In recent quarters, the revenue differential has narrowed down to about $300-400 million from about $800-900 mn three years ago. Ankur Rudra, IT sector analyst at Ambit Capital, feels that at this rate TCS could surpass Accenture's outsourcing revenue within the next couple of years.
A Kotak Securities report in December said that between the years 2005 and 2010, Accenture saw a compounded annual growth rate (CAGR) of 7%. The corresponding figure for TCS was 22%.
For the period January-December 2011 for TCS and December-November 2010-11 for Accenture (TCS follows an April-March and Accenture a September-August financial year) the difference in outsourcing revenues stood at around $1.5 billion. Three years ago the difference was around $3.5 bn.
Accenture, however, remains the much larger company because of its consulting revenue. Its consulting revenue is about 50% of overall revenue. TCS's consulting revenue is just 2-3% of overall revenue.
TCS's growth rate has been accelerating particularly after the re-structuring in 2008. Since late 2009, when N Chandrasekaran took over as CEO, revenues have increased from $6 bn to a likely $10 bn this fiscal. Analysts say that TCS builds strong client relationships.
A former senior official at Accenture said TCS is much more flexible in its pricing compared to global peers. Accenture, which sees itself as a high-value player, does not aggressively bid for commoditised services like application maintenance contracts unless it is a significantly large deal extending over multiple years.
TCS, like many other Indian IT players, is also said to be benefiting from the vendor churn in the industry. Many large clients who were locked in with deals are opening them up for bidding. Large deals are thus being broken down into smaller sized deals, benefiting players like TCS that offer a cost advantage.
An analyst with a leading research and advisory services firm said that Accenture perhaps does not fully realise the potential of the offshore leverage of its global delivery model. "It is also probably not able to sufficiently convert consulting contracts that give vendors an opening into company boardrooms, into downstream outsourcing revenues," he said.
A recent report by brokerage firm Nomura says that top tier Indian players like TCS and Infosys have been gaining IT market share, while global players like HP and CSC are losing out. The Kotak report says Accenture saw a 29% market share gain between 2005-10, while TCS saw a 47% gain.
While seven IT service providers captured a combined 75% of the total contract value of deals over $25 mn ten years ago, this is now distributed across 15 providers. The new entrants to this list are India's tier-1 IT players such as TCS, Infosys and Wipro.
However, not everyone is convinced that it is fair to compare Accenture and TCS as both companies are different in nature and perhaps define outsourcing revenues differently. "Though they do compete for some common bids, Accenture has a huge consulting focus unlike TCS," said Sidharth Pai, partner at sourcing advisory firm ISG.
(Source- http://economictimes.indiatimes.com)
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