Cognizant tops, TCS second, Wipro last among top 5 in 2011

Infosys and Wipro got left behind in the growth scene in 2011, while Cognizant blasted the others with its explosive growth.

Tata Consultancy Services Ltd (TCS), the biggest Indian IT services provider, was the second-fastest growing among the top 5 – these are the results of the 2011 IT services market survey by Gartner.

Overall, there was good news for the Indian IT services industry as the bigger companies grew much faster than they did in 2010. The top five grew nearly 24% on average — more than three times as much as they did in 2010.

Three out of the top five improved their global rankings in the IT services industry. TCS remained the top Indian IT services company and saw its global ranking improve from 21 to 16 in 2011, compared to 2010. IBM is the biggest IT services company in the world.

The growth of the Indian companies was because they continued to take business away from the (often costlier) multinational competitors, Gartner said.

““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 increasingly winning large outsourcing deals with a total contract value of more than $100 million,” said Arup Roy, principal research analyst at Gartner.

As expected, and as has been happening for the last 2-3 years, Cognizant beat others hollow when it came to revenue growth. However, this time, it was followed closely by TCS.

Hit by management issues, Wipro Ltd finished the last among the top five, with a growth of just 12.3%.

While Cognizant grew 33% and TCS 29.4%, Infosys Ltd could only manage only a 17.8% growth.

Noida-based HCL Technologies, was at the mid-point among the top five, growing 26.2%. (see chart below.)

Roy said the spectacular growth of the top guns in the industry was a result of their cross-selling abilities and integration of various services such as BPO.

“Their target customer segment still remains the Fortune 1000 companies, which is their ‘sweet spot.’ However, in recent years, these top five providers have greatly expanded their service portfolios and have been cross selling and up selling their application services client base with offerings such as infrastructure services, business process outsourcing (BPO) services, cloud and analytics services,” Roy said.

In addition, the economic troubles have helped open up the mindset of European companies to outsourcing, particularly from India, Roy said.

“2011 signaled a change in the mind-set of European buyers, particularly Continental Europe for offshore services. Indian providers have historically found it more difficult to gain market share in the Western Europe IT services market than in the U.S. market, but, as a group, the top five increased market share in the region from 2.3 percent in 2010 to 2.8 percent in 2011,” he said.

The year also saw the trend of the bigger IT companies continuing to pull themselves away from the small companies in India.

“The Tier 1 providers dramatically outperformed the growth rates of Tier 2 and Tier 3 providers, despite the consolidation and acquisitions among some of the smaller firms. There were some standouts, however, with Genpact up 27 percent and Syntel up 21 percent. Smaller providers were charged with creating a more compelling marketing message that went beyond labor arbitrage,” Gartner said.

IT services is one of the three parts of information technology, with the others being IT hardware and IT software. India has strong branding in the services (maintenance, deployment, outsourced software design etc.), but very poor presence in the hardware and software business.