Stronger Re hits export-heavy Indian IT cos

NEW DELHI, INDIA: The Top 20 IT companies in India recorded a revenue growth of 24 per cent in the financial year 2007-08, compared to 41 per cent in the previous year.

Most of the Top 20 IT firms are engaged in IT services exports.

The Top 20 IT services exporters, however, recorded a growth of 29 per cent compared to a growth of 45 per cent recorded in FY 07.

This has been revealed in Part one of the four-part annual analysis of Indian IT industry by south Asia's largest specialty media chain CyberMedia's flagship publication Dataquest.

A stronger rupee adversely impacted the exports-heavy Indian IT industry in FY 08 when the average value of rupee in comparison to dollar rose 9 per cent with a vast majority of the IT companies still unfazed by a slowdown in the global outsourcing industry.

The DQ Top 20 companies

In the Dataquest listing of the Top 20 IT companies from India, the top seven positions remained unchanged, with TCS, Wipro, Infosys, HP India, IBM India, Ingram Micro and Satyam Computer Services retaining their positions, from No one through seven.

HP India and Ingram Micro derive a major part of their revenues from the sale of computer systems and peripherals, while the others make money from exports of software services; IBM India has significant services--domestic and exports--revenue, as well as systems sales.

Unlike the previous year, there was no major change in the rankings in the top 14 positions with no company moving up or down by more than two places.

The DQ Top 20 Club — the ranking of top IT companies in India by revenue — also saw changes, with three new companies — two of them doing business primarily in Indian domestic market — entering the list, while three exports-led firms made their exit.

Interestingly, all the three new entrants are non-Indian firms — Accenture, SAP and Dell — which replaced three Indian firms, Teledata, Patni, and Moser Baer, which ranks among the Top 10 CD makers in the world.

The most spectacular story is the entry of Accenture India at No 15 (the company was not tracked by the Dataquest study in previous years, even though it was operating in India its development centre for nearly a decade) and SAP India, which rose six positions to be a No 18, driven by a strong performance in the small and medium enterprise (SME) market, that helped it record 84 per cent growth.

Services exports firms constitute 95 of the Top 200 firms

The Dataquest Top 200 Annual Survey, now in its 25th year, reflects the "services exports" phenomenon driving Indian IT. The number of services firms (most of them exports oriented) in the list of Top 200 companies rose to 95 in FY 08 compared to 86 in the previous year.

The Dataquest study notes that despite a rise in the value of rupee, most export services firms managed to maintain their operating margins.

"After three years of strong growth, FY07-08 was a challenging year for the Top 20 companies in several ways, not least of all due to the exchange rate which meant an over 10 per cent hit right away in rupee earnings, for exporters," says Pradeep Gupta, publisher of CyberMedia group. "Yet the fact that the Top 20--especially the exporters--still grew as much as they did speaks volumes about their robustness, domain expertise and maturity."

Uneven growth

Another significant variation in FY 08 from the trend in the last few years was inconsistent growth witnessed in the industry.

While the number of companies witnessing negative growth jumped from three in FY 07 to 14 in FY 08, establishing a record of sorts in recent years; the number of companies that recorded three digit growths, also jumped from seven in the previous year to 13 this year.

"This uneven growth means companies that have differentiated themselves in some way, in a tough year, began to reap the benefits of that strategy," says Prasanto Kumar Roy, chief editor, Dataquest.

"SAP, Dell and HCL Insys, with the highest growth in the DQ Top 20, are examples of this," he added.

Most of the fastest growing companies in FY 08 were specialized firms. For instance Financial Technologies which grew over 674 per cent made hay with software products for financial market; Bartronics' specialization in bar coding solutions got it 321 per cent revenue jump; Prime Focus business went up 257 per cent because of its focus on software for films and entertainment; and KLG Systel topline shot up by 122 per cent because of its focus on products and solutions for the utility sector.

Of the top 20 IT companies that did maximum business in Indian domestic market, 16 were non-Indian firms.

They included HP (Rs 12,672 crore), Ingram Micro (Rs 8,620 crore), Cisco Systems (Rs 5,370 crore), IBM (Rs 4,275 crore), Intel (Rs 3,879 crore), Dell (Rs 3,200 crore), Lenovo (Rs 3,014 crore), Microsoft (Rs 2,937 crore), SAP (Rs 2,575 crore), APC (Rs 2,410 crore), Samsung (Rs 1,804 crore), Acer (Rs 1,749 crore), Oracle (Rs 1,504 crore), Sun Microsystems (Rs 1,456 crore), eSys (Rs 1,342 crore), Seagate (Rs 1,143 crore).