By the Numbers
In India, arguably the best performing among emerging economies in the last couple of years, a growth figure of an industry at 37.2% may still result in some bit of introspection, but by all other global standards, it is simply outstanding! The Top 20 together accounted for 77% of the market, which was an increase from the last years share of 73%. The next 20 accounted for a mere 11.4%.

The growth of the Top 20 accelerated to 44.2%, as compared to 38.7% in FY 06, and 42.7% in FY 05. In fact, this years growth for Top 20 exporters is the maximum in this millennium. Apart from credible performance by the offshore services firms (especially Tech Mahindra and Cognizant), this has been possible because of large ramp-up by IBM and Capgemini.

Contrary to popular perception, the average value of the dollar last year was higher than the previous year. But it has started falling since August 2006 and sharply since March 2007

The New Leaders
The FY 07 also saw the top tier Indian firmsTCS, Infosys, Wiprofirmly establishing themselves among the leading global players in IT services. In fact, the global IT services industrytraditionally categorized across the geographic origins of vendorsthe North American Big Six (IBM, Accenture, HP, EDS, ACS, CSC), the European Big Five (Atos Origin, T Systems, Siemens Business Systems, Capgemini, and BT) and the offshore challengers (TCS, Infosys, Wipro, Satyam, HCL, and Cognizant), has been clearly redefined.

The New Leaders, as many analysts put them, who play by the new rules of the game, irrespective of their origin and size, are IBM, Accenture, TCS, Infosys, and Wipro. Those, which are staking a serious claim to a membership of that club, are Cognizant, HP and Capgemini, while many of the traditional leaders in North America and Europe, though still large in terms of revenue, thanks to long-term infrastructure management contracts and government contracts, have clearly fallen behind. EDS is trying to make a serious comeback.

The New Leaders distinguish themselves by their ability to offer innovative solutions, greater accountability, newer pricing mechanisms as well as their ability to make an impact on business, rather than just lowering cost. But apart from these, one important and tangible difference has been their offshore (read India delivery) strategy. All the New Leaders have a very strong India presence. Apart from the Indian firms, IBM and Accenture have significantly scaled up their India presence (though because of lack of availability of accurate information, we have not ranked Accenture. We have taken its revenue estimates into account).

It is also no coincidence that from the older firms who are trying to transform themselves to break into the new league have started with strengthening their India presenceincidentally with acquisitions. EDS acquired Mphasis and Capgemini acquired Kanbay to beef up the India presence. MphasiS and EDS which have been put separately in this list (as their merger was not completed by last year), together would have ranked at #12, much above where MphasiS with its standalone revenue stands.

If the non-Indian services firms were looking at building depth and breadth in India delivery, the Indian firms, with deep execution capability at home built in, tried to match the traditional leaders in all possible parametersglobal delivery footprint, breadth of services, deal size, and global market access. On many fronts, they succeeded.

While Indian firms had started their global delivery journey and global market access initiatives earlier, last year saw many of them taking steps to move into high value services and beef up deal size. Consulting was an area that all of them entered with multiple objectivesto add value to their IT and BPO offerings; to increase margin; to gain respectability; and to gain access to the client boardroom. Infosys, which was the first to take the plunge, saw its revenues grow more than 50% in FY 07 to reach Rs 500 crore (including the Rs 213 crore of Infosys Consulting); TCS saw its revenues from consulting growing about 79.5%. The growth rates notwithstanding, the Indian IT firms have to go miles before they can gain either that respectability or the size when its margins can make an impact to the overall company margins. In the next two years, DQ expects that this is going to be the most important area of action for Indian companies. TCS has already announced its targets from consulting: $650 mn by 2010.

In deal size too, Indian firms managed to climb up the ladder. HCLs $200 mn deal with Skandia and $70 mn deal with Teradyne; TCS $90 mn deal with Qantas, $140 mn deal with Banco Pichincha, $100 mn deal with Bank of China; Satyams $55 mn deal with Qantas and $200 mn deal with Applied Materials were some of the $50 mn deals announced by Indian firms. Last year also saw the first billion dollar deal coming the way of an Indian company when BT awarded the big contract to Tech Mahindra. TCS signed as many as twelve $50 mn plus deals in the year.

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