How IT’s bigwigs made it even bigger after covid

Tata Consultancy Services Ltd and Infosys Ltd sharply outpaced the global IT services industry in the four years beginning 2020, as they worked with hyperscalers and adapted to the post-pandemic world. While the global IT industry expanded 14% between 2020 and 2024 to touch $1.04 trillion, the two companies grew at more than double this rate, according to Pierre Audoin Consultants, a Paris-headquartered IT advisory firm. TCS and Infosys grew at 32% and 45% respectively to end the 12 months through March 2024 with $29.1 billion and $18.6 billion in revenue, gaining market share.

Their growth came at the expense of foreign companies like DXC Technology, International Business Machines Corp and Fujitsu, each of which lost market share due to internal restructuring and currency depreciation. Accenture and Infosys were the biggest beneficiaries in these four years, according to PAC.

Dublin-headquartered Accenture’s market share jumped 120 basis points to 5.7% at the end of 2024, whereas Infosys grew faster than each of the country’s four largest IT service providers in these four years.

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Infosys’s revenue growth of 45% was higher than that of TCS, HCL Technologies Ltd, and Wipro Ltd, which grew 32%, 34%, and 33%, respectively.

PAC listed 10 companies including Accenture Plc, International Business Machines Corp, Capgemini SE, Fujitsu Ltd and NTT Data as part of its market share rankings.

Taking global share

Accenture rose to the first spot (from previous No.2), while previous No.1 IBM fell to the third position. TCS and Infosys held over 2.8% and 1.7% in 2024, in comparison to 2.2% and 1.3% four years ago. TCS jumped to second place from third whereas Infosys moved up two places to the eighth spot.

“If you focus on comparable vendors, Infosys and Accenture reported substantial growth over the last four years, slightly higher than TCS and HCL, then Capgemini and Wipro, finally Cognizant. Accenture was extremely successful with its ecosystem strategy, positioning the company as the #1 partner for all the leading technology providers (AWS, Google, Microsoft, SAP, Salesforce, ServiceNow…), and thus took advantage of the massive post-covid wave of digitization and cloud transformation,” said Christophe Chalons, chief analyst at PAC.

“Infosys managed to massively revamp its sales approach and to land numerous large deals, especially in Europe,” said Chalons.

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HCLTech and Wipro also increased their shares, although much lower than the others.

For now, Accenture, TCS, IBM, Deloitte, and NTT Data are the world’s five largest IT service providers with market shares of 5.7%, 2.8%, 2.8%, 2.5%, and 2.2%, respectively, according to PAC data.

New approach

A second analyst attributed the increase in market share for homegrown IT service providers to a more aggressive approach following the covid pandemic.

“The major four India-heritage providers all took full advantage of the pandemic to drive cloud-centric deals with the Global 2000 firms. A lot of this was driven by the sheer speed with which they adapted to delivering work from remote locations and their nimbleness to respond to client needs,” said Phil Fersht, chief executive of HFS Research, a Massachusetts-based tech advisory firm.

The covid-19 pandemic was beneficial for these companies as they could win more deals to digitize operations for companies that required employees to mandatorily work from their systems in office.

To be sure, the country’s IT service providers had a dream run after the pandemic. TCS, Infosys, HCLTech, and Wipro reported double-digit revenue growth in the year ended March 2022.

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“Since the pandemic ended, these same firms have increased market share and the ability to win deals aggressively at scale, while many of the legacy services firms have struggled to be as agile in the market,” said Fersht.

A third analyst attributed this to their growing presence in Europe and cost efficiency.

“Indian IT service companies will more likely make their employees fly economy to save costs than their foreign counterparts,” said a Mumbai-based analyst working at a domestic brokerage on condition of anonymity.

“Also, each country in Europe functions like an individual business unit, and European IT service providers find it difficult to serve clients outside of their home country due to cultural issues, which makes it easier for homegrown IT companies to make inroads,” the analyst said.

For TCS and Infosys, both of which increased their market share within the top 10, Europe business was a big booster. TCS and Infosys’s business from Europe grew faster than their total revenue between 2020 and 2024. Business from Europe grew at a CAGR of 7.95% and 14.27% for TCS and Infosys, whose overall CAGR in this four period came in at 7.2% and 9.8%, respectively.

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The country’s four largest software service providers earn between $3 billion and $9 billion in revenue from Europe.

However, the post-pandemic dream run was stymied by the Russia-Ukraine conflict that began in February 2022. Clients of IT services companies had to increase costs due to supply chain disruptions and hold-back their tech spending.

TCS ended March 2024 with $29.1 billion in revenue, up 4.1% on a yearly basis. This was its slowest growth in three years. For Infosys, which ended FY24 with $18.6 billion in revenue, a 1.9% full-year revenue growth was its slowest. Third-largest HCLTech grew 5.4% to $13.3 billion, its slowest growth in three years. Fourth-largest Wipro reported a full-year revenue decline, after it ended last fiscal with $10.8 billion in revenue.

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Even as there were green shoots at the start of FY25 with central banks across the world looking to lower lending rates, decisions brought in by US President Donald Trump and the impact of Gen AI again poses uncertainty for the growth of homegrown IT service providers.

Low lending rates by banks increases the spending capacity of Fortune 2000 companies, which can in-turn increase their tech spending and give more business to IT service providers.