infoTECH Feature

August 14, 2008

Report: TCS, Infosys and Wipro to Become IT Megavendors by 2011

According to a report titled “India-3 Are the Emerging Megavendors,” published by Gartner (News - Alert), three Indian IT services companies, Tata Consultancy Services, Infosys Technologies and Wipro Technologies, will emerge as the next generation of IT service “megavendors.”
To achieve megavendor status, “India-3” companies, as Gartner labeled them, must expand quickly to keep pace with the changing IT delivery environment, Gartner officials said.
Gartner predicted that India-3, in some cases, will replace today’s leading mega IT vendors, such as IBM Global Services, Accenture and EDS (News - Alert), by 2011.
The three emerging IT vendors are increasingly being considered for strategic service deals, said Gartner. Though they are much smaller than current megavendors in terms of revenue, they will compete for the same megadeals that had been exclusive domain of incumbent megavendors, according to the research firm.
Gartner attributes the success of India-3 to four critical competencies: process excellence, world-class HR practices, provision of high quality services at a low cost and achievement of significant and disproportionate ‘mind share’ compared to their actual size.
“The ‘India-3’ have leveraged their strong success with meeting client needs to achieve record growth levels during a long period of time and have outperformed the incumbent megavendors by almost a 3:1 margin in growth rates,” said Gartner.
A statistical analysis done by Gartner shows that market capitalization of India-3 is much higher than that of EDS, and almost on par with Accenture (News - Alert).
According to Partha Iyengar, a vice president at Gartner, the Indian megavendors have more than doubled their revenue in a four-year period, with the 2007 revenue being 2.6 times the 2004 revenue.
“This level of growth differential has continued even as these vendors have become multibillion dollar enterprises. To put this in context, there are just 100 service enterprises globally with more than $1 billion in revenue,” Iyengar said.
To achieve this growth, India-3 companies have made huge investments on their frameworks and aggressively marketed their capabilities. They have acquired a high level of HR excellence and capabilities and created a world-class human resource management infrastructure, said Gartner.
“By combining process excellence to deliver higher quality with the less expensive (and larger) workforce available in India, the India-3 providers were able to create the combination of low-cost, high-quality services, which has proved to be the most alluring factor for clients,” Iyengar said. “These qualities have resulted in a higher level of mindshare among clients and prospects globally that is significantly disproportionate to their revenue and overall size, as compared with the incumbent megavendors.”
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Rajani Baburajan is a contributing editor for TMCnet. To read more of Rajani's articles, please visit her columnist page.

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