Top 6 India-Based IT Service Providers Outpace Market Growth in 2007, says Gartner

June 12, 2008

Gartner said that the top six India-based offshore service providers, collectively referred to as the ‘SWITCH’ companies (Satyam, Wipro, Infosys, TCS, Cognizant and HCL Technologies), accounted for 2.4% of the total worldwide IT services market in 2007 as compared to 1.9% of the total worldwide IT services market in 2006. Collectively and individually, this group of companies has achieved growth rates that have outpaced the rest of the market. All indications are that the Western European market is the next target growth area for offshore services.

Each of these providers is pursuing growth in the broad-based IT services market. Although the roots of several of these providers were in the application services market, over time each has evolved its coverage of the services market, expanding into a broader base of services, such as infrastructure services.

Mr. Arup Roy, senior research analyst, Gartner, said, “With such strong growth rates that exceed the overall market, the India-based IT services providers are increasing in their competitiveness and taking market share away from the rest of the market. Increasingly they are competing in larger outsourcing deals, with deal values routinely exceeding $100 million and spanning multiple years.”

“While application development and management services remain the bulk of their revenue stream, there is a gradual diversification in other service lines, such as consulting and remote infrastructure management services, where they have experienced high growth. Expansion of service offerings by India-based providers has enabled them not only to build and mine existing accounts, but also to increase visibility as full-service providers”, said Mr. Roy. "Consequently, they are now regularly invited to bid for larger and more-complex outsourcing contracts, requiring multiple services. There is a gradual shift in increasing their revenue share from discrete project based outsourcing services to annuity-based multi-year outsourcing contracts, thereby ensuring ongoing revenue streams. The approach has involved expanding the portfolio of service offerings, tapping new regions and focusing more on high-value services.”

TCS maintains its position as the largest of the India-based IT services vendors worldwide in 2007, rising from a ranking of 35th in 2006 to 28th in 2007 on revenue growth of 34.8% (in terms of US$). While TCS’ growth was slightly below average for this group of vendors at 38% in 2007, it grew more than three times the growth rate of the total market on revenue of $3.8 billion in 2006.