Driven by small deal sizes, acquisitions and focus on niche sectors, mid-size IT companies have outshone their bigger counterparts.
Industry watchers also believe that deals bagged by IT companies are smaller sized, for a short-term and outsourced to small players. As a case in point, iGate bagged 64 customers that outsourced in the $10-100 million in FY12.
“Public sector and healthcare sectors in the US will drive our growth,” according to Mr Phaneesh Murthy, CEO of iGate. This was a similar trend with MindTree, another mid-size company. MindTree grew its new customer base ($10-100 million) to 64, identical to iGate for FY12.
Growing deal size
KPIT Cummins, another mid-size company focused on manufacturing, has guided for a 32-35 per cent growth for FY13. Similarly, Zensar Technologies added 46 new customers in the same range in FY12.
“We are confident of growing at 23 per cent (in FY13) since our focussed markets like manufacturing, retail and distribution sectors continue to spend in technology,” said Dr Ganesh Natarajan, Vice-Chairman and CEO, Zensar Technologies.
In contrast, Wipro added 173 new clients in FY12 as compared to 155 in FY11. TCS added 141 new clients in FY12 as compared to 140 clients in FY11. Infosys added 139 clients in FY11 and 172 clients in FY12.
According to the TPI Index data, deals valued at $100 million or less have tripled since 2002. Some Indian companies have gone for acquisitions to get more customers.
Boosted by the acquisition Daxcon and Wellsco, Infotech Enterprises witnessed a 4.6 per cent Compounded Quarterly Growth Rate in all the four quarters of FY12.
Client metrics
Infotech has not witnessed any change in the demand scenario and is strengthening its product portfolio,” said Ms Ankita Somani, analyst at Angel Broking.
According to a report by brokerage house Nirmal Bang, good revenue growth, improving client metrics and its strategy of focussing on select verticals and leveraging domain expertise to gain clients have paid off.
In the case of Tech Mahindra, its merger with Satyam Mahindra would help it get a play in large or high value outsourcing deals.
“The combined entity with revenues of $2.4 billion will enable it to participate in larger deals and revenues from retail, healthcare and other sectors could go up,” said Ms Somani.