India’s TCS Among Top 10 Global IT Services Cos
The Indian IT industry has a reason to celebrate. The country’s largest IT services provider, Tata Consultancy Services (TCS), has entered the league of top 10 global IT services companies in the world, moving from the 13th position in 2012 to the 10th spot in 2013, replacing GCI, as per the HfS Top 10 IT Service Providers ranking. The company has made records as this is for the first time, an Indian company has made it to the top 10 global ranking.
A sound strategy
According to industry experts and analysts, it is TCS’ aggressive targeting of renewals and new business, particularly in continental Europe, which became an important factor in securing leadership. Many believe TCS is increasingly being perceived by many today as an alternative provider to the Western Tier 1s, who often come up with cumbersome contracts and implementations. By showing the appetite and willingness to pick up low margin, low value work TCS has also proved its mettle with a clear focus on managed services, fixed price projects and has successfully monetized its product group.
A clear vision
In 2002, when TCS clocked the revenues of $1 billion, CEO S Ramadorai had laid out a vision to be among the top 10 by 2010. Analysts believe it took a little longer, partly because of the global financial slump of 2008-09, but the company has finally reached its aimed, growing at a rate, much faster than its global counterparts, the ranking could get better fairly quickly in the years to come.
“Talk to any incumbent western service provider today, and the one making them all tremble from the sub-continent is TCS,” Jamie Snowdon, executive VP of research operations at HfS Research, the consultancy firm that compiled the ranking states.
TCS is estimated to have IT services revenues of $10.1 billion (out of its total revenues of about $12.5 billion). Other players who lead the list include IBM ($54.4 billion), Fujitsu ($32.1 billion), Hewlett-Packard ($29.2 billion) and Accenture ($25.4 billion). While TCS rose to the 10th spot displacing Montreal-based IT services firm CGI, its India-based peers Cognizant, Infosys, Wipro and HCL are at the 15th, 18th, 20th and 25th positions, respectively, all of them went up by one to three spots compared to 2012.
On how TCS improved, HfS says its aggressive targeting of renewals and new business, particularly in continental Europe, was an important factor in driving its assault on the leaders. “TCS is frequently seen as being the most flexible service provider on pricing and terms, and has a developing reputation for winning any deal anywhere in the world at any price, if it really wants,” says Phil Fersht, CEO of HfS noting that it also has an extraordinary profit margin, something that’s normally difficult to achieve in conjunction with high revenue growth.
In this context, while the western counterparts are losing out in the game, mostly because of their high margin, an area where TCS proved to be a differentiator. Moreover, in the recent market conditions, some are finding it difficult to invest in restructuring or technology upgrading and are likely to witness a slump. It is believed that the next Indian player to enter the league in the next 2-3 years is Cognizant, which has maintained margins at the 19% level and is set to join the bandwagon.
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