of what operations given its extensiveness. What should TCS
could be done better to fulfil a stated objective. Also, do?
the audit could uncover the limitations of various KM
3 Zack, M.H. (1999). Developing a knowledge strategy. California Management Review, 41 (3), 125-145.
4 Hylton, A. (2002). Measuring and assessing knowledge: Value and the pivotal role of the knowledge audit. Retrieved May 22,
2007, from http://www.providersedge.com/docs/km_articles/Measuring_&_Assessing_K-Vallue_&_Pivotal_Role_of_K-Audit.pdf.
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EXHIBIT 1
REVENUE OF TCS
Revenue by Geography
EXHIBIT 1
(CONTINUED)
REVENUE OF TCS
Source: Results for Quarter II FY 2007-08. (2007, October 15). Retrieved 16 March, 2008, from http://
www.tcs.com/investors/Documents/Presentations/TCS_Analysts_Q2-08.PDF
EXHIBIT 2
Source: (2007). Presentation by D. Mohapatra, Global Head, Learning and Development, TCS at Nanyang
Technological University.
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EXHIBIT 3
KNOWMAX
Source: Presentation on KM at TCS For K-Community of Bangalore. (2007, Februrary 22). Retrieved 16 March,
2008, from http://www.k-community.org/upload/KM_@_TCS_K-Community_Cbaua.pdf
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EXHIBIT 4
Strategy
2. How could Knowmax effectively leapfrog over the competition in terms of winning and executing projects?
3. As TCS moved up the value chain in the types of projects that it bid for, would there be a similar evolution
in KM deployment that moved from codification to personalisation?
4. Could Knowmax be used as a platform for innovation and business value for TCS clients?
Technology
1. Were Knowmax and Ultimatix stable and scaleable platforms for global deployment? (Would they even
inter-work in the first place?)
2. Was there a need for the SEI CMM assessment for Knowmax?
3. Was there a need to introduce a KM aspect of technology due diligence during mergers and acquisitions
(M&A), and joint ventures?
Process
2. Were TCS’s processes consistent across geographies and practices given the company’s M&A activities
and rapid expansion?
5. Were there knowledge synergies that were captured and exploited in the sales, delivery, practice and
support functions, being overlooked?
People
1. Given the high burn-out rate among consultants in TCS as well as the industry, how could Knowmax be
rolled out so as to garner efficiency gains and effectiveness rather than becoming an overhead in itself?
2. Were there KM initiatives that took into account the global diversity?
3. Were there sufficient people development and incentive schemes that would help make KM successful?
4. Did the Knowmax platform effectively support the convergence of human capital to structural capital?
5. Would the challenges of international and inorganic growth stop TCS from being “ahead of the curve” in its
collaborative culture of knowledge creation, sharing and re-use?
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EXHIBIT 5
Name:
Designation:
1. What have been the top three strategic initiatives at TCS that promote creation, sharing and re-use of
its knowledge assets?
2. With the vision of joining the global top ten by 2010, what is the major strategic initiative to go up the
value chain in order to act as a barrier to entry for newer competitors as well as a competitive advantage
to retaining existing TCS customers?
3. How does TCS provide incentives for its consultants to share and re-use knowledge such as coaching,
mentoring and peer (or subject matter expert) review on deliverables?
4. What are specific management strategies that encourage the re-use of explicit (e.g. deliverables) as
well as tacit (e.g. relationships, industry understanding) knowledge in subsequent, similar projects?
(In other words, what steps are taken to enhance the structural capital of TCS as well as growing the
human and social capital?)
5. How does the TCS leadership encourage contributions to knowledge repositories, participation in
communities of practices, peer review, coaching, mentoring, story-telling as strategies to grow the
TCS intellectual capital?
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EXHIBIT 6
Please find below a set of questions about which we felt that your input would be helpful in our study of
understanding the work practices at TCS.
Also, please find a summary of the current practices at TCS, which we have been able to collect. Kindly
verify the same and give us feedback if there are any other practices, which TCS is following.
We assure you that your responses will be kept anonymous. Should you require any clarification, please
feel free to contact us at rsharma@pmail.ntu.edu.sg or +65 6790 4414.
We take this opportunity to thank you for your co-operation.
Industry:
Competency:
Geographic Region:
1. How are you encouraged by TCS processes to share and re-use project and competency knowledge?
3. Before, during or upon completion of a project, are there processes that extract lessons learnt or best
practices for sharing?
4. How do you think you would be able to better share with your peers, the project and industry knowledge
you may have acquired during the course of your work?
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EXHIBIT 6
(CONTINUED)
Please populate the matrix (first developed by GE in a different context) to rate the various KM tools
used. The X-axis represents the market usefulness or value of a tool to TCS and the Y axis represents a
tool’s functional capability compared to other similar tools used in the industry.
High
Functional
Capability
of Tool
Med
Low
References
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