Silicon India News

Bangalore: Tata Consultancy Services, Infosys Technologies, and Wipro Technologies will emerge as the next generation of IT service mega-vendors.A Gartner study says that these vendors, which are collectively referred to as ‘India-3’ and are increasingly being considered for strategic service deals, will perhaps replace today’s mega-vendors by revenue – IBM Global Services, Accenture and EDS – in this space by 2011.

Though much smaller in size when compared to the current mega-vendors, these emerging mega-vendors are increasingly competing for the same mega-deals that had been the exclusive domain of the incumbent mega-vendors. The ‘India-3’ have leveraged their strong success with meeting client needs to achieve record growth levels during a long period of time (30 quarters continuously) and have outperformed the incumbent mega-vendors by almost a 3:1 margin in growth rates. The market capitalization of the Indian providers is significantly higher than that of EDS, and almost on par with Accenture that are much larger companies in terms of revenue.

“The emerging mega-vendors have made dramatic progress in the past few years and have more than doubled their revenue in a four-year period, with the 2007 revenue being 2.6 times the 2004 revenue,” says Partha Iyengar, VP and Regional Research Director, Gartner.The emerging mega-vendors have leveraged four critical competencies to achieve their status as emerging mega-vendors. The competencies are: process excellence; world-class HR practices; providing high quality services at a low cost; the achievement of significant and disproportionate ‘mind share’ compared to their actual size.

However, as per the study, it is clear that there is a divide between today’s mega-vendors and the aspiring Indian mega-vendors. The Indian providers will have to address the issue of moving away from resource-intensive revenue growth to a model that provides higher leverage and increases revenue without a linear relationship to head count, which is the situation that exists today.

“There are strong indicators that ‘India-3’ (TCS, Infosys and Wipro) will be the next mega-vendors in IT services. However, to achieve this, the current standing of the India-3 will need to expand quickly to keep pace with the changing client environment for IT delivery in the future,” said Iyengar.