IT outsourcing services revenues by India’s top 10 providers crossed $15 billion in 2006, a sneak preview of a survey by Dataquest, an India-based IT publication, reveals. In 2005, the earnings from services exports of these companies were about $11.5 billion. (FY in India is from March-April)
The top three providers (TCS, Infosys and Wipro) contributed $8.7 billion of the $15 billion. Others in the list include Satyam, IBM, HCL, Cognizant, Oracle, Tech Mahindra and Patni. (See Box for details). The top seven positions are the same as the last year’s. Oracle (including I-Flex) and Tech Mahindra are the entrants to the list this time, while Patni has slipped by two positions to number 10.
Tech Mahindra (at ninth position with total revenue of $710 million) posted the highest growth rate of 135% in the year 2006–2007, followed by Cognizant (at seventh position with 83% growth rate) and IBM (at fifth position with 67% growth rate). Tech Mahindra’s growth rate proves that differentiation is key for Tier 2 companies. In 2006 the company bagged a billion dollar outsourcing deal — largest amongst Indian IT service providers — from British Telecom.
Surprisingly, IBM is the only one among the global “Big Six” that made it to the list this year. With an employee base of 55,000 in India, the company has plans of making a six billion dollar investment in India in the next the three years. The list also lacks HP even though its employee strength in its Bangalore, India office is the largest among its offices in the world.
Multiple Strategies
Indian companies are now focusing on multiple strategies to increase their revenue growth rate. One is that they are trying to sell their brand rather than the “India advantage” story as they used to earlier.
Two, almost all companies are beginning to earn a big share of their revenue from the European market. The depreciation of the dollar is beginning to force these companies to look beyond the U.S. as a de-risking strategy.
Three, they are increasingly focusing on bundled IT and BPO services. TCS is only one company to offer such integrated services, and has overtaken Wirpo to become the biggest player in this area.
Four, Indian companies are following aggressive acquisition strategies to add to their skill sets. Wipro’s “string of pearls” acquisition strategy, for instance, is well known. And, as of this writing, there are rumors that Infosys is considering acquiring a stake in the European major, Capgemini.
“To offset the decreasing margin due to the rupee appreciation, companies are now trying out multiple strategies — most commonly geographical diversification focusing on Europe and Russia, and productivity growth,” says Shyamanuja Das, Executive Editor, Dataquest.
Top 10 IT Services Providers
| Rank |
Company |
Earnings from ITO services FY 2007 ($ billion) |
Growth rate (%) |
| 1 |
TCS |
3.90 |
38 |
| 2 |
Infosys |
3.20 |
25 |
| 3 |
Wipro |
2.54 |
39 |
| 4 |
Satyam |
1.42 |
28 |
| 5 |
IBM |
1.20 |
67 |
| 6 |
HCL Technologies |
1.13 |
41 |
| 7 |
Cognizant |
1.12 |
83 |
| 8 |
Oracle India (Oracle + iFlex) |
0.90 |
55 |
| 9 |
Tech Mahindra |
0.71 |
135 |
| 10 |
Patni |
0.63 |
23 |
Source: Dataquest, CyberMedia
