TCS, Cognizant lead India’s outsourcing industry in 2015

Tata Consultancy Services and US-based Cognizant have further cemented their positions at the top of the nation’s outsourcing industry in 2015, despite the worst slump in global technology spending since the 2008-09 financial meltdown and top technology consumers increasingly opting to in-source software projects.
The two companies have even snatched market share away from global rivals such as IBM and Accenture in the past year.
Over the past three years, a clear separation has emerged between the leaders and the laggards of India’s $146 billion information technology industry, with the likes of TCS and Cognizant each adding about $5 billion of incremental revenue during the period — nearly thrice as much as Infosys and Wipro.
Incremental revenue, or additional revenue generated in a given period, has become one of the most important benchmarks to track in India’s IT industry as it reflects the competitive strength of a company and its ability to win new contracts. “TCS has scale from past growth in spite of a slowdown this year.
Cognizant is probably the big success story with consistent revenue growth in most quarters and has perhaps established itself as being the most localised — although Cognizant also has the best marketing of the firms and is positioning itself as the most innovative, at least from a thought leadership perspective,” said Jamie Snow don, executive vice president of research operations at HfS Research.
“They have invested in a lot of talent aimed at spinning their thoughts on digital, for example.”
During the 12 months through September 2015, TCS added close to $1.5 billion in incremental revenue over its base revenue of $14.6 billion, while Cognizant added more than $2 billion. These were more than twice the amount of incremental revenue generated by Infosys and Wipro combined.
More significantly, the performances Cognizant, which is US based but has most of its 219,000 employees in India, and TCS also comfortably eclipsed that of global technology behemoths such as IBM and Accenture during the same period, according to data compiled from company reports and regulatory filings. “India’s Top 5 providers have been gaining market share over the last several years.
Within the set, there are growth variations with some growing faster. That said, the battle is now shifting to who can adapt faster to ‘as a service economy.’ This is such a potent shift that can tilt the scales and create a new set of winners in services industry,” said Dinesh Goel, partner and India head at outsourcing advisory and research firm ISG.
TCS, despite having posted relatively modest growth by its own lofty standards over the past four quarters, is still raking in incremental revenue at a faster clip than any of its top-tier Indian rivals, including the closest Indian peer, Infosys, which has shown signs of resurgence over the past two quarters.
Global technology spending is expected to be down by at least 5.5% in 2015, according to technology researcher Gartner.
Over the past five years, the pecking order in the IT services landscape has been disrupted by the emergence of Cognizant, which has overtaken both Infosys and Wipro in terms of revenue and market cap during the same period. For instance, in 2012, Infosys was ahead of Cognizant in terms of overall revenue – cut to 2015 and the landscape looks vastly different. Cognizant has not only overtaken Infosys during the same period, but has now widened its revenue gap with Infosys by nearly $3 billion.
The fight for supremacy in traditional IT services comes at a time when large customers such as Astra Zeneca and Lowe’s are starting to cut back outsourcing and choosing to in-source software development and maintenance projects.