Top 20 Indian infotech firms clock $28 billion in 2006-07says Dataquest survey

That the Top 20 Indian infotech and services firms generated $28 billion in sales thus recording a 42% year on year growth in the fiscal ended March 31, 2007 may not come as a surprise. What may well be surprising is that nearly half of these 20 firms are foreign multinationals.

The global multinationals competing with their Indian counterparts from Indian soil include HP, IBM, Ingram Micro, Oracle, Cognizant, Cisco, Intel, Microsoft and Lenovo. Together, these nine firms employed 144,380 people and notched up revenues of $11 billion (Rs. 49,721 crore). The foreign multinationals recorded a growth 39% over the revenues logged in 2005-06.

This has been revealed by the CyberMedia group's flagship publication Dataquest in its 20 th “DQ Top 20” annual survey of the Indian IT industry. The survey tracks IT industry performance for each fiscal year (the Indian fiscal year is April to March).

Tata Consultancy Services, Wipro and Infosys Top 3:

The Top 3 players--Tata Consultancy Services (TCS), Wipro and Infosys-together with Satyam, HCL Technologies, Teledata Informatics, Redington India, HCL Infosystems, Tech Mahindra, Patni Computer Systems and Moser Baer contributed the remaining $17 billion. The total number of software and BPO employees engaged by these 11 firms added up to 342,000. (Even though BPO revenues are not included in this study). (For detailed revenues in INR and $ refer to Notes below.)

Pradeep Gupta, publisher of Dataquest , recollects that when he started his specialty-publishing house 25 years ago, the Indian IT industry was under a $100 million. Gupta adds, “India's IT industry is now at a mature and respectable size, with healthy growth on a substantial base. And so are the Dataquest Top 20 companies. It was just four years ago that TCS crossed a billion dollars. Now, no less than 12 of the 20 are over $1 billion in sales”.

“These 20 are global multinationals, whatever their origin. They together contributed nearly 64% of the total sales of the Top 200 firms in India, says Prasanto K Roy, Chief Editor of Dataquest.

“From competing as offshore or onsite IT services companies with back offices in India, the Indian services majors are getting truly global, with multiple locations and a mix of manpower, competing with the global majors,” Roy adds.

Software exporters:

The other big multinationals represented among the Top 20 software exporters from India include Capgemini (Rs 1,114 crore, or $247 mn), Aricent (Rs 1,072 crore, $238 mn), Perot Systems (Rs 972 crore, $216 mn) and Syntel (Rs 932 crore, $207 mn).

For the first time leading US firms like EDS (Rs 490 crore, $109 mn), Google (Rs 96 crore, $21 mn) and Affiliated Computer Services (Rs 88 crore, $20 mn) too have featured in the Top 200 list.  ( US$1 = INR 45.05 average for 2006-07; 1 crore = 100 lakh = 10 mn)

Of the Top 20 Domestic companies in fiscal 2006-07, there were 15 global multinationals firms. They together notched up revenues of about $ 10 billion. They included HP (Rs 9,663 crore, $2.145 bn), Ingram Micro (Rs 6,896 crore, $ 1.531 bn), Cisco Systems (Rs 4,203 crore, $ 933 mn), IBM (Rs 3,380 crore, $ 750 mn), Intel (Rs 3,309 crore , $ 735 mn), Lenovo (Rs 2,561 crore, $ 568 mn), Microsoft (Rs 2,270 crore, $ 504 mn), Dell (Rs 2,000 crore, $ 444 mn), APC (Rs 1,897 crore, $ 421 mn), Samsung (Rs 1,811 crore, $ 402 mn), Sun Microsystems (Rs 1,469 crore, $ 326 mn), SAP (Rs 1,260 crore, $ 280 mn), LG (Rs 1,140 crore, $ 253 mn), Oracle (Rs 1,046 crore, $ 232 mn), Acer (Rs 869 crore, $ 193 mn) and Nortel Networks (Rs 846 crore, $ 188 mn).

The Dataquest survey points out to a stark difference between DQ20 and the Forbes/Fortune listings: size. If the DQTop20 adds up to $28 billion, each of the foreign MNCs is several times that size, globally. Two of the DQTop20, HP and IBM, are over $90 billion each, globally. While the largest India-based tech company, TCS, is just approaching $5 billion.

