Offshore Insights Research - Vendors' Client Data Decides Future


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Offshore Insights in its recent eight quarter study of Top Indian Vendors did a qualitative analysis of their current standing based on the size of accounts they added during this period, as well as predicted what lies ahead for them in coming 12-18 months.

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Offshore Insights Research - Vendors' Client Data Decides Future

  1. 1. Research | Strategy | Advisory
  2. 2. Sudin Apte, CEO & Research DirectorAt Bangalore, October, 2012
  3. 3. EvaluatingTopVendors’ClientDataPremiseWith 90% business coming fromtheir existing clients, study of clientdata and its movement is veryimportant.Client data behaviour not onlythrows up interesting insights, butalso tells possible reasons and itsimpact in the long run.It also indicates vendors’ grip onaccounts and relationships withkey decision makers, and theirability to sell incremental revenuethat will decide future of thesecompanies in coming five years.What we did and why?Findings from client dataof top five vendorsUnderstanding theirstrengths and issuesDiscussions and Q&AAgenda
  4. 4. ResearchMethodology Studied growth, profitability, detailed clientdata and metrics of top Indians over past 8-10quarters Interviewed key providers to know their viewsand reasoning Compared and contrasted some of thefindings in competitive situation Built study findings and our assessment
  5. 5. Basics TCS emerged as first Indian to become 10B ITservices company. Maintained its lead overpeers Pecking order changed with Cognizantgrowing far faster than the peers, increasedits revenue seven times in past six years All, exceptWipro, grew total client count
  6. 6. TCSmaintainsleadershipandpaceMovement of quarterly revenue (million US$) for past 6 quartersSource – Offshore Insights, company websites50010001500200025003000Q4 FY11Q1 FY12Q2 FY12Q3 FY12Q4 FY12Q1 FY13TCSInfosysWiproCognizantHCL
  7. 7. ChangingpeckingorderRevenue growth (absolute $ terms and %)over past six years(LTM revenue in million US$ on ( 31 March 2006 and 30 June 2012)Source – Offshore Insights, company websites0%100%200%300%400%500%600%700%800%020004000600080001000012000TCS Infosys Wipro Cognizant HCLLTM revenue on 31 Mar, 2006 LTM revenue on Jun 20, 2012% Growth in this period
  8. 8. All,exceptWipro,grewtotalclients(netno.)consistently30040050060070080090010001100Q2FY11Q3FY11Q4FY11Q1FY12Q2FY12Q3FY12Q4FY12Q1FY13TCSInfosysWiproHCLCognizantGrowth of total number ofActive Clients in last two yearsSource – Offshore Insights, company websites
  9. 9. Clientdatadebunksvendorgrowthmyths(orshallwesaypropaganda) Increase in total client count do not assuregrowth Even growing 100M accounts not essentiallymeans overall, fast revenue growth Trends in sub $20M and large deals (50M and100M annually) show distinct trends TCS and Cognizant show overall growth, butCognizant had to open several new verticalsand geos to get that growth
  10. 10. Everyonegrew$1millionclients,thoughTCSandHCLwerefasterinthelot250300350400450500550Q2 FY11Q3 FY11Q4 FY11Q1 FY12Q2 FY12Q3 FY12Q4 FY12Q1 FY13TCSInfosysWiproHCLTotal number of clients that give more than $1 million businessin preceding 12 monthsSource – Offshore Insights, company websites
  11. 11. HCLandTCScontinuedtheirMarchin$5Mclients slab100120140160180200220240260280Q2FY11Q3FY11Q4FY11Q1FY12Q2FY12Q3FY12Q4FY12Q1FY13TCSInfosysWiproHCLTotal number of clients that give more than $5 million businessin preceding 12 monthsSource – Offshore Insights, company websites
  12. 12. 406080100120140160180Q2FY11Q3FY11Q4FY11Q1FY12Q2FY12Q3FY12Q4FY12Q1FY13TCSInfosysWiproHCL…HCLandTCScontinuedtheirMarchin$10MclientsslabaswellTotal number of clients that give more than $10 million businessin preceding 12 monthsSource – Offshore Insights, company websites
