Saturday, April 16, 2016

TCS: A new challenge

Tata Consultancy Services has been cruising comfortably for quite sometime. Till a few quarters ago, its financial performance was rated very high by both analysts and investors. It is an admirable cash cow for the Tata group.

When Vishal Sikka took over as CEO of Infosys in June 2014, TCS started feeling competitive pressure. Tata group is known for its ethical standards despite a few well-documented departures from the straight and narrow path like what happened in the case of Tata Finance a few years ago.

Now a grand jury at Wisconsin has found TCS guilty of unlawfully benefitting from using a healthcare services software from Epic Systems Corporation in a way not authorised by the contract between the two firms. TCS has denied that its own hospital services software, Med Mantra, has in any way benefitted from Epic's product.

Nuanced details aside, TCS has received adverse publicity. Is the House of Tatas immune to industry's tendency to cut corners, ethical and financial, when circumstances turn adverse? If the answer is 'no', the reputation loss likely to be suffered by TCS because of 'Epic' problem will be immense. TCS of course will appeal against the jury verdict. It is too early to 'commoditise' the Tata brand. But it does not augur well that TCS  has apparently been caught with its pants down.

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