The year 2001 was undoubtedly the toughest year the IT industry faced. With a
bulk of revenues coming from projects in the U.S, its economic downturn had had
a cascading effect on Indian software companies. Delayed projects and downsizing
were common parlance in the last fiscal. Attributing to this were profit
warnings and revised revenue targets by firms. But despite this gloom, there
were a few major IT organizations meeting revised targets and posting figures
much above the industry average.
Stable growth unlike the heady days
The financial results of India’s IT biggies point to interesting facts.
Despite the economic slowdown, major firms like TCS, Infosys and Satyam posted
growth rates much more than the industry average of 29%.
TCS posted revenues of Rs. 4187 crore in financial year 2001, an increase of
33% over the previous year. Satyam Computers posted a 45% growth and closed the
year with a revenue of Rs 1,803 crore. Infosys posted a growth of 37% to end the
year at Rs 2604 crore. Iflex posted revenues of Rs.415 crore, a growth of 43%
over the previous year.
A spokesman from Infosys says, "We had been able to meet our targets
even in an extremely adverse environment by driving volumes, adding several new
clients, having a repeat business as high as 87.6%, and by tight cost control in
virtually all areas.
We had turned the adverse market condition into an opportunity by becoming a
finely aligned, integrated, end-to-end services provider in all key areas of the
IT space".
The chairman of Satyam Computers, Ramalinga Raju says, "Satyam addressed
the situation by strengthening its existing client relationships and on
enterprise solutions. Steps taken to increase customer acquisition and adopt a
range of services have strengthened Satyam’s position as a top-tier Indian IT
services company".
Derisking business
For IT firms the short term is still challenging as slow ramping from new
customers, longer sales cycles, intense competition and price pressures
characterize the market. Some large companies are witnessing an increase in
prospective customers and visits from CEOs / CIOs during the last quarter. A
positive fall-out of the current slowdown is greater emphasis on outsourcing,
off-shoring and recognition of the value proposition provided by Indian IT
service companies.
Surviving |
||
Revenues in rupees crore (FY 2002) |
Year on Year growth rate (%) |
|
Tata Consultancy Services |
4,187 | 33 |
Infosys | 2,604 | 37 |
Satyam | 1,803 | 45 |
Overall Industry Growth rate |
29 |
|
Source: Dataquest |
There is a definite trend of companies beginning to derisk their business.
Previously untapped markets are now being explored. Tata Consultancy Services (TCS)
recently inaugurated its ninth overseas global software development center in
the Uruguayan capital of Montevideo and announced that it would invest $30
million in that center and reach an employee strength of 500 in the next five
years.
TCS recently bagged a contract that industry sources estimated at more than
$100 million spread over two to three years rom General Electric Medical
Systems – possibly the largest software order won by an Indian company.
Companies are beginning to increasingly provide integrated solutions to its
global customers. Service offerings such as consulting, enterprise solutions,
engineering services, embedded solutions, IT outsourcing, systems integration
and bioinformatics are a move towards this direction.
Though it may be a bit early to speculate as to whether the economic revival
has begun, but a clear and focussed approach would definitely differentiate the
winners.
Amit Sarkar in New Delhi