Corporate Governance Policy of Tata Consultancy Services

Corporate Governance
ASSIGNMENT 1

Corporate Governance Policy of

Tata Consultancy Services

21st June, 2017

Submitted To:

Course Instructor: Mr. K.B. Manandhar

Submitted By:-

Mohit Maheshwari

EMBA Fall 2015- Semester III (First Half)

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Corporate Governance Policy of Tata Consultancy Services

Introduction
Tata Consultancy Services is an IT services, consulting and business solutions organization that
delivers real results to global businesses, ensuring a level of certainty no other firm can match.
Tata Consultancy Services offers a consulting-led, integrated portfolio of Information
Technology, Business Process Outsourcing, Infrastructure, Engineering and Assurance Services.
This is delivered through its unique Global Network Delivery Model, recognized as the
benchmark of excellence in software development.

A part of the Tata group, India’s largest industrial conglomerate, Tata Consultancy Services has
over 371,000 of the world’s best-trained consultants in 45 countries. The company generated
consolidated revenues of US $16.5 billion for the year ended March 31, 2016, and is listed on the
National Stock Exchange and Bombay Stock Exchange in India. Tata Consultancy Services is
headquartered in Mumbai, operates in 45 countries and has more than 208 offices across the
world. (Tata Consultancy Services- Company Profile)

Corporate governance is the organization of rules, practices and processes by which a fellowship
is steered and manipulated. Corporate governance essentially involves balancing the interests of
a company's many stakeholders, such as stockholders, management, clients, suppliers, financiers,
government and the community. Since corporate governance also provides the framework for
arriving at a company's objectives, it covers practically every domain of management, from
action plans and national controls to performance measurement and corporate disclosure.

Corporate governance is the system by which companies are directed and controlled. Boards of
directors are responsible for the governance of their companies. The shareholders’ role in
governance is to nominate the managers and the attenders and to satisfy themselves that an
appropriate governance structure is in position.

Corporate governance is therefore about what the instrument panel of a company does and how it
determines the values of the company, and it is to be made out from the day to day operational
management of the company by full-time executives.

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Corporate Governance Policy of Tata Consultancy Services

Corporate Governance at Tata Consultancy Services:

Solid leadership and corporate governance have been Tata Consultancy Services hallmark. Tata
Consultancy Services strives to attain a proportion between good corporate governance and
effective operation management to concentrate on overall growth of the organization.

1. Employee Access to the Board

Employees at Tata Consultancy Services are highly empowered; the company’s culture
encourages open communication and puts up several channels for communicating
concerns and grievances. There is a Whistle Blower Policy, with the necessary
mechanism for employees to directly report concerns about unethical behavior to the
Chairperson of the Audit Committee, without fear of reprisal or victimization.

2. Sustainability and Risk Management

Tata Consultancy Services has an Enterprise-wide Risk Management process
administered by a Risk Office that continually identifies threats to the company’s
sustainability. The Risk Office maintains a Risk Register and draws up suitable risk
mitigation plans for each of the risks identified therein. These risks are reviewed by the
Board periodically.

3. Succession Planning
At Tata Consultancy Services, succession planning occurs at every level – at the
corporate level, at the business unit level, at the account level, and even at the project
level.
In these last four decades, Tata Consultancy Services has gone through two CEO-level
transitions, the last one in October 2009. The seamless manner in which that transition
took place is evidence that the Company’s succession planning is working well.
(Corporate Goverance Policy of Tata Consultancy Services)

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4. Remuneration Policy
The Company follows a compensation mix of fixed pay, benefits, and Economic Value
Added Analysis based variable pay based on Economic Value Added Analysis.
Individual performance pay is determined by business performance and the individual
performance of the individuals measured through the annual appraisal process.
Compensation for Non-Executive Directors on the Board consists of sitting fees,
commission, and reimbursement of any out-of-pocket expenses incurred by the Directors
for attending meetings.
Remuneration of the Managing Director and Executive Directors consists of a fixed
component (salary, benefits, perquisites, and allowances) and a performance-liked
variable component (commission).
The Remuneration Committee decides the annual increments within the salary scale
approved by the Members and within the ceilings prescribed under by law.

5. Protecting Minority Shareholders’ Interests

The corporate governance philosophy at Tata Consultancy Services, based on the Tata
Code of Conduct, emphasizes fairness and transparency to all stakeholders. The company
also has a variety of channels through which minority shareholders can interact with the
management / board to express their concerns.
At the Board level, a Shareholders/Investors Grievance Committee of Directors
consisting of two Independent Directors and one Non-independent Director oversees the
redress of these complaints.