  13. 13. InfosysandTCSgrewin$50Mclients,HCL,Wiprostartedsaturating05101520253035404550Q2FY11Q3FY11Q4FY11Q1FY12Q2FY12Q3FY12Q4FY12Q1FY13TCSInfosysWiproHCLTotal number of clients that give more than $50 million businessin preceding 12 monthsSource – Offshore Insights, company websites
  14. 14. TCSsurpassedeveryoneinlargedeals ($100M+)0246810121416Q2FY11Q3FY11Q4FY11Q1FY12Q2FY12Q3FY12Q4FY12Q1FY13TCSInfosysWiproHCLTotal number of clients that give more than $100 million businessin preceding 12 monthsSource – Offshore Insights, company websitesNote – Numbers are small and may vary quickly
  15. 15. Today’sClientDataDecides Tomorrow’sProspects TCS will continue its growth story, enjoys hugeopportunity Infosys too, has potential and client base, butneed higher leverage of existing relationship Cognizant need to ensure it do not spread toothin, as it opens up newer verticals and geo HCL will face challenges to add real large dealsas they lack number of services Wipro has set of challenges it needs to addresson client front
  16. 16. Topstrategicthemes Clients need next level of benefit from ITfirms and various camps prepare for winingnewTech reality Shift from Ops IT centric business to IP ledbusiness Age old offshore advantages vanished, butclients need further saving Gaps between offshore capability and clientdemands – domain, account management,consultative selling, account managementand relationship sophistication Increasing role of IP and platform play
  17. 17. TataConsultancyServices Strengths: Traditional strengths continue – scale, skill, GDM, lower rates New client centricity model and client partners Extended service line and domain capabilities to offer high endservices Good strategy on IP and patents based solutions Superior automation and productivity initiatives giving next levelof saving Young, energetic organization Issues: New/emerging technology strategy is average and have limitedtraction Still some way to go on Sales and Marketing upgradation, Our take –TCS will maintain its leadership position in coming 3 years
  18. 18. Infosys Strengths: Right strategy and market understanding in BTE Good domain and consulting capabilities Superior IP/Platform strategy, investments and traction Solid BU level strategy for leading BUs serving traditionalservices Issues: Though leadership position fading away Uncertainty about leadership and its fall out continues Lower S&M spend Our take –Next two-three quarters are critical for Infosys to show itsability to execute the strategy
  19. 19. Cognizant Strengths: Continuity of successful strategy around client centricityand business focus Growing brand image attracting clients as well as talent Higher account level investment and mining capabilities Focus and commitment to emerging tech (SMAC stack) Issues: Positioning of SMAC evolving technical and over emphasison emerging technology’s potential Strategy, while successful, is not updated substantially Our take –Next 18 months will decide if Cognizant is able to manage thegrowth it is experiencing
  20. 20. HCLTechnologies Strengths: High energy, aggressive engine Rapid adoption of emerging models (pricing, engagement) Good traction on emerging technology and winning dealsaround these capabilities Ent Apps and transformational capabilities Issues: Dropping profitability Limited service line offerings, limited ADM practice Our take –Will HCL be successful in building broad service line portfolioand grow large deals (50M/100M)??
  21. 21. WiproDuring the study process,Wipro opted to backout from the research and do not want to befeatured in the report
  22. 22. Interesting“Midtierandsmall”playersMahindra Satyam +Tech MahindraGenpactiGateHexawareL&T InfotechMindTreeKPIT CumminsPersistentSyntelSynechron
  23. 23. ThanksResearch Garage, 12 Shailesh Society,Ganesh Nagar, Pune – 411 052, INDIAEmail – sudin@offshoreinsights.comPhone – (020) 2545 9851 / 9852