EXCERPT TCS Business Process Outsourcing Services: In Pursuit of Excellence

Mukesh Dialani Melissa O'Brien Lisa Rowan

IN THIS EXCERPT
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F.508.935.4015

The content for this paper is excerpted from the IDC Vendor Profile Report, TCS Business Process Outsourcing Services: In Pursuit of Excellence, by Mukesh Dialani, Lisa Rowan, and Melissa O'Brien, (Doc # 240274). All or parts of the following sections are included in this Excerpt: IDC Opinion, In This Study, Situation Overview, Future Outlook, Essential Guidance, Learn More, Methodology, and Synopsis. Table1 1 was edited to comply TCS Financial disclosure policy, and table 3 was edited.

IDC OPINION
As business process outsourcing (BPO) providers continue to refine and reposition their BPO services offerings, their ability to get called out as a differentiated provider will be a function of their ability to create a positive impact and transform the business operations of their enterprise customers. In studying the BPO services provided by Tata Consultancy Services (TCS), IDC is of the opinion that TCS' ability to excel will depend on leading and excelling in the following: Strong key horizontal BPO and industry-specific BPO offerings as well as platform BPO solutions Robust analytics and Big Data services offerings Used cases demonstrating an exponentially transformative impact on customers' business metrics Differentiated global delivery capability Nonlinear business models Mobile and social BPO services In evaluating TCS' capabilities and performance for these metrics, IDC is of the opinion that TCS has a reasonable level of competency for each of these metrics. TCS has built a strong global delivery infrastructure that enables the company to deliver key horizontal BPO and industry-specific BPO services. TCS has also demonstrated the ability to provide a transformative impact on its customers' business operations. However, TCS needs to work on the following in order to strengthen its position as a leading BPO services provider:
Filing Information: April 2013, IDC #240274 : Excerpt

Global Headquarters: 5 Speen Street Framingham, MA 01701 USA

P.508.872.8200

 Focus on client acquisition in the human resources (HR) BPO services domain Move up the value chain in delivering customer care BPO services Increase revenue from as-a-service BPO delivery services

IN THIS VENDOR PROFILE

This IDC Vendor Profile outlines and evaluates the business process outsourcing (BPO) services provided by Tata Consultancy Services (TCS). The BPO business information details as outlined in the document are provided by TCS, and the analysis is carried out by IDC based on IDC's view of key factors that will enable a BPO services provider to succeed in light of the current and emerging market trends. Additionally, this analysis is carried out in isolation and not compared with TCS' BPO services competitors.

SITUATION OVERVIEW
BPO Customer Needs and Trends
Some of the day-to-day challenges and key strategic initiatives for many customers of BPO services include: Maximizing revenue and improving profitability and cash flow Sourcing products/services at optimal pricing Keeping employees happy and attrition rates down and training employees appropriately so that they can create products/services and maintain them, which ultimately leads to higher levels of customer satisfaction To overcome all the aforementioned and other key challenges, customers expect their BPO services provider to: Reduce operational expenses. The vendor takes over the responsibility of running a subprocess or the complete process and delivers these processes within the agreed SLA norms. This results in reduced operating costs of the customer's business unit. Offer innovative pricing models. Customers want vendors to offer innovative pricing models such as business outcomebased pricing that enables customers to minimize risks. Other options include a fixed-fee up-front payment combined with a variable payment option that pays out based on consumption/usage of services (e.g., DSO, care resolution, error rate, and cost savings) and fixed-fee payments (with the ability to vary payment based on usage). Provide operational excellence. Over time, BPO vendors have built a delivery system that leverages their experience and insight in executing multiple, global,

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industry-specific projects. Additionally, BPO vendors have mastered the art of using Lean Six Sigma techniques to improve the quality of process execution that has direct implications on time and cost to execute the process. Assist with managing business risk. As BPO providers deliver business analytics services, they are being called upon to help their customers with managing business risk and improving the customers' "sense and respond" ability to adapt to economic and other market factors that impact their business. Offer unique enterprise solution approach. Customers are increasingly expecting their providers to offer BPO solutions that are tailored to their own unique business operations. Increase business efficiency. BPO providers are being called on to make concerted attempts to infuse technology as well as to leverage cloud infrastructure to move away from the traditional labor-based approach to BPO. IDC is seeing increasing cases where BPO providers, besides making the gradual shift to building BPO solutions that use technology to deliver BPO, are adding the "as a service" flavor to their BPO offerings. Focus on business analytics and Big Data services. Harnessing Big Data and using business data analysis (in some cases in real time) to monitor business performance, improve operational performance, and sense branding/image impacts of social media are some areas that BPO providers are assisting their customers with.

Key BPO Trends

Key horizontal and industry-specific BPO trends as observed by IDC's BPO analysts are detailed in the sections that follow.

