Top 3 IT cos see revenue growth despite slowdown

Despite the uncertainty in the global economy, the top three IT majors have seen revenue growth from all important sources of income: from the North American and European regions, in the financial services vertical and from application maintenance and development (ADM) offerings between fiscal years 2008 and 2009.

All of these are bread-and-butter targets for the industry.

(The table shows the basis point change for revenue contribution across geography, verticals and service offerings. For instance, TCS saw Europe’s contribution to revenue increase from 29 per cent to 29.5 per cent, so the increase is 50 basis points – or bps. This article considers chunks of revenue that account for at least more than 50 per cent of total revenues, across geography, verticals and service offerings.)

Interestingly, as seen in the table, Infosys has seen a slump in percentage contribution to revenues across all of the above counts except North American revenues.

TCS saw a slump in percentage contribution to revenues in financial services, while Wipro saw a slump in ADM.

All of this means that while bread and butter services continue to grow, new services, geographies and verticals are growing faster, thus contributing to revenue growth.

The table also shows that while traditional ADM offerings have kept pace with, or even lagged, overall revenue growth, newer services such as BPO and infrastructure services have galloped, especially for Infosys and TCS.

However, percentage contribution from telecom to total revenues has fallen for all three while contribution from Europe has slumped for Infosys and Wipro.

These majors attribute the fall predominantly to the dollar strengthening against the European currencies, though business volumes have also slumped. The top client for both Infosys and TCS is a telecom vendor in the UK.

Infosys has also said that a significant number of its clients have gone for an all-out cost cutting exercise, where they are nipping offshore costs as well. TCS, though, has reported an overall increase in volumes and an increase in offshoring as well.

Infosys has done well particularly in the manufacturing vertical. However, Mr S. Gopalakrishnan CEO and MD, Infosys, told Business Line last week that it is early days yet to talk of a turnaround. He felt that should a major shake-up happen in GM or Chrysler, the ripple effect would be felt across. “Manufacturing is not out of the woods, yet.”