TCS Isn't Thriving. Can Chandra Fix the Firm?

Parent Tata Sons wants India's largest IT services company to quickly shape up. It won't be easy

- Varun Sood

In mid-February this year, Tata Consultancy Services Ltd (TCS), India's largest IT services exporter, held its annual strategic event called 'Blitz' in Dubai. Tata Sons chair, Natarajan Chandrasekaran, addressed around 800 employees present—he didn't sound happy.

Chandrasekaran, or Chandra as colleagues address him, underlined the underperformance of TCS in the stock market, according to two executives present at the event. In his 30-minute keynote address, the chairman used a PowerPoint slide to show that the shares of the Tata Group's 26 publicly listed companies were up 270% between 2020 and 2024. Barring TCS, the shares of this cohort were up over 530% in this period.

Chandra went on to lament that TCS was still not a leader in artificial intelligence (AI) and that the company was still not realizing its potential, the executives said.

The chairman's message was clear: TCS needed to shape up.

How the company performs is crucial to the Tata Group—TCS is the crown jewel accounting for about 84% of parent Tata Sons's total income in 2024—and 41% of the combined market capitalization of $365 billion, as on 31 March 2024.

Chandra's address in Dubai came less than a fortnight after another development, one that highlighted his increasing concerns about TCS. In the first week of February, close to a dozen senior executives presented their performance and goals. This annual exercise was not just reviewed by the chief executive officer, K. Krithivasan. Chandra was present, too. The chairman reviewed the IT company's senior leaders for the first time since he moved to Bombay House, Tata Sons' corporate headquarters, in February 2017.

"This is the first time the chair reviewed individual business unit heads," said the first executive mentioned above. "Classic Chandra style," commented the second executive, adding the review meeting was over 75 minutes long. "Sharp and prodding us to set larger goals," the executive said.