Tata Consultancy Services or TCS is a leading Indian multinational information technology services, consulting and business solutions company. Founded in the year 1968, TCS is a flagship subsidiary of the iconic Indian conglomerate, Tata Group. The company specialises in delivering end-to-end digital transformation, IT infrastructure solutions, business process management, cloud computing services, AI integration and much more. It is the pioneer of the global delivery model for IT services, commencing with its first offshore client in the year 1974. In the year 2014, TCS became the first Indian IT company to cross the $15 billion threshold. It is ranked among the “Big 4” most valuable IT brands in the world. How did TCS attain this feat? How does it work? What are its sources of revenue? Read on to get answers to such questions.
What Are The Core Features of TCS’ Business Model?
TCS offers a diversified set of services, leveraging technologies like artificial intelligence, cloud, IoT, big data, machine learning and analytics. Key service lines include custom software development and ongoing support, enterprise solutions like CRM, ERP and other integrated systems, business process outsourcing, assurance services, consulting, IT infrastructure services like IT operations, managed services and cloud migration, engineering and industrial services and asset leverage solutions.
TCS serves a wide range of industries and sectors, offering tailored solutions and industry-specific proficiency for each. Major industries in the company’s domain include manufacturing, retail, communications, media and technology, banking, insurance, energy, healthcare, logistics and public services.
TCS operates a Global Delivery Model or GDM. It executes the maximum possible operations offshore (mainly in India), while running only strategic, customer-facing and regulatory-required operations onsite or nearsite. Operations are run 24/7, using global time zone differences. The processes are standardised to seamlessly operate across locations. 70-80% of the work is done offshore. TCS operates in over 150 locations across 46 countries, with major delivery centres located in multiple Indian cities like Mumbai, Bangalore, Chennai and Hyderabad.
Innovation is a major contributing factor in TCS’ growth. To this end, the company directs a major part of its investments towards research and development.
| Company | TCS Limited |
| Establishment Year | 1968 |
| Founder | J.R.D. Tata |
| Headquarters | Mumbai, Maharashtra, India |
| Industry | Information Technology |
| Net Worth | $130 billion |
| Revenue In 2024 | $29.08 billion |
How Does TCS Makes Money?
1. Application Development/Maintenance and Digital Transformation
TCS gets paid by companies to build new software applications and/or keep their existing systems in an optimal condition. It also earns income by planning and implementing digital transformation projects like AI implementation, cloud migration, cybersecurity, IoT and more.
Clients pay on the basis of per hour/daily rates or fixed prices quoted at the outset. Both application development/maintenance and digital transformation services account for 65-70% of the total revenue.
2. Infrastructure and Cloud Services
TCS generates revenue by managing its clients’ servers, data centres and cloud environments. The clients buy subscriptions into the cloud or pay on a pay-per-use model. This segment accounts for 15-18% of the company’s revenue.
3. Proprietary Software
TCS earns revenue through its proprietary software products developed for banking, finance, retail and other sectors. The clients pay multiple kinds of fees for these ready-made software products, including licencing fee, implementation fee and annual maintenance fee.
4. Business Process Outsourcing
TCS earns revenue through its BPO services covering the back-office operations and business processes of its clients. This is the most stable revenue source because the services are provided through long-term contracts.
Financial Growth of TCS
TCS attained a market valuation of INR 10.6 trillion or USD 144.73 billion in October 2020, thereby overtaking Accenture to become the most valuable IT company in the world. TCS’ share price surged to an all-time high of INR 2,898 in December 2020, up from just INR 375 a decade ago. This translates to a huge jump of 603% in stock value within a decade.
TCS reported a revenue of INR 227,094 crore or USD 27.6 billion in FY23, with a year-over-year or YoY growth of 14.6%. The company recorded a net profit of INR 86,252 crore or USD 10.5 billion, with a growth of 11.5% from the previous fiscal year.
North America accounts for around 47% of the company’s revenue, with United States being its primary source of revenue. Europe is the second biggest market, accounting for 33% of the revenue.