6. Ethics and Compliance

The Tata Code of Conduct, which every employee signs at the time of joining the
company, contains 25 clauses that make up a governing framework for responsible
corporate citizenship and ethical behavior.
Customers and suppliers are made aware of the Tata Code of Conduct through specific
clauses in proposals, contracts, contract discussions, and through the Tata Consultancy
Services website.

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Senior managers with access to privileged information, have to comply with an additional
code for the Prevention of Insider Trading. Tata Consultancy Services also has a global
policy to address sexual harassment at the work place.
The Ethics and Compliance Committee oversees Tata Consultancy Services compliance
to the Codes of Conduct to be followed by the Directors, Officers, and other employees.

7. Disclosure and Transparency

Benchmarked against global peers, Tata Consultancy Services discloses significant
operational and financial metrics on a quarterly, half-yearly, and annual basis.
The results are published in leading Indian newspapers, emailed to subscribers, and
posted here. Half-yearly results are also sent to shareholders.
The Earnings Release every quarter is accompanied by a live webcast. There is also a
conference call where Management briefs investors and analysts on the quarter gone by,
and takes questions.
The robust investor outreach program sees Tata Consultancy Services Management meet
investors at our premises or at investor conferences.

8. Independent and Effective Validation

Tata Consultancy Services has an independent third party, Ernst and Young, to oversee
and carry out internal audits of the company’s operations as per an internal audit plan
which is reviewed annually by the Audit Committee in consultation with the Statutory
Auditors.
The external auditors of the company are Deloitte Haskins and Sells, who do not have
any undue dependence on Tata Consultancy Services.

9. Fiscal Oversight
An Audit Committee, consisting entirely of independent, non-executive Directors,
oversees Tata Consultancy Services disclosure process to ensure that sufficient and
credible information is disclosed.

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The committee meets four times a year to approve the quarterly accounts and another
three to four times for an in-depth consideration of internal audit reports.
As an additional governance control on access to the company’s cash, Tata Consultancy
Services has a Bank Account Committee of Directors which approves the opening and
closing of bank accounts and to authorize persons to operate the company’s bank
accounts.

10. Board Oversight of the Sustainability Agenda

The Board of Directors meets seven to eight times a year instead of the statutory four
times. While four of these meetings are for review and approval of financial results, the
remainders are for more detailed oversight of business, strategy, and sustainability
matters.
The CEO is the Director responsible for Sustainability.
Oversight of the company’s sustainability strategy is the responsibility of the
Sustainability Head, the EVP and Global Head of HR. He is supported by the
Sustainability Council and dedicated teams for Corporate Social Responsibility and the
Environment. Their goals are determined by senior management in line with the
company’s overall sustainability objectives, and performance on these two specific
aspects of Tata Consultancy Services sustainability agenda is reviewed by the Board on
an annual basis. A framework to enable the Board's self-evaluation is currently under
review.

11. Intra-Group Transactions

No intermingling of material revenues, employees and resources, including cash, is
allowed among the Group companies.
Independent Directors make up half the Board.
Any dealing with Tata Sons or with a group company is at arm’s length and has to be
approved by the Board.

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12. Avoidance of Conflict of Interest

Conflict of interest between the executive function and the supervisory function of the
Board minimized by making the Chairmanship of the Board a non-executive role
Chairmanship of the Board kept separate from that of the Chief Executive Officer and
Managing Director
Existence of a Code of Conduct for Non-Executive Directors
All employees including the Managing Director and Executive Directors prohibited from
freelancing or accepting any position of responsibility with any other company without
Tata Consultancy Services written approval.

Conclusion
Sound corporate governance makes a lucid set of regulations and controls in which
shareholders, directors and officers have aligned incentives. Most companies strive to
deliver a high degree of corporate administration. For many shareholders, it is not enough
for a company to merely be profitable; it likewise needs to show good corporate
citizenship through environmental awareness, ethical conduct and sound corporate
governance practices. Tata Consultancy Services have a sound governance policy that
they adhere to provide overall growth to the organization.

Bibliography
Corporate Goverance Policy of Tata Consultancy Services. (n.d.). Retrieved from
http://investors.tcs.com/investors/corp_governance/Pages/default.aspx

Corporate Governance of TCS. (n.d.). Retrieved from http://sites.tcs.com/corporate-

sustainability/business-performance-governance#prettyPhoto

Tata Consultancy Services- Company Profile. (n.d.). Retrieved from

http://www.tata.com/company/profileinside/Tata-Consultancy-Services

What is Corporate Goverance? (n.d.). Retrieved from

http://www.investopedia.com/terms/c/corporategovernance.asp

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