India's TCS Introduces Hybrid SaaS Model

Ann All

Back in January, I blogged about theimpact that software-as-a-service could have on outsourcing. Some folks, including Gartner, contend that SaaS gives companies "a viable alternative" to relationships with traditional outsourcing providers.


Indeed, Indian blogger Sramana Mitra wrote about an Indian company whose 150 employees were laid off after it was purchased by a Silicon Valley company that provided the same lead generation and marketing research services via a SaaS model.


Similarly, THINKStrategies' Jeff Kaplan notes that SaaS could boost the efficiency of outsourcing providers by reducing their reliance on manual labor.


So it's less than a huge surprise that Tata Consultancy Services, India's largest -- and one of its smartest -- service providers, is introducing a hybrid SaaS/services model that it calls IT-as-a-service.


The product, which combines hardware, software and underlying network infrastructure, is aimed at local SMBs, an "underserved" market segment that could be worth up to $9 billion a year, reports The Economic Times.


TCS has been tweaking the business model for about a year and expects to move it to other geographies should it prove successful in India. It hopes to find new clients in industries not typically targeted by services providers, such as real estate. Says the company's COO:

The business won't be people-intensive because the solutions and process are standardized. This will break the linearity of revenues... The opportunity size is very large but the problem is it is very fragmented. In the first year, our focus will be to get the right customers and the delivery model. We will go to other countries but not in a hurry.

TCS has already signed 10 clients for ITaaS, which is expected to go live in April, according to the article. It will form partnerships with other vendors for hardware, connectivity and other areas outside of its core expertise.


TCS is rolling out the new business unit just as it begins to feel some clear financial repercussions from the slowing U.S. economy. Two of its 10 largest clents,i both Wall Street banks, canceled projects that had been slated to begin this quarter, reports Times Online. The article also quotes Infosys' CEO as saying some of its U.S. and European bank clients are freezing budgets and/or looking to move work to lower-cost countries.


Though TCS did not say how much the canceled projects would affect its bottom line, the company's 10 largest clients account for nearly a third of its revenues and more than half of its earnings result from its contracts with U.S. companies.

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Add Comment      Leave a comment on this blog post
Mar 8, 2008 2:20 PM Jay Jay  says:
I am not too optimistic about TCS's announcement of ITaaS. In the name of SaaS they are fooling SMBs. They are not a product company, as a consulting company they wanted to participate in SaaS wave that world is currently undergoing. Making a software available over Internet and charging monthly fee are not going to make your software a SaaS software. Good that they have called it ITaaS, not SaaS. THere is a big differenec between the TWO. We should look at real SaaS companies like Webex, Salesforce, A2Z Applicatios.com etc. But I think where Salesforce is trying to go SaaS way thru Apex, A2Z APPLICATIONS.COM (India) was founded ~2 yrs back with a notion of building a SaaS business platform from scratch for SMBs in Asia/India. This company is basically providing a business operating system and claims that any business solutions can be deployed in few days with ZERO IT knowledge. Reply
Mar 10, 2008 11:33 AM Michelle Michelle  says:
Im not either too enthusiastic. Not when it comes from TCS. The guys talk too much and deliver too less. To answer the question: "Though TCS did not say how much the canceled projects would affect its bottom line" you may find the more here: http://www.rediff.com/money/2008/jan/31msg.htmOf course there are billions of blogs talking about, whether is fair or not, but one thing is for sure, for TCS there are no losses, because there will be 100,000 people sustaining when the poor management screws it up *as usual. But of course, the blame is over the so-called US recession. Not on the poor delivery of IT, SW, HW, Consultancy and all what you can imagine they offer "as a service".Therefore, i dont trust either this ITaaS or hybrid SaaS or whatever they try to sell this time... is just that the company is not able to even understand properly SaaS and probably neither the core of it and they come up with "new" ideas. Kind of "Bollywood" replay: same same but different.I already feel sorry about those 10 "clients" (if there are so) which will be the "laboratory rats". Well, good luck. Reply
Jan 20, 2009 9:16 AM George George  says:
The Hybrid model is what is needed for the SMB market in India given the wide diversity and the handholding need in India. However without its own products TCS may get some market share but will not lead.K-Serve suite of Enterprise products (www.K-Serve.net) is an example of an Indian company with Indian products providing the Hybrid SaaS model effectively. They provide solutions in the areas of CRM, HR, ERP and Retail/ Supply Chain distribution. Reply
Feb 6, 2009 11:51 AM Colin Earl Colin Earl  says:

The Hybrid SaaS model is certainly gaining steam, but it takes a lot of work to craft a truly general platform and it looks as if these guys are trying to jump on the bandwagon rather late.

We put about three man-centuries and 9 elapsed years of development into www.saaswizard.com and now have hundreds of enterprise deployments of products based on this platform, such as EnterpriseWizard and ManuLogic. But it took us 7 years just to get the platform truly stable, scalable, and extensible.

Jun 23, 2009 8:54 AM Sunil Pande Sunil Pande  says:

As an early SaaS entrepreneur, I have stated in an earlier comment that I am confused by the current SaaS vs. Outsourcing debate. I have seen both co-exist comfortably among our customer base. The basic issue is that existing providers like TCS, Wipro, Infosys etc. need to rethink their menu of services in the context of SaaS. Many of their offerings are designed to meet the outsourcing needs of internal IT and functional groups based on customer's current On-Premise model. When they transition to SaaS, these customers will not need many of these services. At the same time new higher value SaaS enabled service opportunities will become available. These are the ones service providers must focus on. Whether TCS can make a success of ITaaS, only time will tell. But coming up with new SaaS enabling offerings is precisely the right thing to do.


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