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FT.com / Home UK / UK - Tata's IT wing moves into manufacturing network

Tata's IT wing moves into manufacturing network
By Peter Marsh in London

Published: July 3 2007 03:00 | Last updated: July 3 2007 03:00

Tata Consultancy Services, one of India's largest information technology consultancies, is planning to move into manufacturing by fixing up "supply networks" in India to make parts and engineering goods for western companies.

The company - part of the Tata industrial group - is working with about 190 India-based engineering businesses which appear to have the potential to win orders with much larger businesses in the US and western Europe which are already TCS clients.

Under its plans, the consultancy could earn additional income by acting as a "supply chain manager" for its clients through introducing them to potential partner businesses in India which would become the clients' suppliers. TCS hopes it will be able to improve what it offers its existing stable of customers.

TCS would leave the western companies and the Indian suppliers to work out the details of specific contracts for themselves. It would collect fees only from the western businesses that are already its clients, not the Indian suppliers.

However, it would play a role in advising both sets of businesses as to how best they could work with each other.

S Ramadorai, TCS's chief executive, said the efforts by his company to establish a role in manufacturing was an "experiment" that could eventually lead to a new source of business in a relatively high value area of consultancy services.

Like most of the established Indian IT consultancies - which have grown strongly in the past decade on the back of outsourcing contracts awarded by US and European groups - TCS is trying to broaden out the scope of its services and focus on new areas.

The amount of income that TCS - which in 2006/07 had worldwide revenues of $4.3bn - hopes to get from its manufacturing service has not been disclosed, but it is believed to be aiming for extra revenues of a few tens of millions of dollars a year over the next few years.

Aniruddha Gokhale, head of sourcing solutions at TCS, said so far 20-30 TCS clients, mainly in the US, UK, Germany but also Australia, had expressed interest in linking up with India-based suppliers that the consultancy might be able to identify for them.

Copyright The Financial Times Limited 2007