TCS vs Infosys: Yawning Gap

Be it a slowdown in mature markets or the erratic currency movements, the country's largest IT services exporter, Tata Consultancy Services (TCS) has weathered it all ably and has grown despite an uncertain economic environment.

The $11 billion IT major has pumped up its topline to more than double over the last four years. From a total revenue of R30,028 crore in FY10, TCS has moved up to Rs 62,989 crore in FY13, registering a compound annual growth rate (CAGR) of 20.3% in the last four fiscals and widening its lead over its nearest rival, Infosys.

During the same period the Bangalore-headquartered software services firm posted a CAGR of 15.4% with revenue of R22,742 crore in FY10 to R40,352 crore in FY13. Not just that, TCS has managed to record growth ahead of the industry average (CAGR), which is estimated to be about 17% during the last four fiscals.

Experts point out that over the last few years, the growth for the company were broad-based across industry segments. Some felt it is the booster dose TCS got from its backbone financial services and insurance vertical that led to the industry leading growth.

During the first quarter of the current fiscal, banking, financial services and insurance (BFSI) vertical contributed 43% to the overall revenue. The revenue gap between TCS and Infosys has more than tripled in the last four financial years, revealing the different growth trajectories of both the companies.

TCS at the end of FY13 reported a consolidated revenue of R62,989 crore against Infosys' topline at R40,352 crore, a difference of R22,637 crore. However, this was not the situation four years ago when the revenue difference between the two IT majors was around R7,287 crore.

In US dollar terms, it would mean that what was once a gap of around $1.5 billion four years ago has now widened to more than $4 billion. This widening revenue gap reveals how TCS has been able to navigate successfully through the difficult period while Infosys is struggling to outperform the market.

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