The growing internal business, now representing 3.1% of TCS’s total revenue, underscores Chandrasekaran’s strategic push to modernize the sprawling conglomerate’s digital infrastructure and leverage the IT giant’s capabilities across the group. Out of TCS’s FY25 revenue of more than ₹2.5 trillion, ₹7,835 crore came from group companies, the company’s annual report showed. Eight years back, the figure was ₹2,412 crore.
An email sent to TCS on Thursday remained unanswered.
Rising revenue from group companies comes amid a broader initiative to foster tighter collaboration among Tata entities, exemplified by mega-deals with Jaguar Land Rover and state-run Bharat Sanchar Nigam Ltd.
In 2023, TCS won an 800-million-pound order from Tata Motors’ UK subsidiary Jaguar Land Rover to revamp its IT systems.
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“The JLR contract was a mega deal for TCS and its ramp-up would have caused the group company revenues to increase significantly,” said a Mumbai-based analyst on condition of anonymity. A mega deal is a contract that brings more than ₹8,500 crore, or $1 billion in revenue.
TCS winning a ₹15,000 crore contract from state-run Bharat Sanchar Nigam Ltd was another example. In August 2023, TCS announced that along with group company Tejas Networks Ltd, which makes wireless networking products for telecom companies, it had won a large contract from BSNL. TCS has also bagged multi-year contracts worth over ₹5,000 crore from its non-bank lender Tata Capital Ltd.
The increase in earnings from group companies is primarily due to Chandrasekaran’s efforts to make TCS future-ready for many of the group companies. Chandrasekaran, who began his career with TCS, rose through the ranks to become chief executive officer in 2009, before he was elevated as Tata Sons chairman in February 2017.
Since then, Chandrasekaran has been nudging senior executives within TCS to collaborate with group companies such as Tata Communications Ltd, and also help modernize their IT infrastructure, an executive familiar with the developments said. He envisioned the ‘One Tata’ plan in 2017, a strategy to “simplify, synergise, and scale” the group’s operations.
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“I see ample evidence that we are moving ahead on the course we set under the ‘One Tata’ strategy. We are embarking on a process of simplifying, synergizing and scaling (3S) to create an agile, powerful platform,” Chandrasekaran wrote in a New Year message to Tata Group employees in 2019.
For now, TCS executives believe business from group companies will only increase.
“Tata Group getting into new businesses like semiconductors and digital business is an opportunity for us (TCS) to work with other group companies,” the executive cited above said on the condition of anonymity.
Chandrasekaran’s letter to shareholders in the TCS annual report also underscored the importance of technology.
“We are witnessing the rise of new paradigms, demanding a thorough reimagination of systems, processes, and technologies to improve visibility, reduce costs, and enhance operational throughput,” Chandrasekaran, who is also chair of TCS, wrote in the annual report. “This reimagination includes designing end-to-end traceability across supply chains; diversification of sourcing strategies to build resilience, and region-specific ecosystems to serve decentralized markets.”
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More money from Tata-owned businesses also comes at a time when the company is looking to boost revenue from its home turf. For two years, India has been the fastest-growing market for TCS, accounting for 8.6% or $2.6 billion in revenue last year.
Despite the boost from group companies and homegrown businesses, TCS’s growth has slowed: TCS ended the year with $30.18 billion in revenue, representing a 3.78% dollar revenue growth. This was its slowest growth in four years.