All four members of Indian IT's billion dollar club are back as the top grossers of last year. HP is yet again the only MNC in the club. The last decade saw the big four Indian IT services companies really strengthen their positions, seizing every opportunity in the exports space to drive growth. In fact, last year was largely about strategy and each player displayed a unique way to push growth.

The Top 5 groups added up to Rs 49,836 crore in the IT business, as they moved toward the next big individual landmark: $5 bn. After an impressive 41% growth rate in 2004-05, they grew a little less, 29%, last fiscal.

HP was the most diverse of the groups, with operations spanning PCs, peripherals and supplies, enterprise systems and software, and IT and BPO services. Infosys was the most 'focused': basically, a single company in the services exports area, with subsidiaries for BPO and for IT global delivery.

Exports ruled, with offshore IT services and BPO operations stealing the limelight. The Top 5 exported Rs 33,176 crore worth of software and services in 2005-06, some 25% up from a year ago. While exports still remains the growth driver for Indian IT, the domestic market has also been buoyant. The impressive 28% growth last year was based on strong gains for HP India, Wipro Infotech, HCL Infosystems and TCS. The strengthening of the domestic market can be gauged from the growth of HP India, which closed last fiscal at sales Rs 6,905 crore, a growth of 31%.

The story so far has been really impressive for the Top 5, on both fronts-exports and domestic. All five at an individual level grew faster than the industry on both counts.

By rough estimates, the IT industry employed 1.6 mn people (IT and ITeS) at the close of FY 2005-06. The Top 5 employed 236,125 people, which is nearly 15% of the strength of the industry. The top IT companies are today looking at manpower addition to scale up operations

Advantage Branding
Last year was the year of branding and consolidation as the Top 5 adopted different strategies. The HCL Group worked on recreating a common brand HCL, with an eye on the future. Among other things, employees of both HCL Infosystems and HCL Technologies and subsidiaries carry identical visiting cards: a transition from the isolated operation just a couple of years ago. From reinforcing its lineage through the 'Fearless' campaign in 2005, HCL moved to the 'Talking Numbers' campaign in 2006 to help boost its perceived strength especially to the stockmarket, where HCL Technologies has not been faring well, as a global technology and IT services player. The campaign showcases the diversity of the company while consolidating all of it into a single Brand-HCL.

For Infosys, branding was really about consolidating its portfolio of service offerings under one umbrella. Infosys created 'One Infy', a common go-to-market and delivery mechanism for its Top 30 customers. Its account management system was completely restructured and a single window in the form of an engagement manager was initiated for interface with large customers.

Wipro's focus on its consulting business in FY 2005-06 was driven by aspirations of major engagements with large customers. It was mainly about positioning Wipro as a partner, right from the first stage in the lifecycle of the project, as it pushed its 'total outsourcing' services.

Mergers and consolidation happened across the board. TCS completed the much-debated acquisition of Tata Infotech, but did not go beyond that to the several other Tata group IT entities. Besides, Tata Infotech had a significant presence in the SI area, particularly in telecom and defense. Consolidation also happened in the form of JVs signed during FY 2005-06 and the FNS acquisition. Going forward, we could see similar acquisitions in the current fiscal.

Go Global!
The acquisition path was discovered afresh by the Indian services majors, to enter markets and acquire vertical and domain knowledge. Wipro acquired New Logic, an Austria-based company in the semiconductor space with good customer names in Europe. The other two buys were US-based firms, mPower and cMango. With three acquistions in the banking, financial services and insurance (BFSI) space this quarter, TCS seems to have become very active in this vertical. TCS also acquired Comicron in Chile to make a dent in Latin America, where it wants to leverage Comicron's relationships to offer banking solutions in both IT and BPO services.

India's top offshoring giants also looked at strengthening their global delivery model by offshoring. TCS opened offices in Budapest, Hungary and Hangzhou in China. Infosys set up shop in Shanghai, Mauritius and Czech cities, Prague and Brno. Wipro has new offices in Shanghai and Beijing and plans to open soon in Bucharest, Romania.

The last fiscal also witnessed Indian IT majors getting into big-ticket deals. Such as the ABN Amro deal. TCS and Infosys have bagged the $2.2 bn outsourcing deal along with Patni, IBM, and Accenture. In fact, the merger of Tata Infotech with TCS is focused at future multi-year mega deals that may be up for grabs. The TCS-CMC-Tata Infotech combine is expected to leverage its domestic expertise to bid and win mega deals in the future on its own, without a consortium.

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