Wipro’s revenue growth has raced past Infosys’ for the first time in recent years, marking a new chapter in the contest. In FY15, Wipro recorded 7% revenue growth in dollar terms while Infosys managed a mere 5.6% due to pricing pressure, slow spend in key verticals like energy and telecom and delays in project implementation.
Even in constant currency terms (given the volatility in forex market seen during FY15), Wipro overtook Infosys in terms of overall growth. Viju K George, a senior analyst with JP Morgan, in a note on Infosys, said, “Infosys has its work cut out on revenue growth, especially in the bread-and-butter offerings,” adding, “Infosys has to pick itself up on this, improve its win rates in its pipeline and make revenue growth its overarching goal to keep the faith of investors.”
This new set of numbers is a far cry from FY14 when Infosys recorded 11.5% revenue growth against Wipro’s 6.4%. Both IT majors have been struggling for industry-par growth and have not been able to outperform the benchmarks set by Nasscom. Infosys, under its nine-month-old CEO Vishal Sikka, has been stitching together a revival strategy of “renew and new”, which is expected to get its growth engines buzzing in a new operating environment. On the other hand, for Wipro, it has been a steady climb under the leadership of TK Kurien in the last four years. That said, Infosys still maintains a significant lead over Wipro in overall revenue, the difference being $1.6 billion.
Expectations are, both Infosys and Wipro will post better growth rates in FY16 than last fiscal. Infosys has provided a revenue growth guidance of 10-12% in constant currency terms for FY16. Sikka, during a recent analyst call after the fourth quarter results, said, “I’m confident that the steps that we are taking will get us back to being the bellwether of our industry, to being a next- generation services company, one that delivers innovation for a world that is fundamentally being reshaped by software.”
His counterpart Kurien remained confident of Wipro’s growth momentum in FY16, though he admitted certain sectoral challenges remain, such as oil & gas and BFSI. “Our priority is growth. That is the single thing we sort of focus on as we think about the future, and therefore, we are not chasing margin at the expense of growth,” the Wipro CEO said at an analyst call.
Despite the slowdown, Tata Consultancy Services and Cognizant have maintained industry leading growth rates. TCS closed FY15 with 15% growth and expressed confidence that it would be able to beat the Nasscom guidance of 12-14% for FY16. Cognizant maintained its strong momentum at the end of the first quarter and raised its revenue outlook for 2015 to $12.24 billion from the $12.21 billion%.