Tata Consultancy Services (TCS), the country’s largest IT services exporter, has regained revenue parity with its nearest competitor Cognizant in the key North American market, after trailing the latter for over three quarters, setting the stage for an interesting battle between the two companies in the world’s largest technology market.
For the quarter ended June, 2014, revenue from North American market for TCS and Cognizant stood at $1,928 million each. At the end of September quarter last year, Cognizant had marginally overtaken TCS in the region and managed to maintain the lead subsequently.
TCS has certainly the edge now given its current growth momentum, with Cognizant having lowered its revenue growth guidance for 2014. TCS, for the quarter ended June, reported sequential revenue growth of 5.5% to touch $3.69 billion. Cognizant, during the same period, registered sequential revenue growth of 3.9% to reach $2.52 billion.
Sudin Apte, CEO, Offshore Insights, an IT research firm, told FE, “TCS has been doing consistently well for quite a while now whereas Cognizant’s performance in the last few quarters has been average going by its own standards in North America.”
He felt that the broad-based approach of TCS in North America, with a presence in a large number of industry segments and a strengthened sales engine, has helped it to sustain the momentum.
In comparison, Cognizant generates the chunk of its revenue from fewer business verticals like BFSI, healthcare, retail and manufacturing. TCS has traditionally generated the highest revenue from the North American market among all India-based IT services providers including Infosys, Wipro and HCL Technologies.
A senior executive of a rival IT services company on the condition of anonymity said, “It is amazing how TCS has performed during the quarter despite its largest business vertical — BFSI — showing flat growth.” He believes that TCS’ superior execution skills is helping it maintain the momentum.
The North American segment, particularly the US, is a key market for the Indian IT industry, accounting for around 60% of the overall export revenue. For TCS, the North America region accounted for 52.2% of its topline and for Cognizant it stood at 76.6% at the end of the June quarter.
However, despite this setback, Cognizant is confident of getting back to its growth momentum. R Chandrasekaran, executive vice- chairman, Cognizant India, had told FE , “We see a healthy demand environment for our services. Our pipeline remains very strong. We are confident of long-term sustainable industry leading growth for Cognizant.”
- P P Thimmaya | Financial Expresss