Finance and Accounting

Increased adoption of end-to-end outsourcing of finance and accounting (F&A) process. Customers that were traditionally outsourcing smaller, noncore parts of the F&A processes (say, order to cash [O2C]) now want to outsource multiple F&A processes and, in some cases, the entire order-to-cash process. Increased use of technology. BPO vendors are using technology to automate certain mature components of BPO processes. For example, customers and BPO vendors have realized that improving the efficiency of the process in terms of time and accuracy results in higher savings and directly impacts the bottom line.

Procurement BPO
Customers are open to outsourcing direct procurement. As customer confidence in procurement BPO vendors increases with successful execution of indirect procurement BPO contracts, customers are now beginning to outsource some of their direct spend.

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 eProcurement. As procurement departments across enterprises attempt to make their internal sourcing process more effective in the form of consolidating spend data, improving reporting of spend, and so forth, eprocurement platforms and services offered by procurement BPO vendors will see increased adoption.

Human Resources BPO

Taking it back to basics. Full end-to-end HR outsourcing encompassing everything from HR record keeping through to the talent management functions has become less popular in recent years. This was true a year ago and holds true today. Instead, buyers seem to favor focusing on core HR areas with a single provider while seeking out specialists for areas like recruitment process outsourcing. Emerging workforce models bear watching. With so many jobs lost in the United States and little sign that these jobs will be regained soon, employers will find that they have a broader array of workers than ever before among the alternatives are contingent workers, contingent staff, and freelancers.

Customer Care BPO

Looking to utilize social networks. IDC's end-user survey (see Customer Care BPO Services Buyer Needs: A Demand Side Study, IDC #232820, January 2012) highlights that the vast majority of enterprises are using social networks. Additionally, the survey indicates that customers are using their outsourcers to manage these social networks. In utilizing this type of communications channel, enterprises are looking to keep customers informed about future product or service offerings, improve existing brand image, and provide quick resolution to customer complaints. Expansion in use of homeshoring. IDC believes that homeshoring, the use of home-based agents, will expand. Key drivers of this expansion will involve not just concerns of keeping jobs locally but also regulations in key industries, such as healthcare and energy, which require more locally based service delivery.

Industry-Specific BPO
Some key trends related to spending on BPO, both horizontal and industry specific, are: Industry-specific BPO grows along with additional vendor offerings, as customers are changing what they define as core processes. Industryspecific BPO will grow as the needs of vendors and customers converge and as customers change their attitudes toward outsourcing. BPO vendors are looking for new growth opportunities and expanding offerings in industry-specific processes (e.g., in healthcare provider and payer markets). Customers, on the other hand, have become comfortable not only in outsourcing more of their processes but in redefining their core competencies to a narrower view. This means that processes previously considered too important to outsource are now "in the market" for outsourcing.

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 Vendors will differentiate themselves, in part, via their platform-based BPO strategy. Vendors are not only delivering industry-specific BPO via platformbased BPO but also working with an anchor client to configure and implement a new process and are then offering the solution to other customers in that industry. Competition is heating up for government market share. IDC expects to see more competition among vendors for government market share. Service providers to government are getting larger, more consolidated, and more equal. Pharmaceutical and life sciences industry will continue to outsource more processes and rely on analytics. The pharmaceutical and life sciences industry has long used BPO services to automate processes and reduce capital expenditures and overall costs. This industry has outsourced much of its horizontal processes and is now redefining core processes and looking to outsource more industry-specific processes, previously kept in-house. The insurance industries, specifically healthcare payers, are ripe for increased outsourcing adoption. With new healthcare reform laws, healthcare insurers will increasingly outsource many paper-intense processes. Many of the processes will be industry specific (such as provider contracting and credentialing and personal health records), but there will also be increased spending on customer service.

Company Overview
TCS is an IT services provider offering an integrated portfolio of IT and IT-enabled services (see Table 1) delivered across all major geographies.

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TABLE 1
TCS: At a Glance
Description Year company founded Year company began offering BPO services 20122013 revenue ($B) Total employees Nationalities Total customer CAGR since 1998 (%) BPO Vertical BPO ($M) Research and analytics services ($M) Total BPO Revenues (2012-13) including Research & Analytics Services ($B) Growth (%) Share of horizontal in vertical BPO (%) BPaaS contribution to vertical and KH BPO (%)
Source: IDC, 2013

1968 2004 11.6 238,583 110 1076+ 30 (approx.)

945 185 1.4 25 1015 (IDC estimates) 25

According to TCS, key elements of its overall IT strategies include: Customer centricity. To become a strategic partner for its customers, TCS seeks to build, nurture, and deepen customer relationships by leveraging its industry-segmented, customer-centric organization that ensures high levels of accountability, superior customer service, and intimacy. Full-service capability. TCS has invested in building a comprehensive, integrated portfolio of services to capture the entire value chain of IT. Global Network Delivery Model (GNDM). TCS' GNDM lets the company seamlessly and uniformly deliver services to global customers from multiple locations across India, China, Europe, North America, and Latin America. Teams separated by time zones collaborate on projects, leveraging all of TCS' assets while subscribing to one global service standard.

