By S Ramadorai
Twenty years ago, on August 25, 2004, I stood beside Mr. Ratan Tata, the then Chairman of the Tata Group, as we clicked a mouse to officially list Tata Consultancy Services (TCS) on the National Stock Exchange. On the same day, TCS was also listed on the Bombay Stock Exchange. This momentous event culminated years of preparation and marked the beginning of a new era—not just for TCS, but for India’s entire technology sector. What a team and collaborative effort it was!
As the CEO & MD steering TCS through this transformative moment, I felt a mix of pride, excitement, and, admittedly, trepidation. We were taking a company that had long been the “best-kept secret” of Indian IT and exposing it to global market scrutiny. The stakes were immense, but so was the potential.
A Groundbreaking IPO
The TCS IPO was groundbreaking in multiple ways. It was the first billion-dollar IPO in Indian history, with Tata Sons diluting its stake by offering 14% of TCS’s equity shares. The journey to this IPO was far from straightforward. For 36 years, TCS had operated as a division of Tata Sons, the group’s crown jewel and primary cash generator. The decision to take TCS public meant potentially sacrificing a reliable source of cash flow. Moreover, the scale and complexity of extracting a division and creating a separate legal entity was unprecedented in Indian corporate history.
As CEO & MD, I had set an ambitious vision for TCS: to be among the global top 10 IT services companies by 2010. The IPO was crucial to enhance our global visibility beyond our customers and suppliers, attract top talent, and provide the financial muscle needed to compete for mega-million-dollar projects.
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Unveiling the Best-Kept Secret
TCS had always maintained a low profile, despite being a pioneer with numerous firsts to its credit. Our pre-IPO campaign, “TCS – Truly Global,” revealed our true scale: 149 offices in 32 countries, over 28,000 employees of 30 nationalities, six clients from the US Fortune Top 10, and Global Development Centres in 17 cities across nine countries. We were unveiling a global powerhouse that had been hiding in plain sight, true to our ‘substance over show’ philosophy. Living by our commitments, every day, and every moment, was our mantra. This brought a lot of visibility to TCS within the Tata group and across the IT sector.
The IPO was a grand success, oversubscribed 7.7 times, with the stock opening at a 41% premium on the issue price. To put this success in perspective: if you had invested Rs 850 in a TCS share at the IPO, it would be worth around Rs 38,823 today – a remarkable 4467% return over 20 years.
A Matter of Principles
What set the TCS IPO apart was its unwavering focus on creating sustainable, long-term value for all stakeholders. We resisted the temptation to list during the dot-com boom, waiting until TCS had achieved sufficient scale and track record to command sustainable premium valuations. The issue price was set at Rs 850 per share, deliberately leaving “something on the table” for investors. Also, we took a more measured approach, allocating shares to a wide range of employees, including support staff based on experience and performance.
Two Decades of Remarkable Growth
In the two decades since, TCS has achieved remarkable growth that transcends mere financial metrics. With only five CEOs in its 56-year history, TCS has maintained a consistency of vision and values that is rare in the fast-paced tech industry. It has set a great example of how enterprises can combine innovation, integrity, and inclusion to achieve global success.
Revenues have grown nearly 20-fold to $29.1 billion, with industry-leading operating margins and profitability. TCS’s market capitalization has reached $200 billion, making it one of India’s most valuable companies. Its global footprint has expanded to 54 countries, with a diverse workforce of over 600,000 consultants from 152 nationalities. Women comprise 35.7% of the global workforce, underscoring the company’s commitment to inclusivity. TCS has become India’s largest private sector employer and has been named a top employer in 32 countries and regions.
Commitment to India’s growth has been integral to TCS’s journey. From developing systems for stock exchanges to innovations in financial systems, including SBI’s core banking systems, TCS has been at the forefront of nation-building. The strategic acquisition of CMC enhanced TCS’s capabilities in serving key sectors like Railways, ports, and other critical areas of the Indian economy. This legacy continues with critical government initiatives like the Passport Seva project and BSNL’s telecom network infrastructure.
The company has consistently prioritized capability-building and customer-centricity over short-term gains, investing heavily in talent development, research, and innovation. We launched “Ignite,” a program to bring science and math graduates into IT, based on our
belief that talent is not exclusive to any social class or group. World-class L&D programs and learning platforms were built to offer anytime, anywhere, on-demand learning for all TCSers, irrespective of their location, to ensure a future-ready workforce. Our employee engagement initiative “Maitree” fostered a sense of togetherness, caring, and sharing, extending beyond employees to the larger community. The value of this human capital investment was evident during our IPO, where investors were essentially buying into our collective knowledge, skills, and talent rather than physical assets. This focus on human capital has been complemented by a strong commitment to research and innovation. From establishing the Tata Research Development and Design Centre (TRDDC) in 1981 as India’s first software research center to today’s TCS Pace Innovation Ecosystem, TCS has consistently driven cutting-edge solutions through collaboration with academic institutions, startups, and technology partners.
Excellence is deeply ingrained in TCS’ DNA, as evidenced by its journey with the Tata Business Excellence Model (TBEM). In 2004, the same year as its IPO, TCS won the prestigious JRD Quality Value (QV) Award, the highest recognition of business excellence within the Tata Group. This was a major milestone in TCS’s pursuit of quality, reflecting company-wide efforts to integrate excellence into every aspect of its operations. It set the stage for TCS’s continuous improvement journey, leading to its current status as a benchmark leader in business excellence.
Sustainability has been embedded into TCS’s core strategy, with the company aiming for net-zero emissions by 2045. Extensive corporate social responsibility initiatives reflect TCS’s commitment to community, staying true to the vision of Jamsetji Tata: “In a free enterprise, the community is not just another stakeholder in business, but is in fact the very purpose of its existence.”
TCS’s success across Financial, Human, Intellectual, Social, and Natural Capital domains establishes it as a true market leader, delivering lasting value to employees, clients, shareholders, and the wider community.
The Road Ahead
As TCS enters its third decade as a public company, its journey offers profound lessons for the global business community. It stands as a role model for building robust foundations, maintaining the highest standards of corporate governance, and creating enduring value for all stakeholders.
The world is undergoing unprecedented digitization, with digital economies becoming a priority for governments worldwide. In this landscape of digital interconnectedness and new-age globalization, TCS is well-positioned to lead. Built on a strong foundation, TCS has established itself as a trusted partner for both corporations and governments in their digital transformation journeys.
TCS’s proven track record of adaptability and innovation equips it to harness accelerating technological advancements and intensifying global digital transformation. From quantum computing to edge AI and the metaverse, TCS is set to shape the technological landscape of tomorrow, driving the next phase of growth in an AI-driven future. As we look to the horizon, one thing is clear: the best chapters of the TCS story are yet to be written.
(Disclaimer: S Ramadorai is a Former CEO and MD of Tata Consultancy Services. Views, recommendations, opinions expressed are personal and do not reflect the official position or policy of Financial Express Online. Readers are advised to consult qualified financial advisors before making any investment decisions. Reproducing this content without permission is prohibited.)