Swathi Moorthy Moneycontrol News
IT companies’ investments in the space seem to be bearing fruit as majors such as TCS, Infosys, HCL Technologies and Wipro are witnessing a steady rise in digital revenues over the past few quarters. On an average, digital income now accounts for 25-30 percent of total revenues at several IT companies. Enterprises are increasingly opening their purses for digital spends as they embark on digital journey.
At HCL Technologies, businesses that include digital and analytics, cloud native services and cyber security have crossed a revenue run rate of $1.5 billion. The company said that its digital revenues now account for about 29 percent of overall revenue in the third quarter ended December 2018. Similarly, TCS’s revenue from digital engagements comprised about 30.1 percent during the same, a growth of 52.7 percent YoY.
Even at Wipro, digital revenues now contribute 33.2 percent of overall revenues. Though Infosys did not reveal digital revenues in Q3 results, the company in an earnings call said digital revenues grew 33.1 percent YoY in constant currency terms.
Digital transformation is creating demand for new roles and the digital tailwinds are likely to keep the global sourcing market on a strong growth, DK Aggarwal, Chairman and Managing Director, SMC Investments and Advisors said in a statement.
One could assume these are the outcomes of investments these IT majors have made and still making in this space for the last few years. For example, HCL Tech reorganised its business into Mode 1-Mode 2-Mode 3 focus on digital. The objective of Mode strategy is to leverage digital products and services to sustain core services such as infrastructure and engineering services. The company now aims to develop next generation digital capabilities in-house to focus on newer areas of growth. HCL Tech is also opening technology labs at different locations to increase its IP-led offerings.
Other IT cos aren’t far behind on investments either. Infosys has expanded its digital offerings with its Next Generation Integrated AI Platform. Similarly, Wipro is banking on Wipro Digital offering as growth avenue. “Our clients are increasingly drawing on the power of Wipro Digital combined with Wipro’s traditional business to deliver new products, services and experiences to their clients and employees. All of this is enabled by the digitally-trained workforce that is over 130,000 employees,” CEO Abidali Z Neemuchwala said in a statement.
Acquisitions are becoming a norm as companies are looking to drive the digital growth faster. More than half of HCL Technologies acquisitions were after 2015. This includes acquisition of seven products by IBM for $1.8 billion. CEO C Vijayakumar has always stressed on the need for more investments in the digital space. The company is now looking at digital acquisitions in marketing and digital design studios.
Infosys, which came under the scanner for its high profile Panaya and Skava acquisition, has bought three more companies in the customer digital experience space.
While investments in inorganic growth are yet to payoff, companies are confident of success in the long run.
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