TCS has outperformed Infosys over the last few quarters across almost all parameters.
These include higher employee utilisation, volume growth, strong client pipeline, more opportunities in discretionary projects and growth in ‘troubled’ sectors such as telecom and BFSI.
Employee utilisation, which refers to the number of employees working on a project, is higher for TCS. Currently, TCS has utilisation in the range of 81-83 per cent. In comparison, Infosys at present has utilisation of 67.2–71.6 per cent and the company has been struggling to get its utilisation rates up in the last six quarters.
Large clients
TCS management is on targeting further improvement in utilisation, according to analysts, Mr Pankaj Kapoor and Ms Apoorva Oza of Standard Chartered. Simply put, Infosys has larger people on the bench compared to TCS. This, in turn, is largely related to the kind of clients TCS has in its portfolio. It won eight large deals of which one was above $100 million. Of these, four deals came from North America, two from Europe and one each from APAC and West Asia. While Infosys added 51 clients, the bulk of it is in the $1 million+ range.
The bench situation is also linked to volume growth. Volumes that are defined by number of people billed grew by 5.3 per cent for TCS, while it grew a mere 2.7 per cent for Infosys.
Also, Infosys has had troubles in the last two quarters with some clients cancelling projects and some of them deferring technology spends.
Analysts have had more visibility when it comes to TCS. “Already pocketed deals for TCS gives better visibility of revenue compared to peers,” said Mr Shashi Bhusan, analyst at Prabhudas Lilladher.
This is also seen in TCS management reiterating in the recent quarter that the company will achieve the Nasscom growth estimates of 11-14 per cent for fiscal 2013 compared to Infosys, who said that the company will grow at five per cent this fiscal.
Analysts are impressed by TCS’ execution that has resulted in its continued growth in troubled sectors such as BFSI and telecom and have added new clients. TCS saw revenues in telecom go up by 6.1 per cent and BFSI by five per cent over January-March quarter.
Infosys, meanwhile, has said that client spending in BFSI and telecom continues to see pressures. Ms Ankita Somani, analyst, Angel Broking, said: “TCS management sounded confident of surpassing Nasscom’s growth guidance and indicated that despite challenges in the macro environment, the deal pipeline remains healthy.”
Win rates
TCS’ win rates continue to go up and the company continues to see opportunities and orders even in transformation and discretionary projects, said Mr Ashish Chopra, analyst, Motilal Oswal.
Meanwhile, the Infosys Chief Executive Officer, Mr S.D. Shibulal, said in the recent quarter that due to a large exposure in discretionary projects has impacted the company as its clients continue to grapple with slowdown in the US and European markets.