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 Strategic acquisitions. While primarily focusing on organic growth, TCS is open to selective strategic acquisitions in order to penetrate select markets, strengthen verticals, and enhance service offerings. Nonlinear business models. TCS has focused on building nonlinear growth businesses that can enable revenue growth without commensurate head count growth. Nonlinearity in the existing businesses comes from productivityenhancing tools, frameworks, solution accelerators, and managed services engagements. TCS is pursuing three strategic initiatives for nonlinear growth: software products (Asset Leveraged Solutions), platform services (technology and process clouds), and iON (an IT-as-a-service solution for small and mediumsized business). TCS Innovation Labs. TCS Innovation Labs work toward developing transformative, research-based solutions for customer and with customer through a comprehensive 360-degree interconnected research ecosystem with over 19 labs worldwide, which collaborate with a wide network of partners, institutions, and venture capitalists on forward-looking solutions. TCS' Co-Innovation Network (COIN). COIN is a network that drives innovation in an open community that has Innovation Labs connecting with research institutions, academic institutions and student communities, alliance partners, industry bodies, consultants, start-ups, venture capitalists, entrepreneurs in residence, and the customer.

TCS BPO Services: History and Evolution

In the early 1970s as TCS was growing, the company also undertook data entry and maintenance work. When Swissair chose to transition its processes to India, TCS partnered with Swissair to create Airline Financial Services (AFS) to deliver services to Swissair and other airlines. TCS similarly had joint ventures (JVs) and subsidiaries such as Intelenet (voice services), WTI (engineering services), and BTS (insurance services), which provided BPO services and some of these were subsequently reverse merged with TCS. Additionally, TCS also acquired Citi's captive in India, CGSL. However, it was only in 2005 that as a part of its full-service strategy, TCS chose to energize and leverage BPO as a growth engine. TCS chose to focus on building industry domain expertise, analytics capability to deliver insights, and technology transformation through FORE and create platforms that helped deliver business process as a service (BPaaS). In the past seven years, TCS built the BPO business executing a two-pronged strategy: Cross-selling to the then existing ITO customers Promoting BPO services to new customers where there was no TCS presence TCS' domain expertise across industries allows the company to deliver industryspecific cost of goods sold processes core operations for the firm's customers.

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TCS can help its customers launch innovative new products, enter new markets, and improve the end-customer experience, thus assisting with its customer's initiatives to increase revenue. TCS' predictive and risk management analytics capability helps customers be more agile to the market demands. TCS' technology transformation approach FORE has helped customers achieve significant efficiencies and effectiveness. And the platforms have been a key investment. For a summary of TCS' BPO services offerings, see Figure 1.

FIGURE 1
TCS' BPO Services

Source: TCS, 2013

Company Strategy
TCS BPO: Vision and Strategy
According to TCS, its vision for BPO services stems from its strategic objectives of customer centricity, full-service play, and nonlinear growth. According to TCS, these result in a strategy that is centered on who it sells to (customer acquisition), strategic investments it makes to create offerings, and the way TCS delivers excellence (customer delight). TCS' focus on customer centricity points to the company's constant endeavor to help its customers be agile, innovate, and grow their business.

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TCS has invested in building domain expertise, with occasional acquisitions (such as CGSL) to plug in the expertise gaps, combining this domain expertise with the analytics skills to provide business insights to customers seeking agility and risk management and creating platforms on which TCS can build and deliver BPaaS solutions, thereby assisting customers with preconfigured industry-standard processes. TCS' FORE transformation methodology, governance frameworks, and methodologies and tools in TRAPEZE focus on delivering experience certainty. TCS engages with various partners through COIN to provide the most effective solutions to its customers. TCS' investments in creating domain intellectual property (IP) and BPaaS platforms and the company's ability to deliver insights help meet its strategic objective of nonlinear growth.

BPO Services
TCS BPO services offering includes the following; Horizontal SG&A services. These include Finance and Accounting, HR, Supply Chain Management, Customer Interaction Management (CIM), and knowledge services: Finance and Accounting services include payables, receivables, fixed asset management, general ledger, FP&A, and reporting. Human Resources services include payroll administration, workforce management, compensation and benefits, resourcing services, and talent management. Supply Chain Management services are vertical focused and span the supply chain from sourcing and procurement to supply chain operations, sales order management, and customer support. These services also extend to include product life-cycle management, ranging from R&D capabilities to warranty management. Customer Interaction Management services include customer service, sales, technical support, and value-added services. Analytics and Insights Services. TCS' knowledge services provide the necessary business insights to drive business outcome and enable strategic and faster decision making. Research and analytics contribute close to 10% of TCS' BPO revenue. TCS provides industry-specific analytics such as pharmacovigilance, actuarial, and other cross-industry analytics services such as financial analytics, customer analytics, supply chain analytics, and risk analytics.

