Tata Communications: Building a Global-Local Operating Model

Topics: Tata Group, Management, VSNL International Canada Pages: 23 (6836 words) Published: June 19, 2011
Tata Communications: Building a Global-Local Operating Model By Stéphane J.G. Girod, Joshua B. Bellin and Robert J. Thomas November 2009

Case Study

Tata Communications: Building a Global-Local Operating Model

A Mumbai-based “global startup” in the rapidly changing communication-services industry must decide how to manage its global footprint and surmount new industry challenges—all while honoring the Indian cultural values it was founded on. Its solution? Build a “global-local” operating model in which “hard” components like business processes and performance metrics support the “soft” component of leadership and people—and manage the challenges that come with the model. Tata Communications’ fast international growth

Tata Communications has changed shape frequently and steadily extended its global reach since its inception in 1986 as a state monopoly in India for fixed-line international calls. At the time, the company was called Videsh Sanchar Nigam Ltd. (VSNL). (See “Table 1: Tata Communications at a Glance.”) In 2002, the Indian government corporate center’s role, though as important as ever, is shifting from managing foreign units’ dependence to managing foreign units’ interdependence. Emerging-market powerhouses now sell to customers not only in other emerging markets, but also in developed markets. Multinationals source talent at all levels without regard to country. innovation is no longer the sole preserve of the developed world. Technology advances facilitate cross-border integration, but consumer pressures and regulations vary widely from market to market and force multinationals to craft local strategies. In this environment, multinationals need a more sophisticated global and local operating model to manage

privatized VSNL as part of a deregulation plan, and the Tata Group acquired a 45% stake in it. VSNL’s market capitalization by the close of that year stood at $1.2 billion. Two months later, India ended VSNL’s monopoly status, and the company saw its domestic market share begin to erode. As a result, the company initiated a globalization drive fueled by acquisitions and diversification into value-added services (such as data). Its goal? To step up its presence and leverage its expertise in emerging markets while also consolidating its leadership in India. Tata Communications’ executives see the company as a “global startup” because of its rebirth as an international organization soon after loss of its monopoly.

Operating models in a multipolar world: Accenture’s case study series The term multinational used to designate companies that operated primarily from company headquarters, usually based in the United States, Western Europe or Japan. Multinationals often sold their first-world goods in other markets, and managed operations in the developing world in order to take advantage of cheaper labor. “Talent” often meant, first and foremost, expatriate employees from the home market. But in a multi-polar world, where economic power is diffused around the globe, much has changed. The

the complex operations that span continents and cultures. To learn more about how some multinationals are creating these new models, we undertook a series of case studies, with a particular focus on emerging-market multinationals in the telecom and energy industries. This is the second case in the series.

2 | Accenture Institute for High Performance | Copyright © 2009 Accenture. All rights reserved.

Tata Communications: Building a Global-Local Operating Model

In 2003, the company set up an international division in Singapore and established offices in the United States, United Kingdom and Sri Lanka. In 2005, VSNL acquired Tyco Global Network for $130 million and began providing data services for global customers. With this move, VSNL joined the ranks of the world’s largest providers of submarine cable bandwidth. In 2006, VSNL acquired Teleglobe International Holdings Limited for $238 million. It now...
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