IT services

Wipro, under chairmandesignate Rishad Premji, faces a key challenge of matching industry level growth, after the IT services company struggled with client bankruptcies, bad market bets and acquisitions over the past few years.

Although Wipro hived off its cloud business, restructured its India operations and bet on businesses that leveraged the gig economy workforce to deliver services, the effort is still work in progress. “Challenges for Wipro remain, it must continue to address portions of its business which are underperforming, while moving quickly to build the new digital business which is its future,” said Peter Bendor-Samuel, chief executive, Everest Group, a global IT advisory firm. Rishad has been “carefully groomed to take his father’s place,” he said.

Read more in The Economic Times

Global IT services and consulting firm Cognizant has seen its fourth executive resignation this month, with the President of the firm’s global Industries & Consulting vertical Prasad Chintamaneni leaving the firm. He was recently tasked with provisionally managing the Banking & Financial Services vertical as well.

CEO at market research firm Everest Group Peter Bendor-Samuel added, “With a new Chairman of the board and CEO, Cognizant is changing out its senior management team as it puts distance from the ill-advised Elliot influenced commitments of the last two years. Furthermore, the senior Cognizant team has had a great run and accumulated significant wealth in stock which can best be sold while they are no longer insiders.”

Read more in Consultancy India

India’s largest IT firm TCS was recently in the news for a trade secret theft case filed by US-based tech firm CSC.

Yugal Joshi, Vice President, Everest Group, a consulting firm, agrees that IP charges are not uncommon. However, Joshi pointed out that most service providers do deliver platform-based services and therefore need to further enhance their governance mechanism. In addition, they need to further educate their workforce on enforcing such a mechanism.

Read more in Money Control

The Indian IT business is getting more commoditised, resulting in stiff competition and lower margins in legacy business, according to industry experts.

Peter Bendor-Samuel, CEO and founder of Dallas-based research and management consulting firm Everest Group, says, “We expect margins of big Indian (IT) service providers to continue to erode. We believe that digital is less profitable than the traditional labour arbitrage model.”

Read more in The Hindu

In 2009, before things fell apart, Satyam Computer Services was more than twice the size of Tech Mahindra. Then among India’s top five IT firms, its strength lay in the enterprise segment. Tech Mahindra, being a niche player, derived its revenues almost entirely from the telecom sector. There was almost no overlap and no synergies. An important development, however, would pitchfork Tech Mahindra into the limelight.

Other technology firms, though, scaled up faster during this period (see box), with analysts saying Tech Mahindra had the potential to overtake HCL to the fourth spot if revenue growth had not slowed. In 2011, HCL bought Axon, a British consulting company, aggressively pursuing clients and focusing on growth at the cost of margins. The results paid off, with FY18 revenues of about $8 billion. “They (Tech Mahindra) could have scaled the enterprise business better,” says Pareekh Jain, founder, Pareekh Consulting. Even in its traditional telecom business, loss making contracts in its unit Lightbridge Communications Corp (LCC) hit Tech Mahindra, while the company also rejigged its legacy contracts in other verticals. The firm had to also face public wrath when an audio recording of a person who was being sacked went viral, forcing chairman Anand Mahindra to intervene. “Tech Mahindra was a little late to investing in and building digital capabilities, but they are trying to move faster now,” says Chirajeet Sengupta, partner, Everest Group. “Most companies are moving to a mix of a services plus IP-led business model. The company is experimenting with this approach…”

Read more in Economic Times