The DQ Top 200 list reflects the “services exports” phenomenon driving Indian IT. As many as 87 (that's 43%) of the Top 200 IT businesses in India are services firms, most of them drawing their revenues from exports. Notable exceptions are CMS Computers, Tulip IT Services and Datacraft. Among the DQ Top 20, the number of IT services export firms is eight. Contrast this to the 1996-97 list, where TCS was the only IT services exports firm in the DQ Top 20. Of course, there were no global companies from India then.

There are companies in the DQ Top 50 with interesting and varied businesses, the study notes. A government entity, IRCTC, manages Internet-based ticket bookings for the Indian Railways, the world's biggest; and NIIT Ltd, a focused training company with global footprint that acquired a US training firm ElementK.

According to Dataquest , Indian IT services firms constitute a large chunk of Top 20 companies that went truly global be it in terms of building delivery capability in other offshore destinations or targeting newer markets beyond the US.

Most firms reported higher revenues from Europe and are making efforts to deepen their engagements. The Europe entry strategy adopted by many IT services firms to accelerate their business growth was rewarded amply with the US dollar weakening sharply, while the Euro and the UK Pound held steady or gained.

The declining dollar is already hitting services exports companies hard. From an average of Rs 45.05 to the dollar in 2006-07, the US currency is down to under Rs 40 to the dollar. This is causing a 5% to 10% hit in rupee revenues to services exports companies like Infosys.

MNCs extend their India presence beyond metros

Large IT services players like IBM and Oracle exported significantly more (out of India) than their sales in India, with IBM exporting Rs 4,880 crore or $1.083 bn vs. domestic sales of Rs 3,380 crore or $ 750 mn and Oracle exporting IT services of over Rs 3663 crore or $ 813 mn vs. domestic sales of Rs 1046 crore or $ 232 mn.

In addition, two more trends were clearly visible across DQ Top 200 firms. One was the focus on the small and medium business (SMB) by all firms. IBM tried to shed its image of “for the big” and succeeded, making close to 35% of its revenues from this segment. So did SAP India. Oracle had close to 4,500 customers by the year-end out of which a significant number was added last year.

All the large companies-IBM, Microsoft, Sun, Oracle-had a clear target of expanding into the deep interiors of India. IBM has set a target of setting up presence in seventeen small cities by the end of 2007. Sun already has built direct presence in state capitals and large industrial towns.

Cisco owes a significant part of its revenues to the IT infrastructure building exercise undertaken by the governments. The domestic IT services business further accelerated last year with IBM bagging mega deals from the cellular operator, Idea and real estate major, DLF. In 2006-07, HP bagged the UCO Bank deal. Services now contribute a significant part to the business of IBM and HP in India.

Note:

Para 2 and 4 above repeated with revenues in INR and $

The global multinationals competing with their Indian counterparts from Indian soil include HP (Rs 11,917 crore, $ 2.645 bn), IBM India (Rs 8,245 crore, $ 1.83 bn), Ingram Micro (Rs 6,896 crore, $ 1.531 bn), Oracle (Rs 4,753 crore, $ 1.05 bn), Cognizant (Rs 4,584 crore, $ 1.02 bn), Cisco (Rs 4,424 crore, $ 982 mn), Intel (Rs 3,760 crore, $ 835 mn), Microsoft (Rs 2,580 crore, $ 573 mn) and Lenovo (Rs 2,562 crore, $ 569 mn).

Tata Consultancy Services, Wipro and Infosys Top 3

The Top 3 players-TCS (Rs 18,698 crore, $ 4.250 bn), Wipro (Rs 13,252 crore, $ 2.942 bn) and Infosys (Rs 13,240 crore, $ 2.939 bn)-together with Satyam (Rs 6,057 crore, $ 1.345 bn), Redington India (Rs 5,022 crore, $ 1.115 bn) , HCL Technologies (Rs 4,930 crore, $ 1.094 bn), Teledata Informatics (Rs 3,802 crore, $ 844 mn), HCL Infosystems (Rs 3,522 crore, $ 782 mn), Tech Mahindra (Rs 2,929 crore, $ 650 mn), Patni Computer Systems (Rs 2,646 crore, $ 587 mn) and Moser Baer (Rs 2,074 crore, $ 460 mn) contributed the remaining $17 billion

The above revenues do not include BPO (or ITES) revenues.

The US dollar averaged INR 45.05 for 2006-07, and declined only in the 2 nd half of 2006-07 and Apr-Jun 2007 quarter to the INR 40 level

©DQC News Bureau