The Dataquest survey points out to a stark difference between DQ20 and the Forbes/Fortune listings: size. If the DQTop20 adds up to $28 billion, each of the foreign MNCs is several times that size, globally. Two of the DQTop20, HP and IBM, are over $90 billion each, globally. While the largest India-based tech company, TCS, is just approaching $5 billion.
And the DQ Top 200 list-probably the only such ranking available on the Indian IT industry anywhere-reflects the 'services exports' phenomenon driving Indian IT. As many as 87 (that's 43%) of the Top 200 IT businesses in India are services firms, most of them drawing their revenues from exports. Notable exceptions are CMS Computers, Tulip IT Services and Datacraft. Among the DQ Top 20, the number of IT services export firms is eight. Contrast this to the 1996-97 list, where TCS was the only IT services exports firm in the DQ Top 20. Of course, there were no global companies from India then.
There are companies in the DQ Top 50 with interesting and varied businesses, the study notes. A government entity, IRCTC, manages Internet-based ticket bookings for the Indian Railways, the world's biggest; and NIIT Ltd, a focused training company with global footprint that acquired a US training firm ElementK.
According to Dataquest, Indian IT services firms constitute a large chunk of Top 20 companies that went truly global be it in terms of building delivery capability in other offshore destinations or targeting newer markets beyond the US. Most firms reported higher revenues from Europe and are making efforts to deepen their engagements. The Europe entry strategy adopted by many IT services firms to accelerate their business growth was rewarded amply with the US dollar weakening sharply, while the Euro and the UK Pound held steady or gained.
The declining dollar is already hitting services exports companies hard. From an average of Rs 45.05 to the dollar in 2006-07, the US currency is down to under Rs 40 to the dollar. This is causing a 5% to 10% hit in rupee revenues to services exports companies like Infosys.
MNCs extend their India presence beyond metros Large IT services players like IBM and Oracle exported significantly more (out of India) than their sales in India, with IBM exporting Rs 4,880 crore or $1.083 bn vs. domestic sales of Rs 3,380 crore or $ 750 mn and Oracle exporting IT services of over Rs 3663 crore or $ 813 mn vs. domestic sales of Rs 1046 crore or $ 232 mn.
In addition, two more trends were clearly visible across DQ Top 200 firms. One was the focus on the small and medium business (SMB) by all firms. IBM tried to shed its image of 'for the big' and succeeded, making close to 35% of its revenues from this segment. So did SAP India. Oracle had close to 4,500 customers by the year-end out of which a significant number was added last year.
All the large companies-IBM, Microsoft, Sun, Oracle-had a clear target of expanding into the deep interiors of India. IBM has set a target of setting up presence in seventeen small cities by the end of 2007. Sun already has built direct presence in state capitals and large industrial towns. Cisco owes a significant part of its revenues to the IT infrastructure building exercise undertaken by the governments. The domestic IT services business further accelerated last year with IBM bagging mega deals from the cellular operator, Idea and real estate major, DLF. In 2006-07, HP bagged the UCO Bank deal. Services now contribute a significant part to the business of IBM and HP in India.
Note for Editors: Para 2 and 4 above repeated withrevenues in INR and $
The global multinationals competing with their Indian counterparts from Indian soil include HP (Rs 11,917 crore, $ 2.645 bn), IBM India (Rs 8,245 crore, $ 1.83 bn), Ingram Micro (Rs 6,896 crore, $ 1.531 bn), Oracle (Rs 4,753 crore, $ 1.05 bn), Cognizant (Rs 4,584 crore, $ 1.02 bn), Cisco (Rs 4,424 crore, $ 982 mn), Intel (Rs 3,760 crore, $ 835 mn), Microsoft (Rs 2,580 crore, $ 573 mn) and Lenovo (Rs 2,562 crore, $ 569 mn).
