How Infosys, TCS, HCL, Wipro & Cognizant fare against each other

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SD Shibulal, CEO of Infosys EDITORS PICK

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Next week, on January 12, Infosys starts off the quarterly results parade for IT. This is a crucial year for the five IT majors. Pecking orders may get further disrupted. Medium-term fortunes may get Cognizant. decided. ET does a SWOT on Infosys, TCS, HCL, Wipro &
Infosys Technologies

Quarterly

Result

on:

January

12

Strength: Early positioning as high end differentiated player thanks to Nandan Nilekani and NR Narayana Murthy, investors and customers prefer the company for its established processes and predictability. Weakness: Lagging peers in making strategic, 'game-changing' acquisitions, consulting business has not delivered the results, losing price premiums, lost its No.2 position in the US market to Cognizant last year. Opportunity: Best positioned to replicate the Accenture model from offshore, a game-changing acquisition in a new geography could help the company raise its profile. Threat: Ongoing visa abuse case and federal investigations in the US could affect brand and business, management transition from founders to professionals, rival Cognizant could overtake the No. 2 position. Tata Quarterly Result Consultancy on: January Services 17

Strength: Ability to win and execute large, billion-dollar outsourcing contracts, increasingly viewed by customers in the same league as IBM and HP. Weakness: Made progress in commoditised services, but still lags some peers and multinational rivals in high-end consulting offerings. Opportunity: Best positioned among all Indian vendors to disrupt the global league of IBM-HPAccenture. Threat: People-led linear growth means Cognizant can beat it, and there are no visible leaders beyond N Chandrasekaran. That could pose a big challenge.

N Chandrasekaran, CEO & MD of TCS

8 JAN, 2012, 07.42AM IST, PANKAJ MISHRA,ET BUREAU

How Infosys, TCS, HCL, Wipro & Cognizant fare against each other
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HCL

Technologies

Quarterly Result on: January 17 Strength: Shiv Nadar made it aggressive. Vineet Nayar's deal-making capabilities has brought in incremental business higher than rivals. Customers like Boeing and Deutsche continue to give more business, Axon acquisition considered a silver bullet. Weakness: Overly aggressive acquisition brings risks of additional staff in high-cost geographies. Profit margin lowest among all Indiabased vendors, back-office business still in transition. Vineet Nayar, CEO and Vice-chairman of HCL Opportunity: Sacrificing margins should help gain more business. Best positioned to rival TCS in terms of scale. Threat: High-risk contracts could affect cash flow and dent profit. Post-Nayar leadership issue can be a tricky to solve. Wipro

Quarterly Result on: January 20 Strength: Billionairefounder Azim Premji's early alliances with global leaders like Jack Welch helped the company establish its credibility, among the most diversified IT conglomerates with businesses ranging from soaps to hydraulic pumps and embedded software. Weakness: Lags peers in sales and marketing spend and initiatives, lack of articulated strategy and vision, strategy focussed on traditional IT capabilities. Opportunity: New CEO TK Kurien's strategy to create a leaner, sharper organisation could result in more profits and wallet share of large customers, shift from pure tech positioning to a more broad-based vendor focussed on solving business problems. TK Kurien, CEO of Wipro Threat: Life after Premji continues to be a worry, too much focus on cost reduction could come at cost of long-term strategic direction.

Cognizant Quarterly Result on: February 8

Strength: Fastest growing in the business of outsourcing, US-centric model helps in positioning, high wallet share of fewer large customers ensures growth even during crisis, blends IBM's depth with Accenture's front-ending capabilities in its model. Weakness: Nearly 75% of business from the US could turn risky, a laggard in BPO business, also lags peers in infrastructure management business. Opportunity: At this pace, and having overtaken Francisco D'Souza, President and CEO of Cognizant Wipro last year, the company is already setting sights on Infosys' position; TCS could be next, growing Europe business to mitigate US risks. Threat: Pace of growth could cause fatigue among leaders, over-dependency on US could affect prospects during recession, will make for a good acquisition target for an IBM or Accenture in the coming years. TCS/Cognizant Good. Infosys/Wipro Not So Good

$100 mn in fresh business (FB): Big volume FB is a key pointer for IT companies. Between December '10 and September '11 quarters, TCS has had $100 mn FB or more in all four quarters and Cognizant in two quarters. Infosys and Wipro didn't hit that figure in any quarter. Net Headcount Addition: The higher the number of extra people IT companies hire, the better they think they are doing. Between December '10 and September '11 quarters, TCS added 40,000-plus employees, and Cognizant, 34,000-plus. Infosys added less than 20,000, and Wipro, just over 15,000. Attrition Rate: Lower the attrition rate, better, in employees perception, a company's future. TCS and Cognizant have had lower attrition rates than Infosys and Wipro in all the four periods between the December '10 and September '11 quarters.