TCS INCENTIVE EVA MODEL

1. Presented by,
Francis Rajan . J.S
Vinoth Arockiaraj . R
Gayathri . V
Priya . S
Madhuvanthi . K

2.  Born1963
Mohanur, Tamil Nadu, India
 Residence Mumbai, India
 Alma mater Coimbatore
Institute of Technology
 Occupation CEO&MD
of Tata Consultancy
Services

3.  Tata Consultancy Services Limited (TCS) is a global IT
services, business solutions and outsourcing company
 a subsidiary of the Tata Group conglomerate.
 Second-largest India-based BPO services
 Ranked #20 in the list of top companies of India, by Fortune
India 500magazine.
 Largest technology service company in India
by revenue and market capitalization.
 142 offices across over 47 countries and generates around 30

4. Type Public
Industry IT services, IT consulting
Founded 1969
Headquarters Mumbai, Maharashtra,
India
Area served Worldwide
Key people Subramaniam Ramadorai
(Vice Chairman)
N. Chandrasekaran
(CEO & MD)

5. Services IT, business consulting and
outsourcing services
Revenue Rs. 37,928 crore (US$8.34
billion)(2011)
Profit Rs. 9,068 crore (US$1.99
billion)(2011)
Total assets Rs. 25,037 crore (US$5.51
billion)(2011)
Employees Rs. 226,751 (Q3 2011)
Parent Tata Group

6.  Early 1970s- Tata Consultancy Services
started exporting its services.
 1974- The company pioneered the
global delivery model for IT services with
its first offshore client
 1975- TCS conducted its first-ever
campus interview which was at
IISc,Bangalore

7.  1979- TCS associated with a Swiss partner, TKS
Teknosoft, which it later acquired.
 1981-TCS set up India's first software research and
development centre, the Tata Research
Development and Design Center (TRDDC) in Pune
 1999- TCS saw outsourcing opportunity in
E-Commerce and related solutions and set up its
E-Business division with ten people

8.  2004- TCS became a publicly listed company, much
later than its rivals, Infosys, Wipro and Mahindra Satyam.
 2005-TCS ventured into a new area for an Indi
an IT services company – Bioinformatics
 2006-TCS designed the ERP for IRCTC
 2008-TCS went through an internal restructuring exercise
that executives claim would bring about agility to the
organization
 2011-TCSentered the Small and medium
enterprises (SME) market with cloud-based offerings

11. TCS conducts two appraisals:
1.At the end of the year
2.At the end of a project.
Appraisals are based on Balanced
Scorecard, which tracks the achievement of
employees on the basis of targets at four
levels —
 Financial
 Customer
 Internal
 Learning and growth

12. Financial perspective
Quantifies the employee’s contribution in terms of
revenue growth, cost reduction, improved asset
utilization and so on;
Customer perspective
Looks at the differentiating value proposition offered
by the employee
Internal perspective
Refers to the employee’s contribution in creating and
sustaining value;
Learning and growth
Are self-explanatory. The weightage given to each
attribute is based on the function the employee
performs.

13. TCS can review and design your incentive
plans which could include any of the
following:
 Annual Bonus Plans
 Short-term Incentive Plans
 Long-term Incentive Plans
 Equity Incentive Plans

14. The process for establishing an incentive
compensation plan is as follows:
 Develop organization business strategy
 Link business strategy to overall goals and
objectives
 Identify prospective plan participants
 Establish individual goals and objectives
 Evaluate market practices and determine
target awards
 Assign performance objectives to award levels
 Communicate plan elements to staff.

15.  It can be an effective tool for motivating
employees to increase both individual
and organizational performance and
recent market trends reveal that
incentive planning can be effective in a
not-for-profit environment as well as a
for-profit environment.

16.  TCS adopted EVA in 1999, when the company had a staff of
around 15000, working at several locations across the world
 Through the EVA model, TCS aimed at creating economic
value by concentrating on long term continuous improvement
 EVA measured operating and financial performance of the
organization and the compensation of all employees was linked
to it
 EVA was adopted to focus on continuous improvement rather
than short term goals and also to motivate employees

17. PERFORMANCE-LINKED SALARY STRUCTURE
Aimed to give differential pay scales to employees at the same level of the
hierarchy based on the performance of the individual and the company
INDIVIDUAL BUSINESS UNIT
LEVEL LEVEL
CORPORATE
LEVEL

18. Global and regional operating areas
EVA
Dimensions
Service practices Industry practices

19.  A business unit could be a part of a service, a practice, a
geographical unit or a combination of all the three
 Every unit was considered to be a revenue center and
had its own EVA target
 Employees could claim stakes at three EVA levels - at the
organization level, at the business unit and the individual
level
 The individual was informed how he or she could
contribute to the EVA enhancement at all three levels.
 EVA was controlled by revenues, capital and costs, and
an individual could contribute in any or all of these areas at
all the three levels

20. The benefits of EVA were realized across all
levels in the organization
 increased transparency in the organization
 The decision making process became more
decentralized.
 The internal communication within a unit
had increased considerably
 the employees were motivated to increase
their contribution

21.  All the units could determine how they
had fared against the targets.
 Employees became aware of their
responsibilities and their share in increasing
the EVA of the unit and organization
 EVA was not just a performance metric
but an integrated management process
aimed at achieving long term goals.

22.  EVA concentrated mainly on return on
investments, due to which the growth of TCS
could be restricted
 In 2003, TCS caused an uproar in the IT industry
when it reduced the variable salaries of
employees by 10%
 The reduction in the variable salary resulted in
an overall reduction of monthly take-home
salary for most of its employees

23.  Project milestone parties — to encourage efficient
execution of projects.
 Recognition of star performers / high fliers — to
recognize outstanding talent.
 Nomination to covet training programmes — to
encourage self-development.
 Best project award — to promote a spirit of internal
competition across work groups and to foster
teamwork.

24.  Best PIP award — to encourage innovation and
continuous improvement.
 Best auditor award — to acknowledge participation in
critical support roles
 Spot awards — to ensure real-time recognition of
employees.
 Recommendations for new technology assignments / key
positions — to ensure career progression and
development of employees' full potential.

25.  Performance-based annual increments — to
recognize high performers
 Early confirmations for new employees —
to reward high-performing new employees
 Long-service awards — to build organizational
loyalty
 EVA-based increments — to ensure performance-
based salaries.
 On-the-spot recognition —
to guarantee immediate recognition of good perfor
mance

26. Exhibit I: Goal Setting and Balanced Scorecard
Perspectives
Exhibit II: TCS - Mission, Vision and Values
Exhibit III: Components of TCS EVA Incentive
Exhibit IV: Best IT Employers in India
Exhibit V: TCS Employee Satisfaction (2003-04)
Exhibit VI: Top 15 Companies in Business week
Information Technology 100 Rankings (2005)