TCS First Among IT Equals
IN less than three months, Tata Consultancy Services (TCS), India’s largest IT services company, will touch $4 billion (Rs 17,630 crore) revenues (and perhaps breach it), taking it well ahead of peers Infosys and Wipro.
A combination of strategic overseas buys and growth in new markets like Latin America and eastern Europe have put the company on course to its targeted $10 billion revenues by 2010.
Infosys and Wipro also turned in healthy numbers for the nine months of fiscal 2006-2007, but TCS’s $1.1 billion revenues in the third quarter alone gives the Mumbai-based firm a significant lead over its peers.
While TCS CEO S. Ramadorai declined comment on revenue projections for the full year, analysts estimate that the company will comfortably cross the $4-billion mark by March. Bangalore-based Infosys’s revenues are pegged to touch $3.09 billion by the end of the fiscal. Wipro has not given full-year projections, but it expects to clock $685 million revenues in the fourth quarter.
Like TCS, Wipro has also pursued an aggressive acquisitions-led growth strategy this year — it has bought eight companies for $250 million since December 2005.
Infosys remains at the top of the heap in terms of margins — 29 per cent in the third quarter ended December 2006 (TCS’s margins were at 26 per cent). However, TCS’s quarter-on-quarter topline and bottom line growth rates have picked up smartly in the past three quarters and are almost at par with arch rival Infosys (see ‘Staying Ahead’).
However, analysts say that among the Big Three, TCS has the highest percentage of end-to-end contracts and margins are bound to improve.
For TCS, its trademark ‘Six Bubble’ {IT services, business process outsourcing (BPO), engineering and industrial solutions, package enabled solutions, consulting and infrastructure services} strategy seems to be working well so far — the strategy has helped it move into new areas like engineering services, infrastructure management and consulting (see ‘Awake And Hungry’, BW, 21 November 2005).
It expects acquisitions and large contract wins ($100 million-plus) to continue to power growth for the next 18-24 quarters.
A combination of strategic overseas buys and growth in new markets like Latin America and eastern Europe have put the company on course to its targeted $10 billion revenues by 2010.
Infosys and Wipro also turned in healthy numbers for the nine months of fiscal 2006-2007, but TCS’s $1.1 billion revenues in the third quarter alone gives the Mumbai-based firm a significant lead over its peers.
While TCS CEO S. Ramadorai declined comment on revenue projections for the full year, analysts estimate that the company will comfortably cross the $4-billion mark by March. Bangalore-based Infosys’s revenues are pegged to touch $3.09 billion by the end of the fiscal. Wipro has not given full-year projections, but it expects to clock $685 million revenues in the fourth quarter.
Like TCS, Wipro has also pursued an aggressive acquisitions-led growth strategy this year — it has bought eight companies for $250 million since December 2005.
Infosys remains at the top of the heap in terms of margins — 29 per cent in the third quarter ended December 2006 (TCS’s margins were at 26 per cent). However, TCS’s quarter-on-quarter topline and bottom line growth rates have picked up smartly in the past three quarters and are almost at par with arch rival Infosys (see ‘Staying Ahead’).
However, analysts say that among the Big Three, TCS has the highest percentage of end-to-end contracts and margins are bound to improve.
For TCS, its trademark ‘Six Bubble’ {IT services, business process outsourcing (BPO), engineering and industrial solutions, package enabled solutions, consulting and infrastructure services} strategy seems to be working well so far — the strategy has helped it move into new areas like engineering services, infrastructure management and consulting (see ‘Awake And Hungry’, BW, 21 November 2005).
It expects acquisitions and large contract wins ($100 million-plus) to continue to power growth for the next 18-24 quarters.
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