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.
The After Exports |
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
The |
|||
Group |
Revenue (Rs crore) |
Growth |
|
2004-05 |
2005-06 |
||
Tata |
11,187 |
14,269 |
28 |
Wipro |
7,698 |
10,209 |
33 |
Infosys |
7,131 |
9,521 |
34 |
HP |
7,095 |
9,075 |
28 |
HCL |
5,396 |
6,762 |
25 |
Total |
38,507 |
49,836 |
29 |
Total Industry size |
122,710 |
164,652 |
34 |
Contribution by Top |
31% |
31% |
 |
Source: DQ estimates                    CyberMedia Research |
|||
The top five groups retain command over 31% of the industry. However, a lowered growth rate is not necessarily a sign of slowdown, it could be the sign of a maturing market |
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.
Top |
||||||||
 |
Domestic |
Exports |
||||||
Rank |
Company |
Total Revenue |
Revenue (Rs crore) |
Growth |
Revenue (Rs crore) |
Growth |
||
2005-06Â |
2004-05 |
2005-06 |
2004-05 |
2005-06 |
||||
1 |
Tata |
14,269 |
2,211 |
2,242 |
1 |
8,976 |
12,027 |
34 |
2 |
Wipro |
10,209 |
2,021 |
2,759 |
37 |
5,677 |
7,450 |
31 |
3 |
Infosys |
9,521 |
134 |
544 |
306 |
6,997 |
8,977 |
28 |
4 |
HP |
9,075 |
5,271 |
6,905 |
31 |
1,824 |
2,170 |
19 |
5 |
HCL |
6,762 |
2,410 |
3,524 |
46 |
2,986 |
3,238 |
8 |
 |
Top 5 Total |
49,836 |
12,047 |
15,973 |
33 |
26,460 |
33,863 |
28 |
While export revenue growth drops to 25%, domestic market revenues remain fairly stable at 45% for the top five. Interestingly, Infy's domestic revenues grow by 306% which shows that the export major is moving away from its export-only revenue model and is trying to make a dent into a more promising domestic IT market |
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.
Stable |
|||
Rank |
Company |
Revenue |
Rank |
1 |
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