The transformation of TCS

Niccolo Machiavelli once said, "There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things."

Transforming a leading, successful organisation is an uphill task, especially when a corporate is known for its pioneering efforts and proven business model. There are corporate case studies of successful business transformation, but the initiative in most cases is triggered by an event of great magnitude, as in the case of Apple Computer and, more recently, IBM. The task of transforming a corporation in order to meet a stated vision requires transparency, a willingness to change and a determination not to lose sight of the short term over the long term. These traits will enable Tata Consultancy Services (TCS) to transform itself to be in the top 10 by 2010.

Where conventional wisdom decrees, "If it ain’t broke, don’t fix it," TCS decided to willingly transform itself in its desire to excel and lead. It was this initiative that acted as the catalyst in the nearly year-old transformation exercise. The complexity of the exercise owed itself to the sheer growth of TCS in recent years in terms of employee strength, geographical spread and cultural diversity. So what does transformation really mean? S. Ramadorai, CEO, says, "Transformation, in my opinion, is a way of life. One needs to be proactive and prepared for the emerging trends of the future."

Mr Ramadorai emphasises the need to be responsive to internal and external factors. He says, "The change in mindset instills an ability to learn to live with change. This, coupled with empowered decision-making and an ownership-based approach, is aimed at ensuring that transformation is a continuous process." The changes on the customer front, caused by global competitive pressures, are throwing up a whole host of new opportunities and challenges for the company to act upon. In turn, these developments are forcing the company to take a close look at the organisational structure, practices and decision-making process. Says P. S. Vishwanathan, VP, transformation, "It is only now that people are settling in the IP (industry practice), SP (service practice) and geography matrix. We are already making adjustments."

However, changing organisational structures is the greater challenge TCS has to face up to. Mr Vishwanathan says, "We have always led; we have never been No 2. We take so much for granted. Success itself can be your biggest enemy. Yesterday’s formula for success won’t hold today. Implementing any change is going to be difficult." TCS is the first Indian IT company to designate a chief transformation officer (CTO), and one of only eight IT companies in the world to have such a designation.
The top management soon realised that the process of creating a new corporate reality required a clear understanding of the direction that the company would take. In order to propel itself into the big league, TCS would have to look within itself. The future reality map drawn out by the senior management had to be clear enough to convey the message that change was inevitable for survival. "The other aspect," says S Padmanabhan, VP, HR & OD "is the 'company learning programme'. We need to ensure that employees gain certain attributes. These attributes include communication and negotiation skills, and how to deal with a customer in a very competitive environment."

Today TCS is a billion-dollar company in terms of revenue. It is managed by nearly 25,000 people and has operations in 55 countries. The organisational structure has to continuously mutate and evolve to remain relevant. It has to transform itself to meet employee aspirations and ensure customer delight. Says Mr Vishwanathan, "There was a recognition within TCS that there was a need for transformation. You need to know where you are going. Only then will the mission, vision and values hold." The company launched a matrix organisation structure a year ago, but had to change it due to changes on the external front.

To make a corporate transformation exercise successful, the leaders should find out the cause of the current state of affairs. The first step in the process is to question existing practices and processes. People don’t resist change; they resist being changed in the process. Since it is difficult to get an insider to objectively carry out the process of challenging existing habits, TCS roped in an outsider to bring a fresh perspective to the change programme. The role of this person was to act as a facilitator and change agent.



Data-based managementThe corporate transformation model of TCS encompasses strategic planning, change management and alignment with project management to create business value. To make any exercise successful, it is necessary to have a performance measurement system (PMS) in place. Towards this objective, TCS introduced the economic value added (EVA) concept across the organisation.

The framework aligns corporate values with the performance of the constituent business units and the individuals who comprise these. The measurement is objective and creates transparency in operations.

Intending to transform itself into a data-driven organisation, TCS decided to implement the balanced scorecard (BS) system simultaneously. A balanced scorecard, with integrated performance measures or key performance indicators, helps companies like TCS track and evaluate their progress in achieving goals. It helps to align the functional targets and goals with the organisational objectives. It integrates the corporate vision with internal business processes, learning, financial measures and reaching out to the customer.


What does transformation mean?Any transformation exercise has to have a clearly measurable and tangible goal. Transformation for the sake of transformation will be counter-productive. Mr Vishwanathan says, "Sometimes people think it is an impossible task to be in the top 10 by 2010. It might sound like a political slogan, but, to put things in perspective, ten years ago we had revenues of Rs 253 crore and 4,000 employees. This increased to Rs 550 crore and 6,900 people about five years ago. Today we are a billion-dollar company."

To cut a long story short, an organisation is about structure, systems, processes and people. And that is TCS’s biggest asset.