Hard Facts on Software Giants   1 comment


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 decided.Pankaj Mishra does a SWOT on Infosys,TCS,HCL,Wipro & Cognizant

Infosys

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,gamechanging 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

TCS

Quarterly Result on January 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 highend consulting offerings
Opportunity

Best positioned among all Indian vendors to disrupt the global league of IBM-HP-Accenture
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

HCL

Quarterly Result on January 17
Strength
Shiv Nadar made it aggressive.Vineet Nayars 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 India-based vendors,back-office business still in transition
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
Billionaire founder Azim Premjis 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 Kuriens 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
Threat

Life after Premji continues to be a worry,too much focus on cost reduction could come at cost of longterm 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 IBMs depth with Accentures 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 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.

Infy/Wipro Not So Good

$100mn
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.Infy and Wipro didnt 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.Infy added less than 20,000,and Wipro,just over 15,000.

Attrition Rate
Lower the attrition rate,better,in employees perception,a companys future.TCS and Cognizant have had lower attrition rates than Infy and Wipro in all the four periods between the December 10 and September 11 quarters.

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Posted January 8, 2012 by avinash2060 in Economy, Tech Wars

One response to “Hard Facts on Software Giants

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  1. Pingback: A time for infosys, past « A blog of blogs

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