This document summarizes a study of client data from the top five Indian IT vendors - TCS, Infosys, Wipro, Cognizant and HCL. The study found that TCS has maintained its leadership position in terms of revenue growth and number of large clients. While Cognizant grew the fastest over the past six years, it may face challenges ensuring it does not spread itself too thin across industries and geographies. Infosys' leadership position is fading and it needs to show it can execute its strategy in the next few quarters. HCL will need to build out its service offerings and acquire more large deals. The document also briefly discusses other mid-tier and smaller Indian IT vendors.
2. Sudin Apte, CEO & Research Director
At Bangalore, October, 2012
3. EvaluatingTopVendors’ClientData
Premise
With 90% business coming from
their existing clients, study of client
data and its movement is very
important.
Client data behaviour not only
throws up interesting insights, but
also tells possible reasons and its
impact in the long run.
It also indicates vendors’ grip on
accounts and relationships with
key decision makers, and their
ability to sell incremental revenue
that will decide future of these
companies in coming five years.
What we did and why?
Findings from client data
of top five vendors
Understanding their
strengths and issues
Discussions and Q&A
Agenda
4. ResearchMethodology
Studied growth, profitability, detailed client
data and metrics of top Indians over past 8-10
quarters
Interviewed key providers to know their views
and reasoning
Compared and contrasted some of the
findings in competitive situation
Built study findings and our assessment
5. Basics
TCS emerged as first Indian to become 10B IT
services company. Maintained its lead over
peers
Pecking order changed with Cognizant
growing far faster than the peers, increased
its revenue seven times in past six years
All, exceptWipro, grew total client count
6. TCSmaintainsleadershipandpace
Movement of quarterly revenue (million US$) for past 6 quarters
Source – Offshore Insights, company websites
500
1000
1500
2000
2500
3000
Q4 FY11Q1 FY12Q2 FY12Q3 FY12Q4 FY12Q1 FY13
TCS
Infosys
Wipro
Cognizant
HCL
7. Changingpeckingorder
Revenue growth (absolute $ terms and %)over past six years
(LTM revenue in million US$ on ( 31 March 2006 and 30 June 2012)
Source – Offshore Insights, company websites
0%
100%
200%
300%
400%
500%
600%
700%
800%
0
2000
4000
6000
8000
10000
12000
TCS Infosys Wipro Cognizant HCL
LTM revenue on 31 Mar, 2006 LTM revenue on Jun 20, 2012
% Growth in this period
9. Clientdatadebunksvendorgrowthmyths
(orshallwesaypropaganda)
Increase in total client count do not assure
growth
Even growing 100M accounts not essentially
means overall, fast revenue growth
Trends in sub $20M and large deals (50M and
100M annually) show distinct trends
TCS and Cognizant show overall growth, but
Cognizant had to open several new verticals
and geos to get that growth
15. Today’sClientDataDecides Tomorrow’s
Prospects
TCS will continue its growth story, enjoys huge
opportunity
Infosys too, has potential and client base, but
need higher leverage of existing relationship
Cognizant need to ensure it do not spread too
thin, as it opens up newer verticals and geo
HCL will face challenges to add real large deals
as they lack number of services
Wipro has set of challenges it needs to address
on client front
16.
17. Topstrategicthemes
Clients need next level of benefit from IT
firms and various camps prepare for wining
newTech reality
Shift from Ops IT centric business to IP led
business
Age old offshore advantages vanished, but
clients need further saving
Gaps between offshore capability and client
demands – domain, account management,
consultative selling, account management
and relationship sophistication
Increasing role of IP and platform play
18. TataConsultancyServices
Strengths:
Traditional strengths continue – scale, skill, GDM, lower rates
New client centricity model and client partners
Extended service line and domain capabilities to offer high end
services
Good strategy on IP and patents based solutions
Superior automation and productivity initiatives giving next level
of saving
Young, energetic organization
Issues:
New/emerging technology strategy is average and have limited
traction
Still some way to go on Sales and Marketing upgradation,
Our take –
TCS will maintain its leadership position in coming 3 years
19. Infosys
Strengths:
Right strategy and market understanding in BTE
Good domain and consulting capabilities
Superior IP/Platform strategy, investments and traction
Solid BU level strategy for leading BUs serving traditional
services
Issues:
Though leadership position fading away
Uncertainty about leadership and its fall out continues
Lower S&M spend
Our take –
Next two-three quarters are critical for Infosys to show its
ability to execute the strategy
20. Cognizant
Strengths:
Continuity of successful strategy around client centricity
and business focus
Growing brand image attracting clients as well as talent
Higher account level investment and mining capabilities
Focus and commitment to emerging tech (SMAC stack)
Issues:
Positioning of SMAC evolving technical and over emphasis
on emerging technology’s potential
Strategy, while successful, is not updated substantially
Our take –
Next 18 months will decide if Cognizant is able to manage the
growth it is experiencing
21. HCLTechnologies
Strengths:
High energy, aggressive engine
Rapid adoption of emerging models (pricing, engagement)
Good traction on emerging technology and winning deals
around these capabilities
Ent Apps and transformational capabilities
Issues:
Dropping profitability
Limited service line offerings, limited ADM practice
Our take –
Will HCL be successful in building broad service line portfolio
and grow large deals (50M/100M)??
22. Wipro
During the study process,Wipro opted to back
out from the research and do not want to be
featured in the report