Tuesday, April 22, 2014

TCS (soft)powers India to Premier League

Once upon a time what was good for General Motors was also automatically considered good for America.
We presume the same thing holds true for TCS and India at present.

The rankings are a bit confusing, but whichever way you look (revenues, profit margin, employee count, market cap, growth rate) TCS is doing very well, perhaps only next to IBM.
This is a landmark for Indian IT. The country's largest IT services provider, Tata Consultancy Services (TCS), has broken into the league of top 10 global IT services companies (by revenue), moving from the 13th position in 2012 to the 10th spot in 2013.

"Talk to any incumbent western service provider today, and the one making them all tremble from the sub-continent is TCS," writes Jamie Snowdon, executive VP of research operations at HfS Research, the consultancy firm that compiled the ranking.

TCS is estimated to have IT services revenues of $10.1 billion (out of its total revenues of about $12.5 billion). IBM ($54.4 billion), Fujitsu ($32.1 billion), Hewlett-Packard ($29.2 billion) and Accenture ($25.4 billion) lead the list.

India-based companies Cognizant, Infosys, Wipro and HCL are at the 15th, 18th, 20th and 25th positions, respectively, all of them rising by one to three spots compared to 2012. HfS Research believes that Cognizant could be in the top 10 in the next 2-3 years, may be at the expense of US IT company CSC. CSC's revenues last year had dropped compared to the year before.

"The firm is increasingly being perceived by many today as an alternative provider to the Western Tier 1s, that can come in and fix messy contracts and implementations; it has shown an appetite and willingness pick up a lot of the low-margin, low-value work that seemingly every Western Tier 1 wants out of and make the deals profitable and leverageable across clients," said Phil Fersht, CEO of HfS. TCS also has an extraordinary profit margin, something that's normally difficult to achieve in conjunction with high revenue growth.
Below is a September 2013 report from Forbes magazine. Time sure flies when you are in the (F1) driver's seat.
Mumbai-based Tata Consultancy Services (TCS) and made it the world’s second most-valuable IT services company after IBM. That puts it ahead of rivals like Accenture and Hewlett-Packard.

TCS’ market valuation recently crossed $60 billion, ahead of Accenture’s $50 billion and HP’s $43 billion, but trailing way behind IBM’s $202 billion.

TCS is currently amongst the fastest-growing IT services companies worldwide. TCS’ stock commands a huge premium, trading at around 27 times its profits of the past 12 months, a five-year high, whereas rival IBM trades at 12 times and Accenture trades at 17 times its latest earnings per share. Its share price has spiked over 40% in the past three months.

TCS is notable in terms of employee count and geographical spread. In March this year, its headcount was 276,196 employees. Rival IBM had 430,000 workers at last count, a bulk of them in India. In geographical reach, the North American market – a vital market for India’s outsourcing companies – accounts for half of TCS’ revenues. But a fifth of its revenues come from emerging markets.

TCS is expected to continue to show strong revenue growth. TCS’ CAGR in the past three years leading to FY13 was 22% compared with 13% for Infosys and 10% for Wipro. However, TCS substantially lags behind IBM in revenues and trails Accenture,too.
Link (1): http://www.businessinsider.in/Tata-Consultancy-Services-Joins-Top-10-Global-IT-Services-Companies-Club/articleshow/34076733.cms
Link (2): http://www.forbes.com/sites/saritharai/2013/09/13/indias-tcs-is-second-most-valuable-it-services-firm-globally/

1 comment:

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