How tcs dominated peers in q4 results electricity 1 unit how many watts


Largest tech services firm Tata Consultancy Services (TCS) has outshone its peers – Infosys Ltd and Wipro – on both topline and bottomline front in the January-March period. So, what has kept it ahead of its competitors? And more importantly, what’s made Infy and Wipro fall behind TCS?

"The two most important parts of success of any firm are strategy and execution. In terms of strategy, most IT firms are doing very well to deal with coming challenges and how to drive digital growth and efficiency. But when it comes to execution, TCS beats others. That is where there is difference between them. TCS is very good at translating strategy into execution," he said.

Harit Shah, IT analyst at Reliance Securities, placed the blame for the underperformance of Wipro to its vertical and business mix. For Infy, he said the second largest IT services firm has been in the throes of management instability for some time now which has affected its performance to some extent.

The current CEO and managing director of Infosys Salil Parekh took over from U B Pravin early this year who was appointed as interim CEO after Vishal Sikka resigned late last year following a raging financial irregularity controversy at the IT major.

According to him, Tata Group’s IT services firm also had a "well-oil machine"; "they (TCS) have been able to navigate the whole disruptive period better than Infosys and Wipro. They also have more scale and size. This has helped them get saving and efficiency".

The Reliance Securities analyst believes Infy’s dip in net profit was due to many factors, including one-time gains in the December quarter; "so, I will not look at that (net profit) in general. However, it is fair to say that TCS has performed better than others".

In Q4, Wipro’s consolidated profit fell 20% to Rs 1,800 crore compared with Rs 2,267 crore in the same quarter last year. Sequentially, it was down 6.7%. Infy’s net profit also plunged by 28.1% largely due to one-time gain that had occurred in the third quarter due to advance pricing agreement with the Internal Revenue Service (IRS) of US. In contrast, TCS’s consolidated profit grew 5.7% sequentially and 4.48% annually.

Mishra said IT sector was undergoing a transformation in its business model as companies try to shift their dependence from traditional services revenues to strategic imperative services. This, he said, will impact the revenues and profits of local firms.

Today, the share of digital, which is part of strategic imperatives in total income of local IT firms, are somewhere between 24%-26%. This is much lower than global behemoths like Accenture, IBM and others, whose strategic imperative revenues are around 50% of their total income.

"Indian IT companies are still logged on to large traditional businesses, which they need to change faster if they have to make themselves more relevant in the market. They may need to switch gears much faster. This may impact their total revenues as traditional services revenues get affected due to consolidation and cannibalisation. That is the reason Indian IT companies may be going slow. They may not want to take a hit on their balance sheet. However, I believe, if they move faster and take a hit, it is not bad. That is because you need to take that hit in order to leapfrog in future," said the Gartner research director.

However, TCS seems to have covered a lot of ground on this count. In the quarter gone by, its revenue from digital grew by 42.80% while Infy’s revenue from digital rose 3.3%. Interestingly, digital constitutes 23.8% of the total revenue of TCS while it is 25.5% for Infosys and 26% for Wipro.

That, notwithstanding, Infosys is doing everything to catch up in this space. Recently, it has made some inorganic overtures by acquiring US’s digital creative and consumer insight firm Wongdoody Holding and London’s Brilliant Basics. …& ANALYSIS