The Congress and the BJP might have handled their coalitions better if they had taken a leaf out of the book of TCS, Indias largest IT company.

For years, TCS has been the undisputed Goliath among the handful of IT companies belonging to the Tata group, but it has never acted like a the brash Big Brother. Rather, it has nurtured and helped grow many of these smaller niche players though TCS went ahead to acquire CMC and Tata Infotech. Predominantly, the endeavor has been to look at synergies though it must be admitted that except Tata Technologies in the last two years, the rest have been too small to seriously bother TCS.

The situation has not changed much vis--vis TCS and the rest this year. It still enjoyed an 88% share of the overall revenues of all Tata IT companies, in fact, up by two points from last year. However, the individual numbers also threw up interesting stories. For the first time since DQ started chronicling the Tata group story, we have a new #2: Tata Technologies. The IT arm of Tata Motors and one of the countrys leading engineering services players, it displaced CMC (which though a TCS subsidiary, we include separately by virtue of it being an independently listed company). Tata Elxsi and Tata Interactive, two niche players operating more in the entertainment and e-learning spaces, maintained steady growth.

Interestingly, of all the five groups, Tatas recorded the second lowest growth rate (21%), only Infosys at 20% ranked lower. Tatas presented a complex casethough both TCS and CMC, and to an extent Tata Technologies, operated visibly in the domestic market, they were unable to grow their domestic businesses proportionately.

While the biggies floundered, it was Tata Elxsi (primarily its VFX arm, Visual Computing Labs) and Tata Interactive which proved to be the saviors. And in a year where the fluctuating dollar took its toll on export revenues, the inconsistency of the domestic business of Tatas IT entities obviously left its mark on the groups fortunes.

A Close Look at Synergies
Any look at synergies would start from TCS and Tata Technologies, considering these two are now the biggest entities. Though nothing might be in black and white yet, there is a mutual understanding whereby these two do not compete against each other. In fact, in projects like the one for Fiat earlier and for ArvinMeritor in FY 08, TCS and Tata Tech (now INCAT) have often joined forces. Combined, the two have zipped ahead in the F1 lanes toowhile TCS counts Ferrari as a major client, Tata Tech now has a strong relation with Williams.

ArvinMeritor could be counted as one of the blueprints of Tatas IT synergy in FY 08. As part of a five-year contract with ArvinMeritor, a global supplier of integrated systems, modules and components to the automobile industry, TCS set up a global engineering center in Pune. Along with Tata Technologies, TCS would be delivering end-to-end comprehensive solutions for electronics and control technologies. Some analysts feel that this could prove to be a future blueprint for closer synergy between TCS and Tata Tech or maybe even a possible merger one day.

Though TCS and CMC (the TCS subsidiary with a strong domestic SI presence) had a rather insipid year on the domestic front (except maybe BPO), they shone in the government sector. In fact, it has been the CMC acquisition made a few years back that catapulted TCS into its position of eminence in the domestic government circles. TCS has been successfully leveraging CMCs SI expertise in many of its global contracts, especially the ones like Bank of Pichincha and Bank of China. This was especially significant in infrastructure management services, a fast-growing-high-revenue service where CMC has vast experience. The other advantage that CMC brought was strong domestic presence and a sizeable government clientele. TCS was therefore well-placed to tap this segment as various government utilities increased their IT spends. TCS bagged the coveted passport application-processing project.

Tata Elxsi and TIS too had their synergistic contributions. TIS, known to be one of the leading e-learning vendors globally, had one significant association with Tata Technologies. iKnowledge Solutions (iKS), a Tata Technologies subsidiary, launched the latest version of i.get.it, a specialized social network for the engineering design community. The new product, that leveraged SaaS business strategies and Web 2.0 design offerings, was jointly developed by TIS software solutions practice & iKS.

Not just big brother Tata Tech, TIS has often worked in close collaboration with big daddy TCS too. For instance, when Sun Life Financial decided to implement Oracle Financials to aid its accounting and finance professionals, it asked TIS, in association with TCS, to carry out a thorough training needs analysis.

TCS handles the entire IT infrastructure for major group companies like Tata TeleServices and Tata Chemicals. It would also be involved in significant IT work for two of the latest acquisitions of the group, viz, Corus and Jaguar.

Talking of Jaguar, the other company that enjoys maximum synergy with the non-IT entities is quite naturally Tata Technologies. With Tata Motors being its largest domestic customer, Tata Tech was involved significantly in the engineering design and protyping for the Nano. During FY 08, it also entered into a strategic alliance with Tata AutoComp, Tata Groups automotive components subsidiary. The alliance secured a project for the complete design and development of a new vehicle platform for a Chinese firm.

While the top honchos sitting in Bombay House might not be overtly strategizing on how different Tata IT entities could synergize, the fact is that most of them have found their own ways of smoothly co-operating with each other. The biggies avail of the services of the smaller niche players in specific areas, whereas the latter gain by their association and involvement in large projects. It looks likely that this arrangement (instead of any designated mandate) would continue for the near future.

Rajneesh De
rajneeshd@cybermedia.co.in

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