Surprise 1. EDS on Top
EDS, a company reeling under performance pressure for several years, emerges as the top most company in the Black Book’s listing of the top 50 global IT and business process outsourcing (BPO) service providers. In the Black Book’s 2005 listing, the company was at a dismal 44th position, and in 2006 at the 36th. What did it to do right in the last two years to steal the show this year?
What worked well?
Its business and merger strategies worked well, says the report. EDS’ acquisition of MphasiS BPO in 2006 and its venture with Towers Perrin for ExcellerateHRO in 2005 gave a new lease to the company.
In 2006, EDS improved its operating margin significantly, driven by contract execution and a strong focus on productivity and revenue growth. During the same year, new logos accounted for $4.2 billion of the Total Contract Value (TCV) (nearly a 70% increase in new logos from the year prior to 2006), and that year the company’s annual TCV was highest since 2001, an EDS spokesperson told Global Services. EDS also continues its focus on operational excellence and in 2006 achieved productivity improvements of approximately one billion dollars in the areas of process improvements, labor cost management and supply chain management.
Some key successful outsourcing deals in 2006 for the company include Kraft ($1.7 billion), GM ($3.8 billion), and the U.K. Ministry of Defence ($1.27 billion). EDS’ applications revenue grew approximately six percent while its total contract value grew by almost 50% to approximately five billion dollars in 2006.
WNS is another company whose rank shifted dramatically upward this time. The company ranked third (from 26th position in 2006) in 2007. “Four years ago, we were the first to go beyond a call-center focus, and target transaction processing and industry focused BPO services in areas like travel and BFSI, and launch F&A as a key service area,” Neeraj Bhargava, CEO, WNS, told Global Services. “Three years ago, we were the first large BPO company to emphasize KPO. In 2006, we made a big play in mortgage by acquiring Trinity Partners.”
The other companies that made dramatic upward shifts in the Black Book’s listing from 2006 to this year are: Unisys (from 47th to 11th), Wipro (from 40th to 9th), IBM Global (from 35th to 14th), Ness (from 30th to 15th), Capgemini (from 15th to 2nd) and Convergys (from 14th to 6th). See Table for the entire list.
Surprise 2: Cognizant, Perot Systems and Genpact Lose Out
Cognizant slipped 40 positions from its third position in 2006 to 43rd position this year. Perot, too, slipped from fourth position in 2006 to 42nd position this year. Genpact dropped from ninth position in 2006 to 46th this year!
What went wrong?
The reason for Cognizant’s slip, according to the Black Book, is: “Clients do not see the [company’s] plans to deliver business transformation.” While Cognizant remains a good choice for customers wanting maximum cost satisfaction and faster delivery, the company loses out because “Faster and cheaper is less of a driver for clients looking for vendor contributions to their revenue and development growth.”
Perot’s loss is because of the dissatisfaction of its health-care clients. This is unfortunate because Perot’s clients in manufacturing and government gave it top grades in application and infrastructure outsourcing.
Other companies that slipped in 2007 from their 2006 positions are: Genpact (from 9th to 46th position), TCS (from 7th to 27th), Mellon SourceNet (from 10th to 28th), EPAM (from 29th to 44th), i-Flex Equinox (from 18th to 31st), Oracle (from 32nd to 45th), Hewitt (from 37th to 48th), Infosys (from 5th to 10th), Satyam (from 2nd to 5th), ACS (from 1st to 4th).
