Post the recovery in the global economy, Indian IT firms have the opportunity to chart a new growth story. An analysis of their results provides valuable insights on the way forward
Even though he has got himself out of Infosys, it will remain hard for Infosys founder and former Chairman N. R. Narayana Murthy to stay out of public attention. And he makes it even harder due to some of the statements he makes, which may not win popularity awards, but bring us face to face with valid truths that we often try to sneak away from. In a seminar organised by the Project Management Institute a few days back, Murthy lamented on the laid back attitude of Indians, low focus on merit in society and how this affected our work. And around the same week, he was busy drafting a letter to FM Pranab Mukherjee on how delays at immigration were discouraging foreign clients from coming to India, and that IT firms should sponsor world class VIP lounges at airports.
Without a shadow of doubt, the Indian IT sector has been a study in contrast as compared to the economy in general. The sector has registered blistering growth (revenues of Rs.4.38 trillion in FY 2010-11 and growth of 19% yoy as per NASSCOM), generated high employment, developed a powerful export model and also delivered on creating benchmarks in terms of best business practices.
Normally, we describe India’s IT story as TCS, Infosys, Wipro & Cognizant (followed by Mahindra Satyam, HCL Technologies and the rest of them). These four have been often used as the barometers for experts to judge the entire sector and where it is headed.
By that yardstick, there have been a number of mixed signals in the results of these companies for the quarter ended June 2011. And not surprisingly, the ‘basics’ that the Indian IT sector swore by at one point in time are also losing some of their relevance over time and CEOs are often seen talking about inflection points. B&E analyses the broad picture that emerges from these results and also strategic implications for IT companies.
It is known how the results showed a surprising contrast between the performances of Wipro and Infosys on one hand and TCS and Cognizant on the other. Infosys revenues grew by 23% yoy to reach $1.67 billion for the quarter, but net income after tax grew by only 17.8% yoy and declined by 4.5% qoq to reach $384 million. Wipro, on the other hand, posted IT services revenues of $1.41 billion, an increase by 16.9% yoy while net income just increased by 1% yoy to touch $295 million. In the case of TCS, revenues increased by 34.4% yoy to reach $2.4 billion and net income increased by 30.6% yoy to touch $532 million. Cognizant, which beat Wipro in terms of revenues to reach the number 3 position in the quarter, saw revenue rise by 34.4% yoy to reach $1.48 billion and net income reach $208 million, a growth of 20.78% yoy.
Even though he has got himself out of Infosys, it will remain hard for Infosys founder and former Chairman N. R. Narayana Murthy to stay out of public attention. And he makes it even harder due to some of the statements he makes, which may not win popularity awards, but bring us face to face with valid truths that we often try to sneak away from. In a seminar organised by the Project Management Institute a few days back, Murthy lamented on the laid back attitude of Indians, low focus on merit in society and how this affected our work. And around the same week, he was busy drafting a letter to FM Pranab Mukherjee on how delays at immigration were discouraging foreign clients from coming to India, and that IT firms should sponsor world class VIP lounges at airports.
Without a shadow of doubt, the Indian IT sector has been a study in contrast as compared to the economy in general. The sector has registered blistering growth (revenues of Rs.4.38 trillion in FY 2010-11 and growth of 19% yoy as per NASSCOM), generated high employment, developed a powerful export model and also delivered on creating benchmarks in terms of best business practices.
Normally, we describe India’s IT story as TCS, Infosys, Wipro & Cognizant (followed by Mahindra Satyam, HCL Technologies and the rest of them). These four have been often used as the barometers for experts to judge the entire sector and where it is headed.
By that yardstick, there have been a number of mixed signals in the results of these companies for the quarter ended June 2011. And not surprisingly, the ‘basics’ that the Indian IT sector swore by at one point in time are also losing some of their relevance over time and CEOs are often seen talking about inflection points. B&E analyses the broad picture that emerges from these results and also strategic implications for IT companies.
It is known how the results showed a surprising contrast between the performances of Wipro and Infosys on one hand and TCS and Cognizant on the other. Infosys revenues grew by 23% yoy to reach $1.67 billion for the quarter, but net income after tax grew by only 17.8% yoy and declined by 4.5% qoq to reach $384 million. Wipro, on the other hand, posted IT services revenues of $1.41 billion, an increase by 16.9% yoy while net income just increased by 1% yoy to touch $295 million. In the case of TCS, revenues increased by 34.4% yoy to reach $2.4 billion and net income increased by 30.6% yoy to touch $532 million. Cognizant, which beat Wipro in terms of revenues to reach the number 3 position in the quarter, saw revenue rise by 34.4% yoy to reach $1.48 billion and net income reach $208 million, a growth of 20.78% yoy.
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