But how big is this gap and will these companies be able to retain their lead in the coming quarters? An analysis of the performance of the country's top four IT exporters over the last five fiscal years reveals that TCS and HCL Tech gained over 300-400 basis points in their respective shares of aggregate revenue, while Infosys and Wipro suffered an erosion in their shares.
A keen focus on inorganic growth, an increasing proportion of infrastructure management services in revenue, and effective employee resource management have emerged as key differentiators. The trend is likely to continue in the medium term as Infosys and Wipro scramble to get back on the growth track.
Between FY09 and FY13, the aggregate revenue of the top four companies, including TCS, Infosys, Wipro (IT division), and HCL Technologies, rose by 73% to $29,724 million (approximately Rs 1,61,700 crore). The sharp growth was on account of increased demand that followed restructuring of the banking and finance sector after the financial crisis in 2008.
However, this did not benefit the top IT companies in India equally. Companies such as TCS and HCL Tech, which invested in expanding their reach through acquisitions and by enhancing their deliverables stayed ahead of the competition. At the end of FY13, TCS has increased the share of its revenue in the aggregate revenue of the top four players to 39% from 35% in FY09. The company's top line expanded from $6,015 million to $11,569 million during the period. HCL Technologies improved the share of its revenue by 310 basis points to 15.3%. Its revenue more than doubled to $4,539 million.
Infosys and Wipro, which had been traditionally aggressive in winning new deals until the sub-prime crisis shattered growth in the Western economies in 2008, were not able to retain their momentum after the crisis. In the four years to March 2013, the revenue growth of each of the two lagged the jump in aggregate revenue for the sample. Infosys grew its revenue by 59% to $7,398 million between FY09 and FY13. Its revenue share dropped by 240 basis points to 25% during the period.
Wipro's revenue share fell by 450 basis points, the sharpest among the peers, to 21%. Its revenue grew at the slowest pace of 43% during this period. The performance of these companies in the March 2013 quarter reflects the fact that the divergence is expected to be visible for a few more quarters.
Infosys has given a bleak guidance of 6-10 % growth for FY14 compared with the 12-14% average estimate issued by industry lobby arm Nasscom. Wipro, too, expects revenue to either drop sequentially by 0.5% or grow by 1.6% in the June 2013 quarter.
In sharp contrast, TCS expects to fare better in FY14 as compared to its performance in the previous year. HCL is betting big on large transformational deals. Considering this, both the companies are expected to grow at a faster clip compared to Infosys and Wipro.
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