Top 6 Indian players outrun global growth

June 13th, 2008 admin Posted in Uncategorized |

SOURCE: LiveMint
DATE: June 13th, 2008

Mohit Soapbox:
The pace of growth of Indian vendors has outpaced growth of their western rivals specially as the european firms are struggling to go global
and have seem to faltered on their growth strategy. The growth for Indian firms has been also more manageable as their core offerings have been IT Development and Maintenance based and only over the last year the firms have started reducing their pure IT outsourcing dependence and getting into other areas - remote infrastructure management, consulting, specialized BPO etc.. What it does do though is put the vendors in direct competition with their larger rivals - Accenture, IBM which have had strong consulting practices and client shore presence. The growth in non core areas for Indian IT vendors does have the potential of creating a downward trend for margins as the additional areas the firms are looking at are traditionally low margin businesses. It will be also interesting to see how these firms go more global in their operating model. Not necessarily have people working all across the globe but create a brand which folks look at broader than India. Interesting to see that the top siz firms still have about only 3.6% of US IT services revenue and 1.9 % of Europe IT services revenue. Still a potential to increase penetration in these geographies.

 

ARTICLE

India’s top six IT firms have grown four times faster than the global IT services industry, grabbing a larger share of the market in 2007, says research firm Gartner Inc. The so-called switch companies—Satyam Computer Services Ltd, Wipro Ltd, Infosys Technologies Ltd, Tata Consultancy Services Ltd (TCS), Cognizant Technology Solutions Corp. and HCL Technologies Ltd—increased their share to 2.4% of the $748 billion market in 2007, up from 1.9% in 2006, Gartner said. “Indian vendors are increasing their competitiveness and taking market share away from the rest of the market,” said Arup Roy, senior research analyst at Gartner.The global IT service market grew 10.5% in 2007 over 2006’s $677 billion, but the “switch” companies outpaced growth both together and alone, posting an average growth of 43%, the advisory firm said.TCS, while maintaining its position as the largest Indian IT firm, rose to the rank of 28 in 2007, from 35 in the previous year, on revenue growth of 34.8% in dollar terms. While TCS’s growth was slightly below the average of this group, it grew more than three times faster than global market growth on revenue of $3.8 billion in 2006. International Business Machines Corp., Electronic Data Systems Corp. and Accenture Ltd topped the charts in 2007. Although the “switch” companies continued to earn the bulk of revenues by developing applications and providing maintenance services, they also diversified into consulting and remote infrastructure services, in which they saw high growth, Gartner said. “The expansion of service offerings by the Indian firms has enabled them not only to build and mine existing accounts, but also to increase visibility as full service providers,” Roy said. “Consequently, they are now regularly invited to bid for larger and more complex outsourcing contracts requiring multiple services.”The “switch” firms accounted for 3.6% of the US IT services market in 2007, compared with 2.8% in 2006. They also grew their European earnings by half in 2007, accounting for 1.9% of the region’s IT services market.

TCS, Wipro and Infosys are now among the top 50 IT service providers in western Europe. “Indian vendors have a conclusive lead in this area against other traditional IT service providers,” Roy said.

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