Industry-specific BPO services include:

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Banking and Financial Services. These services span across consumer and institutional banking and include origination, transaction processing, and administration/collections services across all product lines, including cash, trade, capital markets, retail banking, consumer lending, and cards. Insurance Services. These include services for new products, and policy administration services including life and annuities as well as property and commercial insurance. Drug Development and Safety Services. TCS provides services in the drug development area, including CDM, biostatistics, and regulatory issues. Retail and Consumer Packaged Goods Services. These services support store operations, pricing, merchandizing, and planogramming. Telecom services. Apart from service management and billing services, TCS provides network management and provisioning services. Travel-related services. These services include revenue, accounting, and loyalty management. Media and Information Services. These services span across STM, education, newspaper, magazines, and Yellow Pages and Directory segments. Media and publishing services offerings include editorial services, graphics, design solutions, conversion services, and sales and marketing support. Manufacturing services. This industry-specific work centers around aftermarket services, such as spare parts management.

Platform BPO services. TCS' Platform BPO offering is a business process as a service that eliminates the need for capital investments while reducing operational expenses. It delivers business process services on applications hosted on a private cloud to help reduce the long-term total cost of ownership. These platforms are listed in Table 2.

TABLE 2
TCS' BPO Platforms
Technology Platform TCS BaNCS

Description Insurance The Insurance Platform is part of TCS BaNCS offerings. It is configured to suit the entire core insurance, reinsurance, and accounting functionalities in both personal and commercial lines of business for life, property, and casualty insurance operations. TCS' Clinical Services Platform is a business-process-as-a-service (BPaaS)

Drug development

Oracle

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TABLE 2
TCS' BPO Platforms
Technology Platform

Description offering for clinical trials in the biopharmaceutical industry. We conduct and manage clinical services by combining best-of-breed products for different functions and custom-built applications, which drive efficient transition between steps and reduce cycle times. Human resources The Human Capital Management (HCM) Platform solution is an integrated and global solution to recruit, manage, develop, and reward human capital in an organization. The solution encompasses key HCM areas of payroll, time management, workforce administration, compensation, recruitment, learning management, and performance management. The F&A Platform is a unified and global solution for enterprise finance operations encompassing account payables, account receivables, general accounting, asset accounting, collections, cash, and employee expense management. The Procurement Platform is a global solution for source-to-pay processes encompassing spend analysis, sourcing, contract management, procurement, and invoice processing. The Analytics Platform (ACE) is a comprehensive business intelligence and analytics solution that encompasses sales, marketing, customer, human resources, finance, supply chain, and procurement functional areas and is available in specific industry variants like retail and manufacturing. Specific offerings also include platforms in the following domains customer analytics, finance analytics, IT analytics, procurement analytics, and supply chain analytics. TCS' SWIFT-certified payments solution is an integrated multi-entity, multicurrency, multi-product and straight-through processing (STP)oriented offering.

SAP

Finance and accounting

Oracle

Supply chain management

SAP

Analytics

Oracle

Payments (BaNCS)

Source: IDC, 2013

Like most BPO providers, TCS invests in its people and domain IP. TCS' domain universities provide their associates with the entire gamut of training and knowledge on the specific industry domains. TCS' BPO platforms and strategy (see Figure 2) are based on industry solutions from existing commercial software providers such as SAP and Oracle, or for banking and insurance on TCS products such as TCS BaNCS platform. When the platform is based on a third-party product, the TCS IP includes interfaces, configurations, and customizations specific to the needs of the customer's geography and industry.

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FIGURE 2
TCS Business Platforms

Source: TCS, 2013

TCS also continues to make investments and alliances that help its GTM approach. Recent investments in 2012 include: TCS and Mitsubishi formed a JV to establish an IT, BPO, and infrastructure services delivery. TCS BaNCS signed an agreement with Savvis, a CenturyLink company and global leader in cloud infrastructure for hosting and cloud-enabled core banking, payments, and compliance. TCS does not run captive centers for its clients but offers this as a consulting service.
How Does TCS See Its BPO Offerings Changing in the Future?

