categories

HOT TOPICS

Subscribe to our Feed

Indian IT Outsourcers Continue to Grow, Way Past $100 Billion

Posted on Wednesday, Feb 13th 2013

According to the National Association of Software and Services Companies (NASSCOM), the Indian IT industry is expected to grow 11%-14% over the year during the current year after surpassing the $100 billion mark last year. Recent results announcement by leading IT players in India saw more mixed results. Players are looking at global expansion of operations and talent pool while focusing on product growth to capture the high-growth market.

TCS’s Financials

Tata Consultancy Services (NSE:TCS), saw Q3 revenues grow 14% over the year to $2.95 billion. Earnings grew 15% over the year to $652 million, ahead of the Street’s target of $595 million. During the quarter, the company hired 17,145 employees and ended it with more than 263,635 employees. Utilization rates grew to 81.7% for the quarter. TCS attributed their strong performance to an increasing client base. During the quarter, they added 31 new clients, and the number of clients contributing more than $100 million in annual revenues rose to 16.

TCS’s Global Expansion

Over the past year, most Indian outsourcers have been looking to expand their geographic footprints. Recently, TCS also strengthened their presence in China to cater to the strong growth in Asian markets. During the past year, TCS earned 7.56% of revenues from Asia, compared with 6.6% a year ago. TCS already has more than 3,000 employees in the country, but plans to “significantly” increase that number. The company is not divulging more specifics about this planned growth, but analysts believe that they are targeting a headcount of more than 5,000 employees in the country by 2014. Besides China, they are also looking at growing operations in Japan, Latin America, Europe, and the Middle East. The last I checked, TCS plans to have 25,000 employees in Latin America by 2015 to cater to the near-shore needs of U.S. customers, as well as servicing Latin American customers.

TCS’s stock is trading at Rs 1,345.05 (~$24.94) with a market capitalization of Rs 2,760 billion (~$51 billion) after having touched a 52-week high of Rs 1,439.80 (~$26.70) in April 2012.

Infosys’s Financials

Infosys (NASDAQ:INFY) too delivered a strong quarterly performance. Q3 revenues grew 5.8% over the year to $1.90 billion, ahead of the Street’s target of $1.85 billion. Earnings per American Depositary Share (ADS), however, fell 5% to $0.76, yet managed to surpass market expectations of $0.74. The company added 53 new clients during the quarter and managed to increase the pricing of their contracts by 1.8%.

They raised their fiscal year guidance to revenues of $7.45 billion for the year, compared with $7.3 billion estimated earlier. The Street was looking for revenues of $7.35 billion. Projected earnings per ADS of $2.97 for the year were in line with the Street’s targets.

Infosys’s Product Expansion

Infosys has been enhancing their product offerings. During the last quarter, they tied up with Microsoft and Gen-i to launch a managed service platform that will simplify deployment, management, and control of cloud services for Australian and trans-Tasman enterprises and government agencies. Powered through the Infosys Cloud Ecosystem Hub, the service will include features such as Microsoft’s messaging, collaboration and virtualization tools, Microsoft System Center, Microsoft Exchange Server, Microsoft SharePoint, Microsoft Lync, and Virtual Desktops.

To cater to growing demand for an improved customer contact center experience, last month the company released AssistEdge. The tool uses intelligent routing algorithm to analyze and direct queries based on features such as problem severity, resolution skill requirement, and geography. The tool also offers self-care technology that helps consumers to solve issues on their own and thus reduce contact center volumes. In addition, it integrates the customer’s issues, which may have been addressed through other channels, so that agents can see the customer’s history and thus provide a better experience.

Infosys’s Talent Pool Expansion

Many Indian IT players are suffering from a dearth of homegrown talent. As a result, they are looking towards international markets to hire talent. Infosys partnered with the government of the state of Minas Gerais to let 39 Brazilian students study at their Mysore campus in India to train on Internet-based technologies. One goal of the program is to help Brazil become more aware of Infosys.

Infosys’s stock is trading at $51.55 with a market capitalization of $29.46 billion. It touched a 52-week high of $60.86 in February 2012.

Wipro’s Financials

Wipro (NYSE:WIT) saw Q3 revenues grew 7.5% to $2.01 billion, marginally ahead of the Street’s targets of $1.99 billion. EPS of $0.13 was in line with the market’s projections and managed to improve 18% over the previous year.

For the quarter, revenues from IT services grew 4.8% to $1.58 billion, with earnings from the segment growing 13% to $327 million. They reported a gross addition of over 2,335 employees during the quarter, ending with 142,905. Customer growth remained strong as they added 50 new customers in the period.

For the current quarter, Wipro expects IT services revenue of $1.585 billion-$1.625 billion.

Wipro’s Talent Acquisition

Like Infosys, Wipro is also experimenting with internship programs to help add to their employee pool. They recently announced the completion of their first batch of Internship Programme in South Africa leading to the addition of 30 interns to work on live IT projects. The move will help them explore the emerging markets and target high-growth opportunities in the African markets.

Their stock is trading at $9.37 with a market capitalization of $22.94 billion. It touched a 52-week high of $11.45 in February 2012.

HCL’s Financials

HCL Technologies (Bombay Stock Exchange – HCLTECH), the fourth-largest player in the market, continued to deliver strong results. Q2 revenues grew 13% over the year to $1.15 billion. Revenue growth was attributed to a more than 10% increase in revenues from both infrastructure services and financial services. Net income of $177 million grew 59% over the year. They signed more than $1 billion worth of total contract value during the quarter.

Analysts were impressed with HCL’s ability to exercise strong cost control to deliver high margin growth. Utilization metrics continued to improve as they inched to 81.9% compared with 81.4% a quarter ago. HCL’s revenue expansion also came in when they reduced headcount from 85,335 a quarter ago to 85,194 at the end of the previous quarter.

Buoyed by their strong performance, their stock touched a 52-week high of Rs 721.30 (~$13.37) in January 2013. It is now trading at Rs 659.50 (~$12.23) with a market capitalization of Rs 471.26 billion (~$8.74 billion).

Hacker News
() Comments

Featured Videos

`