One big feat that the DQ Top 20 members were able to achieve in 2004-05 was that they managed  to expand their hold on the Indian IT industry. Fiscal '04 saw the DQ Top 20 companies at a share of 50%-Rs 46,279 crore-when the total industry size was Rs 92,924 crore. This share went up to almost 52.6%-Rs 65,329 crore-in a total industry size of Rs 124,039 crore next fiscal. In fiscal '06 they gained yet some more, and now control 54.08% of the market-Rs 89,045 crore-out of an industry total of Rs 164,652 crore. This effectively means that the existing Top 20 players put up an even better performance in the year 2005-06. And they continued to work not just harder, but a lot smarter! Obviously, a better growth rate was the prime reason for this consolidation. The Top 20 grew 36%: from Rs 65,329 crore in 2004-05 to Rs 89,045 crore last fiscal, whereas the industry grew only 33%-from Rs 124,003 in 2004-05 to Rs 164, 652 crore last fiscal.

Shake-up in the Club
While the big brothers beat the smaller players in terms of market share consolidation and growth, there were quite a few significant upsets in the Top 20 hierarchy. Among the top 5 players-TCS, HP and IBM managed to retain their ranks. Wipro beat Infosys to take the #2 slot, after TCS. However, the next 6 ranks saw quite a bit of up and down: Satyam was pushed to #7 by Ingram, which moved up from its #17 place last year after acquiring Tech Pacific to #6. The other distribution giant, Redington, also moved up to #9 from its #11 position in 2004-05 to dislodge Intel and Cisco.  Another distribution giant, eSys, managed to find its way into the Top 20 club.

TCS however continued to increase the lead margin: in 2004-05 it was Rs 2,742 crore ahead of its nearest competitor Infosys; but last year it increased its lead with Wipro, the next in line, by Rs 3,692 crore. Infosys has managed to reduce the gap with #2, Wipro, and, on the same lines, HP has narrowed the gap with Infosys.

Beyond the Top 6, Cisco moved from #11 in 2003-04 to #10 last year, and Intel fell down two ranks to become #11. Lenovo entered the Top 20 club, not by riding on IBM's PC business legacy (normal growth on that business of the previous year would have placed it in the low thirties in rank) but by ramping up by well over 200%, beating IBM's past performance hollow. Samsung, despite the management shakeup (its former IT business head is in jail) managed to move up. On the software side, Microsoft jumped a few rungs on the ladder to #14, up from #19 the previous year, and Cognizant moved up from the 16th slot to #13. Oracle moved down one place. There were two exits: Tech Pacific and i-flex; their exits had less to do with performance and more to do with mergers and acquisitions.

OVERVIEW Top 20 Club 2005-06 The New Faces Ten Years of DQ Top 20 Big Deal? The Year's Large Orders Consolidation: Acquisitions, Mergers & JVs

Software exports focused companies, among the DQ Top 20, had outperformed hardware vendors and distributors in 2004-05, and they continued this trend last year too. The distribution players starred too: One mega-merger happened; and another of them entered the Top 20, growing their share of the club from 11% to 13%.

However, if we look at the next 30 companies after the DQ Top20, there were quite a few non-software players who showed amazing growth, such as Xenitis, Dell, APC, and Redington. Among the entire lot of India's Top 200 players, Red Hat clocked the fastest revenue growth of 423%, even though it was on a small base of Rs 26 crore. But Red Hat's success story has made a lot of players sit up and take notice. Another high growth player was Polycom at 104%, and because it deals in conferencing solutions, its performance was worth taking note of. Only 6 among the leading 200 IT players had negative growth last year including the famous Tally, whose success story otherwise is the cause of envy for lots of financial management solution players.

Finally, among the Top 200 IT players in the country, when one compares the domestic versus exports focus players, and their respective positions, one will see more shifts as the Indian market grows faster and becomes bigger. An emerging trend to support this is the increasing number of channel players, which have emerged in the list of India's Top 51 to 200 IT companies. They are making money not just by box pushing, but by offering value added services such as network and systems integration involving security, storage, and even network management solutions. As markets in B & C category towns grow, we will see more push coming from these players to move up the DQ list of the country's Top 200 companies.

If we take buyers' perspective, it's evident that more small and medium enterprises (SMEs) in the smaller cities prefer to buy IT solutions from vendors that are close to them. The reason for this is that they want assured and personalized services from the vendors with the objective to run their IT operations smoothly. Though many bigger vendors are expanding their operations in smaller cities either directly or through their channel partners, generally their offerings are unaffordable for user organizations that are planning to introduce or augment IT infrastructure. Plus, users argue that the bigger players are not able to provide frill-free solutions, which are supposed to be economical.

To exploit this demand-supply situation, more independent solution providers are mushrooming in B & C category cities. However, the market can only be termed as fluid, as most of these vendors are not fully qualified to deliver the entire range of services to the user companies. Most of these vendors are trying to become solution providers by expanding their operations from the consumables sales. So the onus is now on IT managers to identify the genuine suppliers and select the right solutions. This may be the reason that most buyers prefer tailor-made solutions as opposed to of-the-shelf ones hawked by bigger players. So this is an alarming situation for the top IT companies, as it'll be an uphill task for them to penetrate in the small business segment, which, in fact, holds enormous potential.

So it'll be good for the Top 200 players if they take the channels route to expand their reach among the smaller users. However, it may not be easy for them to offer economical solutions satisfying varied demand. But they can adopt innovative concepts like mass customization to pull off economies of scale. Plus, they need to strengthen the hands of their channel partners who could offer even high-end services effortlessly to customers. Channels should also be given the freedom to negotiate price and support issues with the buyer organizations. That will help the Top 200 companies leverage the potential in the geographically dispersed markets.

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