TCS sees analytics, industry-specific operations, and business process as a service being increasingly adopted by its customers over the next few years. According to TCS, it expects the industry-specific services to increase significantly as increasingly customers seek white-labeled services. Services such as antimoney laundering for banking, retail operations and merchandizing, pharmacovigilance/drug

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safety, and personal data in government and public sector have started seeing an uptake in the past few years, and TCS expects these services to expand vertically and horizontally. TCS made it to the Leader category in IDC MarketScape: Worldwide Life Science Drug Safety Services 2013 Vendor Assessment (IDC Health Insights #HI239221, February 2013), which carried out a competitive analysis of the current capabilities and future strategy of providers in the Life sciences drug safety services category. TCS expects services such as fraud analytics, product portfolio performance analytics, and employee retention analytics to become more mainstream. Specifically, within the financial services (including insurance) industry, TCS expects an increasing services demand for risk and predictive analytics models around demand planning, customer segmentation, and trade expense management. For its own platform BPO business, TCS expects the BPaaS model revenue to substantially increase in the future. Examples include clinical services platform, life and P&C insurance platforms in the United States, P&C/general insurance platform in the United Kingdom/Europe, and F&A platform globally.

TCS Differentiators and Value Proposition

According to TCS, its go-to-market value proposition has been always around the following pillars, which stem from its strategy. TCS believes that it is its focused execution leveraging the following pillars, to help deliver certainty to its customers (see Tables 3 and 4), that has helped TCS win deals: Industry domain expertise Analytics and insights Transformation FORE: TCS' process maturity assessment and transformation model Business process as a service platforms Delivery excellence

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TABLE 3
TCS BPO: Customers
FY11 Total number of customers Top customer as a percentage of total revenue (%)
Source: IDC, 2013

FY12 200+ 31

175+ 42

TABLE 4
TCS BPO: Key Recent and Past Notable Customer Wins
Contract Duration (Number of Years) Geographies Covered

Contract Value Recent wins U.K. government disclosure and barring services United Statesbased leading funeral goods and services providers Leading bank in Canada $180 million

Nature of Work

7.0

United Kingdom

Data management

$39 million

5.0

North America

FAO, payroll

$35 million

5.0

North America

Retail banking operations FAO, payroll

Leading United Statesbased global food processing company Fortune 500 pharma company

$30 million

5.0

South America

$29 million

7.0

North America

Pharmacovigilance and regulatory affairs

Past large-value notable wins Citi $2.5 billion 9.5 Worldwide Banking, capital markets, corporate banking, FAO, HRO Life insurance, FAO MR, analytics, FAO, SCM, HRO Life insurance, FAO Retirement

Friends Life Nielsen

$2.2 billion $2.2 billion

15.0 13.0

United Kingdom Worldwide

Phoenix NEST
Source: IDC, 2013

$847 million $940 million

12.0 10.0

United Kingdom United Kingdom

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Overall BPO Services Analysis

Overall Strengths
Scale. With about 40,000 FTEs and 9 platforms that contribute to over 15% of total BPO revenue, TCS has the ability to provide a right mix of people and technology and assist its customers with scalable BPO solutions. Ability to impact customers' revenue-generating processes. TCS indicates that about 60% of its revenue is from processes that generate revenue for its clients. This is a good indicator of TCS' involvement in delivery and management of the company's clients' critical/core transformative processes that will enable it to increase revenue and acquire new similar industry-specific clients. Analytics services. Currently, TCS has a team of approximately 3,500 highly skilled resources (Ph.D.s, statisticians, etc.) who are working on fraud/risk analytics, antimoney laundering, risk analytics for the financial industries, consumer analytics, and so forth. Balanced portfolio. TCS BPO services (including key horizontal and industry specific) are consumed by many industries. The access to key accounts gives these industries the opportunity to move up the value chain provided they build/buy/partner to deliver the required competency. Experience in winning and executing large deals. Over the years, TCS has won a few large deals (ranging from $1 billion to $2 billion). These wins can enable the company to win similar larger deals in future. Delivering certainty. This is a good value proposition that if delivered and marketed well can contribute to building a better brand image for TCS' BPO business. Global non-India workforce. According to TCS, about 20% of their BPO workforce is based outside of India. In the past 18 months, recent wins such as Friends Life, NEST, and Home Office in the United Kingdom have contributed to an increase in the onshore workforce. Current platform BPO strategy. Recently, TCS migrated a large insurance client (which it acquired in 2005) to its BaNCS insurance platform. The effort included significant business process and technology transformation whereby more than 14 legacy systems were migrated to the new global platform. Currently, TCS manages 3 million policies for this client. TCS' investment in building multiple platforms across different BPO categories, and over time, migrating these large clients to the company's own industry-specific technology platform, is commendable, especially in view of the productivity improvements over the duration of the deal. Another example where TCS is bringing in its own automated platform IP is the rollout of its desktop automation strategy. Emerging market strategy. To address the needs of customers in emerging markets (India, Latin America, Hong Kong, Australia, etc.) that do not have a lot of legacy technology infrastructure to implement various processes, TCS is

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leveraging its automated, self-service/provisioning, configurable type of services to provide nimble, rapid deployment solutions. Strategic governance versus operational governance philosophy. In conversations with TCS BPO leadership, it has emerged that they are increasingly focusing on strategic governance versus operational governance. This ensures that the BPO services TCS provide are strategically aligned and take into account the impact of changes on one operating unit to another operating unit, which may be a peripheral business unit, another operation located in another geography, and so forth.

