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The Indian IT industry is peculiar. Its export revenue is several times larger than the domestic market. The early movers to IT export are, today, by all means, global companies competing successfully against well-entrenched players in North America and Europe, and taking away the market share. Their success has had two major impacts on how the whole industry has evolved. One, they have inspired many entrepreneurs to try their hands at this opportunity, which, unlike the hardware and package software business, has low entry barriers. Two, they have created a critical mass of engineers and global managers which is available to any new serious player, if it can attract them by promising challenging workthe greatest motivator for Indian knowledge workers.

The result: a large number of new companies have entered the services space. Many of them, especially the late entrants, have tried to differentiate themselves by specializing in niche areas. Many have also succeeded.

No surprise, the DQ Top 200 rankingsprobably the only such ranking available on the Indian IT industry anywhereis a reflection of this "services" phenomenon. As many as 87 (that is 43%) of the 202 companies (we have listed i-flex and CMC without ranking them, as their revenues are counted in Oracle and TCS revenues, respectively) listed in Top 200are services firms, with a predominant majority of them drawing their revenues from exports. Notable exceptions are CMS Computers, Tulip IT Services and Datacraft. In Top 20, the number of IT services export firms is eight. Contrast this to the 1996-97 list. TCS was the only IT services exports firm in the list. Of course, there were no global companies from India then. And that was just 10 years back.

If IT services firms account for the largest chunk of companies in the Top 200 list, the companies that have the biggest play in the domestic marketthe hardware companieshave the second largest presence. That reflects the maturity of the Indian market where hardware is still the largest expenditure on IT. That also explains why the distributors, largely playing on hardware and productivity applications, are the next largest category.

One question we often get from some of the companies who featureand who do notis why we rank both export services companies, product vendors who sell in India, as well as the distributor, together, though their business dynamics are so different, the value that they bring to the business is so different and so on. It is like comparing apples to oranges they say.

We agree. But sometimes, we feel, you do compare apples to oranges, when you are looking at the big picture. And DQ Top 20 is the most comprehensive big picture of the Indian IT industry that you can get anywhere. While we do the overall ranking together, in Vol II we will take up the market segment analyses that will compare apples to apples and oranges to oranges, without double counting them at all.

Exactly 131 companies out of 200 (here we have not counted i-flex and CMC), are headquartered in India and the rest are overseas companies either selling in the Indian market or using India to develop their software or deliver other IT services.

Another parameter to measure the performance is looking at how the cut-off base for Top 20, Next 30, and the Rest 150 companies have moved since last year. The revenue of the 20th company in 2005-06eSyswas Rs 1,567 crore. This time, the revenue of Moser Baer (which occupies the 20th slot) is Rs 2,074 crorean increase of 32%. Similarly, the revenue of the 50th company in 2005-06Honeywellwas Rs 511 crore. That of Xerox India (the corresponding company this year) is Rs 700 crorean increase of 37%. The revenue of the 200th company in the list though has remained more or less the same. That denotes a growing divide.

Entries and Exits
This time we have included several companies who have never featured earlier. That includes services firms Capgemini, EDS India (probably for the last year as well, as the merger with MphasiS is on at the time of writing), Affiliated Computer Services India, and Prithvi Solutions as well as major hardware vendors like LG, Seagate, Quantum, ASUSTek. We also brought in a few smaller products/services companies such as Atrie, KLG Systel, SQL Star, Megasoft, PSI Data, and Educomp. And then, there is the company in a category of its own: Google India.

The notable exits are Celetronix India, Celetronix Power, 3D Networks, Network Solutions, GTL, and eSys. The reason for exit of all except GTL is the same: they have been acquired. While Celetronix has been acquired by Jabil Circuits, a company that does not fall under the scope of DQ Top 20, the new parents of 3D Networks, Network Solutions, and eSySWipro, IBM, and Teledataare all Top 20 companies. This again points to consolidation. GTL has exited the IT space to focus on its core area, telecom.

Top 20: The Leaders
Theres no stopping for the DQ Top 20 juggernaut. The Top 20 companies have crossed yet another milestone. Their combined revenue crossed the Rs 100 bn mark for the first time in 2006-07. Together, they recorded revenues of Rs 126,065 crore, up from Rs 89,045 last yeara whopping 42% growth.

What is noticeable, however, is that their share in the overall pie increased significantly. While they have been doing that consistently for the last few yearsincreasing it from 50% in 2003-04 to 54% in 2005-06this year saw them taking a quantum leap; now accounting for 64% of the Top 200 combined revenue.

Armed with the the i-flex acquisition, Oracle made the biggest jump within Top 20, from #19 last year to #10 this year. Tech Mahindra reentered the club after three years, with a whopping 136% growth. Cognizant also improved its performance by two positions. Teledata, a new entrant stormed into the exclusive club by acquiring another Top 20 company of 2005-06, eSys. But all these changes happened at the bottom of the table. The top nine places remained unchanged.

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