Though TCS always enjoyed a higher revenue base but it was Infosys which reported superior operating profit margins (OPM) setting a benchmark for the Indian IT industry. Even this index seems to be undergoing a change. From the second quarter of FY13, TCS has started to report higher margins. At the end of FY14, TCS reported an OPM of 29.1% while it was 25% for Infosys. TCS also has over 3 lakh employees now, which is roughly double that of Infosys which has 1.6 lakh employees on its rolls.
TCS has started FY15 also on a very strong note by recording a 5.5% sequential revenue growth in US dollar terms for the first quarter with volumes growing at 5.7%. Infosys on the other hand grew its revenues only by 2% in the first quarter, with volumes growing by 2.9%. TCS has already stated that it would beat the industry growth guidance of 13-15% in US dollar for the fiscal as projected by Nasscom, while Infosys has retained its revenue guidance at 7-9%.
Pradeep Mukherji, president, Avasant, an IT outsourcing advisory firm, told FE, TCS is one of the most robust companies in terms of their depth in leadership, range of offerings and the extent of geographic reach. Their DNA is completely different.
TCS' revenue is more evenly spread out across the globe with North America dominating the pie at 53%. Most of its peers derive 60% of their revenues from the North American market. It generated 2.3% of its revenue from Latin America, having centres in places such as Brazil, Uruguay, Chile, Colombia, Peru and Argentina. The IT major has also made similar strides into a region like Africa.
Industry observers say that TCS chief executive office N Chandrasekaran who took over this role in October, 2009 has instilled a new dynamism to the company. Chandrasekaran has certainly brought in new level aggression to TCS which we had not seen earlier, said a senior industry executive, who did not want to be identified.
TCS is a cut above the rest in employee retention too despite its employee base crossing over 300,000 with people representing 118 nationalities. At the end of first quarter this fiscal, the attrition rate at TCS was 12% while it was 19.5% in the case of Infosys. Sanchit Vir Gogia, chief analyst & CEO, Greyhound Research, said, Employee retention and their happiness is very important to an IT company as it has a direct bearing on customer satisfaction. Here, TCS has performed really well.
The number of $100 million clients in TCS' kitty stood at 24 for FY14 while it was 13 for Infosys and 10 for Wipro. TCS has also morphed into a company that takes decisions in double quick time. It is also giving certain amount of operational freedom to various units while this has not been the case with many of its rivals, said a senior industry observer.
TCS, Infosys, Wipro and HCL Technologies together account for close to 40% of India's IT services revenues, but the degree of separation between the four have started to tell a story of its own. TCS ended FY14 with a revenue growth of 16.2% in US dollar terms while it was 11.5% for Infosys and 6.4% for Wipro.
Partha Iyengar, vice-president and analyst at research firm Gartner said, It has already started, you cannot talk about Indian services companies as one unit anymore. You have to talk about individual companies and talk about their fortunes in terms of how is it is evolving and how successful or not they are. You will see increasing separation between the companies.