Overall Weaknesses
Strategy is it articulated and executed well enough? The key differentiators provided by the TCS BPO business include industry domain expertise, analytics and insights, transformation FORE, BPaaS (platforms), and delivery excellence. Some of these are generic, and some are offered by almost every other BPO provider. TCS' focus on leading with analytics and providing transformation versus transaction BPO is promoted by the company's competitors as well. Lack of consulting brand. TCS lacks the consulting brand that is a big emerging part of the BPO services competency. It enables BPO providers to move up the value chain a lot more quickly. Even if TCS does offer these services, they could often be at a lower price point or given away free. Limitations of platform BPO strategy. TCS will have to improve the technology component and automation aspects of its platform IP when compared with, say, automation infrastructure offered by iPSoft that uses an artificial intelligence premise to provide automated machines that solve at least two-thirds of business problems without any human intervention. iPSoft employs 2,000 people to achieve revenue close to $1 billion. Business by geography. Currently, TCS acquires about 80% of its BPO business from Europe and U.S. markets. The rest of its business comes from Latin America and Asia/Pacific markets. Ideally, this ratio needs to change to at least a 70:30 split to diversify the risk. Building brand around mobility for BPO. In The Impact of Mobility on Business Process Outsourcing: A Look at Customer Needs for Finance, Accounting, and Procurement BPO and Business Analytics Services (IDC #236205, July 2012), 33% of respondents indicated that their F&A processes were already mobile enabled, while 34% of respondents indicated that they had plans to mobile enable their F&A process. IDC saw similar trends across other key horizontal BPO offerings. TCS does not appear to promote its mobility BPO capabilities. TCS needs to clearly communicate and position its expertise in mobile, enabling BPO and related business analytics services. Pricing models. Currently, a significant portion of TCS' BPO pricing is time and materials (T&M) and FTE based. While TCS does indicate its ability to take on a

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higher level of risk and to predict business metric outcomes, this is not reflected in the share of transaction-based/outcome-based deals. Risk due to high dependency on few customers. Although TCS reduced its dependency on top 5 customers contributing to its overall BPO revenue from 65% to 49%, IDC believes this is still a high risk factor and recommends that TCS brings this ratio down to about 35%. Brand and marketing. If TCS does indeed want to improve its image and be recognized as a leading BPO provider, it should step up its efforts in promoting its services and the value it brings to the table in assisting with the transformation efforts of its clients.

Finance and Accounting and Procurement BPO

Strengths
Providing transformation. The talent, technology (FORE process maturity and assessment), and methodology available with TCS to migrate its customers' multiple F&A platforms to a single global F&A platform (in some cases TCS' own platform), enabling necessary insight and guidance that the customers are looking for, are a good differentiator. Increasing automation across the F&A process value chain. TCS has developed infrastructure to provide automated (non-labor-based) services beyond the standard workflow automation within the F&A process. These include functions such as dispute resolution and reconciliation. Large client base. TCS has experience in delivering F&A BPO services to over 63 customers across a range of finance and accounting functions. This enables TCS to create automated point solutions and apply its experience in delivering F&A BPO to newer clients. Procurement platform. TCS has built a reasonably good platform for procurement BPO. Besides the traditional spend analysis, source-to-contract, and procure-to-pay functionality, the platform also provides hosting of core applications and all related support tools.

Weaknesses
Limited end-to-end F&A BPO process delivery experience. Most of TCS' F&A BPO delivery is limited to managing siloed processes for the company's clients. Although the market is beginning to pick up as customers begin to outsource end-to-end F&A BPO and TCS has a few clients in this area, TCS needs to push its methodology and automated tools and increase sales focus to bag more endto-end deals. Procurement BPO business penetration. Although TCS has a platform BPO services offering, this discrete key horizontal BPO business contributes to approximately 2% of the overall BPO revenue. Of course there will be

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procurement BPO slivers bundled in industry-specific deals, but the overall contribution from this business is small.

Human Resources BPO

TCS supports HR BPO clients on the client's platform of choice while also offering TCS' own platform. TCS' own HR platform is built on SAP, with add-on TCS intellectual property like full self-service, actionable analytical reporting, local country payroll templates, and mobile enablement built on top of the ERP. TCS says it has quickly grown the BPO business on the basis of an approach that delivers on the strengths of its industry expertise, the ability to provide analytics and insights, transformation including provision of services in a BPaaS model (platforms), and delivery excellence that helps customers experience consistency. TCS was categorized as a Major Player in IDC MarketScape: Worldwide HR BPO 2011 Vendor Analysis (IDC #229437, July 2011) and IDC MarketScape: Worldwide HR BPO 2012 Vendor Analysis (IDC #237630, November 2012) on integrated HR BPO.

