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Thursday, 30 March 2023
By Varun Sood

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How do you separate the Leaders from Laggards in the IT space?

A change in guard at Tata Consultancy Services Ltd comes amid a period of faltering growth. Chief executive-designate Krithi Krithivasan will succeed Rajesh Gopinathan in September. But dollar revenue growth at the country’s largest technology services firm in the year to 31 March 2023 will likely slow to almost half the growth pace reported in the previous year: TCS is expected to grow at best 8.6% in the current financial year against 15.9% in 2022.

If TCS, which does not provide revenue forecasts, clocks an at-best 1.5% sequential dollar revenue growth in the March quarter, then the company will end the year with $2.2 billion in incremental revenue, according to an analysis by Twich+.

This will be less than the $2.45 billion that Infosys is estimated to generate in the current fiscal. Worryingly for investors, this will be only the third time in the past two decades that Infosys did more new business than its larger rival (Infosys did $487 million versus TCS adding $382 million in incremental revenue in 2009, followed by Infosys adding $781 million in new business as against TCS managing $143 million in 2021).

Now, comparing the growth of technology services firms in the current fiscal to last year could be misleading because IT firms benefitted as companies across industries embraced digitization during the peak pandemic period.


However, fears of a looming recession have now made companies, from banks to retailers, relook at their technology spending.

To analyze if things are indeed improving at a company, a firm’s growth in the current year and in the year to March 2024 should be compared to before the covid-19 pandemic, i.e. in the year ended March 2020.

The 60th edition of Twich+ proposes a simple way to separate the leaders from laggards. In this edition, the revenue growth of 10 companies was analyzed and, depending on the growth trajectory, clubbed under three categories: Leaders, Under-watch and Laggards

Accenture Plc, Infosys Ltd, Persistent Systems and LTI Mindtree are the four companies in the Leaders category, as each of them continues to grow at a faster clip than in 2020.

One may ask why Accenture has been clubbed in the Leaders category despite its growth expected to decline sharply in the current fiscal. This is because consulting accounts for over half of the revenue, and in uncertain times, transformation projects are the first to be put on hold. So slow growth at Accenture is because of the nature of the business rather than any company-specific issue.

TCS has been put under watch for two reasons. Firstly, its growth in the current year has almost halved from the previous year and is only slightly more than in 2020. Revenue growth could fall more in the next financial year. This brings us to a related and second point on whether the CEO change points to some underlying problems in the business.

Agreed, TCS, unlike other homegrown IT firms such as Infosys or HCL Technologies Ltd, has a pretty federated organization structure where a CEO change has relatively less bearing on its performance in the short term. This is because many of its business unit leaders are empowered, like CEOs. TCS’s BFSI head oversees business from clients in the financial space, totalling about $8.9 billion in revenue. This will make it the country’s fifth-largest IT services firm. Shankar Narayanan, as head of the retail and consumer packaged goods, has a $4.2 billion portfolio.

Three of the five companies in the Laggard category have put in a new boss in the last four months. Zensar Technologies Ltd named Manish Tandon in December last year; Cognizant Technology Solutions Corp put S. Ravi Kumar at the helm in January, while Mohit Joshi will take over as the boss of Tech Mahindra Ltd in December.

All these three firms have been struggling, and a new leader will need at least three years to script a turnaround. Both Zensar and Tech Mahindra run the risk of slower growth next year than in 2020.

There is one other reason for trying to separate the winners from the losers. The rising tide of great demand lifted all the boats or companies. However, many firms will fall back with a thump during a slowdown or when a tide recedes.

This is reflected in the performance of Wipro and Zensar: Growth has slowed to almost a third of what the two firms managed last year.

Again, a few bosses could find it tempting to use a challenging macro environment as a ruse or as a kitchen sink to dump all the troubles.

This exercise could help call out those companies, especially those that piggybacked on the acquisition route in the past, to shore up growth without bringing about any structural change.

It’s not easy to make predictions in an uncertain environment, but I will keep updating the Twich+ Index (and even expand it with the inclusion of mid-tier and foreign firms) every six months to see how each of the firms is progressing.


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Written by Varun Sood. Edited by Saikat Chatterjee. Produced by Nirmalya Dutta. Send in your feedback to

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