TCS now among top 10 global IT services companies

Tata Consultancy Services (TCS), the country's largest IT services provider, is now also among top 10 global IT services companies.

TCS has moved from the 13th position in 2012 to the 10th spot in 2013, a major gain for an Indian IT company in difficult times.

TCS is estimated to have IT services revenues of $10.1 billion (out of its total revenues of about $12.5 billion) against IBM's $54.4 billion, Fujitsu's $32.1 billion, Hewlett-Packard's $29.2 billion and Accenture $25.4 billion, who lead the list, according to a global ranking compiled by consultancy firm HfS Research.

"Talk to any incumbent western service provider today, and the one making them all tremble from the sub-continent is TCS," Jamie Snowdon, executive VP of HfS Research, said.

It had taken a bit longer than the 2010 deadline that former CEO S Ramadorai set for TCS to break into the top 10 league. This can be attributed to the global financial slump of 2008-09.

But, now that the company has reached there, and considering the fast pace of growth compared to its global counterparts, TCS could further move up the global ranking.

The research compares IT services, and excludes other areas such as BPO, R&D services and software/hardware products. And it uses figures for the four quarters of calendar year 2013.

TCS rose to the 10th spot displacing Montreal-based IT services firm CGI.

Other 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 two - three years, may be at the expense of US IT company CSC. CSC's revenues last year had dropped compared to the year before.

Aggressive targeting of renewals and new business, particularly in continental Europe, was an important factor in driving TCS' assault on the leaders, says HfS. TCS is also often seen as the most flexible service provider on pricing and terms, and has developed a reputation for winning any deal anywhere in the world at any price, if it really wants.

"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," says Phil Fersht, CEO of HfS.

TCS, with an annual revenue of $13.4 billion, also has an extraordinary profit margin, something that's normally difficult to achieve in conjunction with high revenue growth.

For TCS chief executive N Chandrasekaran, Japan and China have proved difficult markets in terms of growth rate. While the company might take some more time to break-even in China, it appears to have put in place a strategy that will help it grab a bigger pie of the $110-billion Japanese IT services market with its joint venture with Mitsubishi Corp's IT arm (See; TCS, Mitsubishi to form new IT services company in Japan).

The deal, expected to be closed by the end of June, gives TCS the scale and size to capture a bigger share of the market.

This merger will take the merged entity's revenues to $600 million - $100 million of TCS' Japan subsidiary and $500 million of ITFC. Besides, the merged entity will have a total of 2,400 associates - perhaps the most by an Indian IT services player in Japan.