Strengths
Global presence. TCS has numerous offices around the world that enable it to efficiently support multinational clients from the best, most cost-effective location. Measurable cost savings to buyers. TCS offers its services at a price point that allows its clients to realize good, measurable cost savings over managing HR internally. A flexible platform approach. TCS supports a variety of underlying HR platforms including its own platform which gives clients choice and enables clients to either move to transform or stay with existing investments. Customer retention. TCS has a strong client retention rate for its HR BPO services.

Weaknesses
Less focus and fewer resources on HR consulting and transformation. When competing with HR BPO providers whose legacy is in consulting, TCS is at a disadvantage. HR BPO is quite transformative, and buyers look for strong subject matter expertise in consulting. Behind in introduction of innovation in new HR services. TCS is a bit behind other HR BPO service providers in offering new and innovative services. Market momentum fewer new contracts for HR BPO services. Selfexplanatory, TCS has fewer clients for end-to-end HR BPO services than many and has signed fewer new contracts than others.

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Customer Care BPO

Strengths
Experience. TCS processes a significant volume of interactions on behalf of its clients, with 6,500+ agents executing interactions for customers of 33 million credit cards and 5 million help desk calls completed annually. While in the larger scope of customer care providers TCS' size and volumes are not remarkable, the 19 years of experience of performing these services on behalf of the company's clients speak to its expertise in the field of customer care. Marquee customers. TCS' customer care clients include many major enterprises, such as Citi Group, a Fortune 50 retailer, a luxury hotel chain, a U.S. manufacturing company, a United States based car rental company, a Middle East and Africabased banking group, and a United Kingdom based telecom company. Suite of offerings. Broken down into customer services and collections, TCS offers at least 14 distinctive services within interaction management. Some of the customer services offerings target the important value-added elements such as CSAT analytics and multichannel care. TCS' customer collections offerings also boast a skip trace optimizer and collection analytics. The breadth and types of services indicate an alignment with customer needs. Execution of results for customers. Case studies highlight results that include (in separate case studies) examples such as 71% cost reduction, 42% improvement in collections recovery, improved CSAT from <75% to >85% levels, and FCR increase from <50% to >80%. Collections as a differentiator. While many customer care BPO providers offer a collections service, very few have the depth of TCS' collections solution. The automation and optimization that TCS provides on behalf of its clients include skip tracing services and the optimization and analytics thereof, which have shown to improve the productivity and effectiveness of its clients' collections campaign.

Weaknesses
Lack of focus on customer care services. From a big picture perspective, TCS' strategy does not focus on customer care BPO and thus does not apply the resources in order to scale and grow to be a major competitor in the customer care BPO market. While this is a strategic decision by TCS due to the low margin and labor-heavy nature of traditional customer care BPO work, shifting dynamics in customer care interactions will behoove TCS to reevaluate this strategy in the future. Behind the curve in delivery. Overall (outside of customer care BPO), TCS delivery is 90% based in India. In 2012, TCS made a greater move into Manila, the Philippines, for voice and non-voice-based services. While TCS has had presence in the Philippines since 2003, from a customer care perspective, TCS has been slower to make a bigger move in this region. TCS is also lagging

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behind customer care delivery trends outside of the Philippines, including a lack of attention to the home-based agent delivery method. While call center activity has not been a strategic focus, that distinction has kept TCS behind competition in the customer care market in terms of delivery location and rationale. Reliance on banking industry. In 2012, 80% of customer relationship services revenue was generated from the banking industry. Having such a heavy dependence on one industry naturally weakens TCS' stability for customer care services as revenue can easily be affected by industry instability. Lack of defined social media offering. While many leading customer care BPO providers have been keen to address the opportunity inherent in looking at social media from a customer care perspective by developing distinctive offerings, TCS' stance on social media has been relatively generic and not well defined. TCS' customer care services offerings would be well served by putting a stake in the ground with social customer care by developing a proprietary offering and IP around the very ripe topic of social customer care.

Industry-Specific BPO
Strengths
Ability to build scalable industry-specific offerings. TCS has strategically invested in acquisitions to plug capability gaps (e.g., Citi acquisition). Additionally, TCS has grown its BPO business using an offering-led portfolio strategy. This strategy coupled with TCS' global infrastructure and investment in building industry-specific platforms enables TCS to build scalable industryspecific services offerings with delivery excellence that has grown at 35 40%. TCS can boast of working with leading pharma, BFSI, and manufacturing customers and is beginning to make inroads in a few other industries as well. Focus on new industry-specific opportunities. TCS has identified a few industries and is leveraging its industry-specific market knowledge and BPO infrastructure to provide BPO services. For example, as the product portfolio in the telecom industry converges and this industry undergoes rapid transformation, TCS sees opportunity in addressing this market. Strong BFSI BPO offering. TCS has built a strong BFSI BPO offering and has a reference list of clients it can use to demonstrate this strength.

