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Tata Consultancy
Rollout of Non-linear initiatives
Quick Comment: TCS announced the formal launch of
its “IT as a Service” for the Small and Medium Business
(SMB) segment in India. It started this unit in April 2008
and currently has ~100 clients across different verticals
under this model. Management believes that SMB IT
spend is hardly tapped in India and this product is
replicable to a large number of SMBs. TCS estimates
total Indian SMB IT spend at ~US$12bn, growing at 32%
CAGR. Management indicated that steady state
margins from this product would be comparable to its
current level of margins.
Reduces total cost of ownership by ~40% for SMBs:
Under this model, TCS owns the hardware, software
and infrastructure, while clients avail the entire platform
as a service. As per TCS management, this would
reduce total cost of ownership for SMBs by ~35–40%.
Non-linear pricing model: TCS would be charging
based on the usage of the service by clients. The pricing
model would be monthly subscription for standardized
packages sold to customers on per-use basis. The total
payment to the vendor (TCS) would depend on the
volumes of transactions, number of users, etc., on the
clients’ side. TCS does not plan to take over the
hardware currently installed with its clients.
Key Verticals: The key target verticals for this product
are manufacturing (including textiles), retail (including
quick service restaurants), education, professional
services. Manufacturing remains the dominant vertical
with ~40% of total business. Annual revenue size of
SMBs could range between Rs100mn to Rs4bn.
Financials: Management did not give any financial
details related to the launch of this product, as it believes
it is the first of its kind in India. We believe there would
be little near-term impact, and we are working to
ascertain long-term implications of the model.
Indirect sales force: TCS has tied up with over 85 partners
across 21 cities in India to distribute this product. Further, it has
back-to-back arrangements with the hardware and network
vendors for this product.
Company Description
TCS is India's largest IT services organization and one of the
world's top IT service corporations. The company provides IT
solutions and services (application development, maintenance),
IT-enabled services (call centers, business process
outsourcing), packaged software implementation, engineering
and technology services, infrastructure-based services,
asset-based offerings (products and associated services), and
consulting (IT and business consulting). TCS was publicly listed
in August 2004.
India Software
Industry View: In-Line
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tata Consultancy
Rollout of Non-linear initiatives
Quick Comment: TCS announced the formal launch of
its “IT as a Service” for the Small and Medium Business
(SMB) segment in India. It started this unit in April 2008
and currently has ~100 clients across different verticals
under this model. Management believes that SMB IT
spend is hardly tapped in India and this product is
replicable to a large number of SMBs. TCS estimates
total Indian SMB IT spend at ~US$12bn, growing at 32%
CAGR. Management indicated that steady state
margins from this product would be comparable to its
current level of margins.
Reduces total cost of ownership by ~40% for SMBs:
Under this model, TCS owns the hardware, software
and infrastructure, while clients avail the entire platform
as a service. As per TCS management, this would
reduce total cost of ownership for SMBs by ~35–40%.
Non-linear pricing model: TCS would be charging
based on the usage of the service by clients. The pricing
model would be monthly subscription for standardized
packages sold to customers on per-use basis. The total
payment to the vendor (TCS) would depend on the
volumes of transactions, number of users, etc., on the
clients’ side. TCS does not plan to take over the
hardware currently installed with its clients.
Key Verticals: The key target verticals for this product
are manufacturing (including textiles), retail (including
quick service restaurants), education, professional
services. Manufacturing remains the dominant vertical
with ~40% of total business. Annual revenue size of
SMBs could range between Rs100mn to Rs4bn.
Financials: Management did not give any financial
details related to the launch of this product, as it believes
it is the first of its kind in India. We believe there would
be little near-term impact, and we are working to
ascertain long-term implications of the model.
Indirect sales force: TCS has tied up with over 85 partners
across 21 cities in India to distribute this product. Further, it has
back-to-back arrangements with the hardware and network
vendors for this product.
Company Description
TCS is India's largest IT services organization and one of the
world's top IT service corporations. The company provides IT
solutions and services (application development, maintenance),
IT-enabled services (call centers, business process
outsourcing), packaged software implementation, engineering
and technology services, infrastructure-based services,
asset-based offerings (products and associated services), and
consulting (IT and business consulting). TCS was publicly listed
in August 2004.
India Software
Industry View: In-Line
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