Info-tech

TCS outpaces rivals in topline growth for June-quarter

Moumita Bakshi Chatterjee Adith Charlie New Delhi/Mumbai | Updated on March 12, 2018 Published on July 20, 2011

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Analysts see ‘differentiated strategies' in the coming quarters







Tata Consultancy Services (TCS) has delivered the highest revenue growth rate within the Tier-1 tech pack, comfortably outpacing rivals Infosys and Wipro during the June quarter.

Analysts say the “differentiation” in the top rung is likely to become even more pronounced in the coming quarters as companies chalk out ‘risk preferences' and place their bets on specific industry verticals.

Separation in Top five

“The next few quarters will see a separation amongst the top five vendors. Start expecting them to show different growth rates, different margin performance and business positioning. We will see differentiated strategies at play,” Mr Amneet Singh, Vice-President - Global Sourcing, Everest Group, said.

TCS – which last week said that demand for technology and business process services was robust notwithstanding global uncertainties – declared a 31.4 per cent year-on-year growth in revenue (in rupee terms) during June quarter. Sequentially too, its topline growth at 6.3 per cent was nearly double the growth rate logged by Infosys, the second largest IT services vendor, which until a few quarters back was a darling of Dalal Street.

“In terms of the topline and the robustness of the business model, the pecking order used to be Infosys, TCS and Wipro. Now the order has changed to TCS, Cognizant and Infosys on the basis of the recent performance,” said Mr Pralay Das, IT Analyst at Elara Capital.

Mr Peter Schumacher, CEO of US-based consultancy firm, Value Leadership Group, ascribes TCS' lead to an aggressive go-to-market strategy and stronger client engagements.

“The competitive intensity is increasing dramatically, and Indian companies need to do more than just restructure their organisations. They must start thinking beyond short-term cost-driven tactics and ask themselves what unique positions they want to hold five years from now,” Mr Schumacher said.

commonalities

Most market watchers agree that while the earnings season has underscored some commonalities– almost everyone talked of macroeconomic uncertainty, pressure on margins on account of wage hikes – the coming quarters will see widening of the chasm. “Companies will highlight 2-3 industry verticals where they want to take a leadership positioning,” said Mr Singh of Everest Group.

Another point of differentiation that will play out in the market is risk preferences of tech vendors. “Some will take up revenue streams that are different from others…where payment is based not on their own performance, but performance of their client,” said TPI partner and MD, Mr Sid Pai.

Published on July 20, 2011
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