Weaknesses
Dependency on BFSI and Citi BPO business. TCS' BPO revenue is generated from services that include four key horizontals (20%), industry-specific BPO services (68%), and research and analytics (12%). High-revenue-generating industries include BFSI and pharma. TCS generates approximately 55 60% of its revenue from both BFSI and pharma categories and needs to diversify this risk. Depth of some industry-specific BPO services. In studying TCS' industryspecific BPO offerings (e.g., telecom), IDC found that TCS needs to build on top

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of its current capabilities and increase investment across the social-mobileanalytics-cloud (SMAC) platform.

SWOT Summary for TCS BPO

Figure 3 represents a summary of TCS' SWOT as it relates to the company's BPO business.

FIGURE 3
TCS' BPO SWOT Summary

Source: IDC, 2013

FUTURE OUTLOOK
Things have so far worked well for TCS BPO. IDC does not expect the business demand for labor-based BPO to go away in the near future, and TCS' current BPO services infrastructure will see the company in good stead and find takers for its services for the next two to three years. TCS will have to continue demonstrating strong industry-specific as well as functional BPO services capabilities and provide proof to its existing and prospective customers that it is investing in building solutions across mature parts of any process value chain including front-office and middleoffice transformation functions that either do not exist currently or are considered core functions from a enterprise perspective and not outsourced currently. Additionally, TCS needs to demonstrate its ability to focus on upstream process impact as it

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delivers downstream process and takes overall ownership of the customers business. IDC is of the opinion that BPO providers will be able to assist their clients and help them respond to expected and unexpected market developments in real time and align/modify their business processes as quickly as possible to adapt to these changes.

ESSENTIAL GUIDANCE
Advice for TCS
IDC is of the opinion that TCS needs to focus on the following: Go deep across a selected set of industry-specific BPO offerings. TCS has built BPO competency across many industries. It is now time for TCS to pick, say, three to four industries and build deeper competencies. Organize customer forums/focus groups. TCS needs to organize and conduct key industry-specific focus customer group discussions that enable the exchange of ideas and best practices. Additionally, this will give TCS the opportunity to share its "transformation" BPO services capabilities. Invest in building a stronger BPO brand and consulting image. TCS should judiciously invest in creating a "transformative" BPO services image and focus on creating or calling out a separate "consulting" group within the overall BPO practice. Focus on mergers and acquisitions. IDC is of the opinion that an inorganic growth strategy will not suffice if TCS has to establish an even-stronger presence in the BPO services landscape. TCS needs to make a few niche-strategic acquisitions from an industry-specific and automated (as-a-service) platform perspective.

LE ARN MORE
Related Research
Meet Your New Boss: The Chief Executive Customer (IDC #239047, February 2013) Worldwide Outsourcing Services 2013 Top 10 Predictions (IDC #238973, January 2013) Market Analysis Perspective: Worldwide Integrated Talent Management, 2012 (IDC #238123, December 2012) The Best of Customer Care Services (IDC #lcUS23891712, December 2012) IDC's Worldwide Business Analytics Services Taxonomy, 2012 (IDC #237626, December 2012)

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 Aegis: It's All About Transformational Partnerships (IDC #238055, November 2012) Worldwide Offshore Key Horizontal BPO Services 20122016 Forecast (IDC #237637, November 2012) The Impact of Mobility on Business Process Outsourcing: A Look at Customer Needs for Finance, Accounting, and Procurement BPO and Business Analytics Services (IDC #236205, July 2012) Improving the Customer Experience Through Mobile Customer Care: Opportunities for Next-Generation Mobile Customer Care Services (IDC #235661, July 2012) Worldwide and U.S. Talent Acquisition and Staffing Services 20122016 Forecast and 2011 Vendor Shares: Mixed Messages (IDC #235785, July 2012) IDC MarketScape: Worldwide Business Analytics BPO Services 2012 Vendor Analysis (IDC #234937, May 2012) SAP Using Mobility, Cloud, Analytics, and Business Process Applications to Help Partners Transform Business Process Outsourcing Services to New Capabilities (IDC #234392, May 2012) Worldwide and U.S. Business Process Outsourcing 2012 2016 Forecast: BPO Providers Working Hard to Move Up the Value Chain, But More Needs to Be Done (IDC #234538, May 2012) Enterprise Mobile Application Investments: 2012 U.S. Customer Perspective (IDC #233523, March 2012)

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