HCL Tech pips Wipro to become India’s third largest IT firm

Against this, Bangalore-based Wipro reported revenues of $2.02 million revenue from its IT services during the same quarter.

Noida-based HCL Tech on Friday said its dollar revenue rose 0.8 per cent to $2.05 billion in the quarter from the preceding three months. Wipro’s dollar revenue, on the other hand, declined 1.7 per cent sequentially to $2.02 billion in the first quarter.

Last year, Wipro’s full-year revenue totalled $8.06 billion, about $220 million more than HCL Technologies’ $7.84 billion. Azim Premji-led Wipro will need to grow 7.32 per cent this year to retain its third position. Wipro does not give full-year revenue outlook, but considering that the firm has not reported this level of annual growth since 2012-13, when it grew 7.1 per cent, it is unlikely.

Shiv Nadar-led HCL Technologies expects its dollar revenue to grow by as much as 10.4 per cent in the current fiscal, which wouldf take its annual revenues to for FY19 to $8.65 billion.

Wipro has been underperforming for the past few years and HCL Tech’s rise can partly be attributed to this.

Wipro, like HCL Tech has been getting most of its revenue from managing data centres and infrastructure services for clients, but the emergence of cloud computing and the entry of service providers like Amazon has eroded this income.

Nasdaq-listed Cognizant Technology Solutions Corp., which edged past Infosys Ltd in quarterly revenue in the June quarter of 2012, has not been considered in the list as it is only listed in the US.

HCL Technologies’ rise has come on the back of years of underperformance by Wipro and a more aggressive approach in acquisitions. Until a few years ago, both companies used to generate significant business from managing data centres or offering infrastructure services to their clients. That revenue disappeared with the rise of cloud computing and when companies such as Amazon Web Services began offering computing power by the hour (cloud computing).

However, both companies have been investing money to acquire firms that can help them offer new technology solutions. This has proved more beneficial for HCL than Wipro, which has been facing other challenges as well.

Over the last three years, HCL Technologies has invested over $2.1 billion in acquiring companies and licensing intellectual properties from these firms. Wipro, on the other hand, has spent about $1.3 billion in acquiring firms and buying minority stakes in start-ups through Wipro Ventures during this period.