The Billionaire Dozen

The DQ Top 20 companies added up to $28 bn in sales in 2006-07.
And thats at last years average value of the dollar, at Rs 45 (a rupee
higher than the 2005-06 average). This year, at under Rs 41 to the dollar, the
same figure would have been $31 bn.

So these 20 companies make up well over half the Indian IT
industrys revenues. The rest of the pie? Several hundred other companiesor
nearly 20,000, if you count the many dealers in the IT channels. Now, this isnt
an exclusive list: there are overlaps even in the Top 20 (for instance, HP, IBM,
and others sell through Ingram and Redington), and so on, and down the line its
overlaps all the way.

Even so, Indias IT industry is at a mature and respectable
size, with healthy growth on a big base. And so for the DQ Top 20 companies.

Just four years ago, TCS crossed a billion dollars.

Now, no less than 12 of the 20 are over $1 bn in sales.

Half of these 20 are foreign, the rest are India-based, but most
of these 20 are multinationals. From competing as offshore or onsite services
companies with back offices in India, the Indian services majors are getting
truly global, with multiple locations and a mix of manpower, competing with the
global majors.

And the foreign MNCs have ramped up their India ops and
back-ends. So the divide between the two is getting fuzzy.

Even down the line, well beyond the Top 20, many services
companies (including training majors like Aptech and NIIT) have gone global,
with multinational footprints, joint ventures, mergers.

There is of course one big difference still: size. If the
DQ Top 20 adds up to $28 bn, each of the foreign MNCs is several times that
figure, globally. Two of the DQ Top 20, HP and IBM, are over $90 bn each, globally.
While the largest India-based tech company, TCS, is just approaching $5 bn.

And as its clear to all by now, moving from $5 bn to even $10
bn will be very tough with just linear scaling of manpower. HR costs in India
are reaching the level where wage arbitrage wont quite be worth the risks of
offshoring. This steps up the pace required for the move away from our cost
edge, to clear leadership in quality and core competence.

And as the Indian services players grow, they will need to
expand more rapidly to markets beyond the USA. Its good to see many of them
in Europe. Its not so nice to see almost none of them in India, where,
barring TCS, its the foreign MNCs who rule the services market.

Prasanto K Roy

pkr@cybermedia.co.in