Cognizant Topples Infosys as India Inc.’s Second Biggest IT Firm

By Narayan Ammachchi

India’s top five IT service providers – TCS, Cognizant, Infosys, Wipro and HCL – managed to increase their revenue by more than 13 percent in 2012, yet their growth has slowed down considerably for the first time in the past five years, says the research firm Gartner.

Interestingly, Cognizant displaced Infosys to become the second-largest Indian IT services provider with more than $7 billion in annual revenue in 2012.

“Cognizant experienced the highest growth rate among the top five providers with an increase of 20.1 percent in 2012,” said Arup Roy, research director at Gartner. “TCS closed in on the top 10 worldwide market share leader, with less than $1.5 billion separating it from the 10th ranked provider, Hitachi.”

The growth rate of India-based providers has been slowing for some years, but in 2012 this trend was more pronounced, stated the research firm.

The growth rate of India-based service providers is still quite high compared with the growth of the top 10 global IT services providers. What is, however, distinct is that the global top 10 providers are larger in their base revenue and are more diversified than the India-based providers.

“The top five Indian service providers have continuously chipped away market share from the large multinational corporation providers. In the past five years, they have been winning large outsourcing deals (those with a total contract value of more than $100 million),” Roy added.

“There is a strong focus on, and investments in, cloud, analytics, mobility, infrastructure and knowledge processes. India-based providers have become much more aggressive in infrastructure management because it offers them the potential to grow bottom-up within accounts.”

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According to the research firm, most of the India-based firms have formed sales team that goes after deals of more than $35 million in contract value.

Revenue contribution from project-based and staff augmentation deals has continued to decline for the top five India-based providers, and the outsourcing service line component has steadily increased. “They have also made significant strides in developing industry-specific BPO services through acquisitions or organic growth,” Gartner stated in a press release.

Indian providers, according to Gartner, use an integrated approach of applications, infrastructure and BPO. Therefore, they have managed to deliver greater cost savings and drive business value. “This allows them to expand their margins as well,” Gartner noted.