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India's largest information technology (IT) services company, Tata Consultancy Services (TCS), is likely to maintain its leadership position over the next three years, backed by a strong and satisfied client base, while its closest peers—Cognizant, Infosys and Wipro— might continue to face some challenges, independent advisory and research firm, Offshore Insights said on Friday, based on its survey of over 400 clients across North America, Europe and Asia-Pacific.
The Pune-based research firm said that the next 12-18 months are critical for two of the largest players in the IT services space -- Infosys and Cognizant. While Infosys would have to show its ability to move towards higher growth, Cognizant would need to prove whether it can absorb the ‘hyper growth’ it has seen.
“The next two-three quarters are critical for Infosys to show its ability to transform and bring back growth which looks tough,” Sudin Apte, chief executive officer & research director, Offshore Insights said. “The next 12-18 months would be critical for Cognizant to digest the hyper growth they have got. They have done it in the past, can they repeat it?”
The country's third largest IT services company, Wipro continues to face some challenges on the strategy and client front, and has not shown any signs of transformation that the company had talked about 18 months ago, Apte added.
Based on its interaction with clients, Offshore Insights said that the IT offshore market was likely to grow 13-15 per cent in 2013, as client sentiment as well as spending levels are looking positive.
Among other reasons, demand for IT services is seen rising due to a change in the business models of clients, their compliance and regulatory requirements, and the need to upgrade, the research firm said.
“I think from a demand perspective, we have seen a pick up,” agreed Mahesh Nagraj, senior vice president, Tech Mahindra. “Things like network services and modernisation are becoming important; so we are seeing a lot of those kinds of deals,” he added.
| TCS | To maintain its leadership position in coming 3 years |
| Infosys | Next two-three quarters are critical to show its ability to transform and bring back growth which looks tough |
| HCL Technologies | Growth depends on how successfully it can build broad service line portfolio |
| Wipro | Has challenge on strategy and client front; no signs of transformation so far |
| Cognizant | Next 12-18 months will be critical to digest the hyper growth they got |
The survey also highlighted that clients’ interest in newer technologies such as Big Data, Mobility, Analytics and Cloud continues to be strong. As many as 68 per cent of the respondents said they would surely adopt Big Data technology over the coming 12-15 months, while 67 per cent of the participants said they would possibly expand the usage of mobile applications.
“Growth is coming back, but it is coming back in really different contours,” Apte said. “Clients are keen to reduce IT costs, especially in hardware and lower levels of technology (system software, security, etc). They are also not showing interest to make large and frequent capital investments, instead they prefer to pay as they use,” he added.
In a year or so, these emerging technologies might get to the mainstream, Apte said, adding that the deals in these segments might become larger and more complex going forward.
