India's premier IT services firm Tata Consultancy Services' (TCS) energetic 9.6 per cent revenue growth in the fourth quarter has catapulted it ahead of US major DXC Technology Co, making it the third largest in the world. The company now has second placed Accenture in its gun sights while IBM's accounting method makes it difficult to fix a target.
It is widely expected that DXC Technology will fail to achieve a 5.06 per cent sequential growth in the fourth quarter to earn $20.91 billion revenue it would need to stay ahead of TCS. Formed by merging Computer Sciences with a division of Hewlett Packard in 2017, DCX will announce its fourth-quarter earnings on May 23.
TCS added $1.82 billion in new business to amass $20.91 billion in revenue in the 2018-19 financial year that ended on March 31. In the first nine months of FY19, TCS notched up $15.52 billion in revenue exceeding $15.47 billion of DXC for the same period.
The strong performance of TCS was despite a change of guard in 2017 when Rajesh Gopinathan, who was then chief financial officer, took over as chief executive officer, succeeding N Chandrasekaran, who was named the chairman of Tata Sons Ltd, according to a report in Mint. The company still managed to retain its senior executives and improved its growth and profitability, marking a smooth management transition.
DXC, which has divested and restructured much of its businesses, had $25.39 billion in revenue when it was set up in 2017, as against $17.57 billion of TCS. Over the last two years, DXC has seen its revenue erode by more than $4 billion, while TCS added $3.34 billion in incremental revenue, the report says. DXC's revenue decline is attributed to the company selling its US public sector business last year losing $2.8 billion in revenue, to private equity firm Veritas Capital.
TCS will definitely take time to catch up with the leaders IBM and Accenture. IBM does not separately disclose its revenue from IT services out of its total revenue of $79.59 billion achieved last year. However, industry observers attribute the company's $69.76 billion revenue from global business, technology services and cognitive solutions to IT services business. Even Accenture with $39.57 billion last year is far ahead of TCS at the moment.
"TCS is widely described these days as the 'Walmart of IT Services' — the firm can pretty much win any large deal it wants and also deliver it," the report quotes Phil Fersht, chief executive of US-based HFS Research, as saying. "Its size and execution focus put it in a commanding position in the market and this is almost impossible for the likes of DXC to compete with."