TCS,Infosys revenue gap triples in last four fiscals

TCS at the end of FY13 reported a consolidated revenue of Rs 62,989 cr Vs Infosys Rs 40,352 cr.

The revenue gap between Indias number one IT services exporter Tata Consultancy Services (TCS) and its rival 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 Rs 62,989 crore against Infosys topline at Rs 40,352 crore,a difference of Rs 22,637 crore. However,this was not the situation four years ago when the revenue difference was around Rs 7,000 crore.

For FY10,the revenue of TCS was R30,029 crore while for Infosys it was R22,742 crore,a difference of R7,287 crore. In US dollar terms,it would mean that what was once a gap of around $1.5 billion four years back has now widened to more than $4 billion. This widening revenue gap growing steadily reveals how TCS has been able to navigate successfully through the difficult economic environment while Infosys is struggling to achieve any market outperforming numbers.

Though there has always been a difference in revenue numbers between the two companies,Infosys for quiet some time had managed a superior edge with its net profit being higher than TCS,powered by high operating margins.

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Today,the situation has completely reversed with TCS overtaking Infosys both in net profit and operating margins. At the end of FY13,the net profit of TCS stood at R13,917 crore while for Infosys it was R9,421 crore. On the operating margins front,TCS ended the year at 28.71% while it was 25.8% for Infosys.

Infosys,which prefers not to sacrifice margins to gain higher volumes,has enjoyed better operating margins compared with other top-tier Indian IT vendors. But over the last couple of quarters,it has been very aggressively cutting down its prices,which brought down the operating margins.

It was in the second quarter of FY13 that TCS overtook Infosys in operating margins and since then it has consistently maintained this difference.

TCS chief executive & MD N Chandrasekaran said,We remain confident that 2013-14 will bring greater opportunities as technology plays an increasing role in reimagining business globally. We continue to identify new growth engines and are investing ahead of the curve in products,platforms and intellectual property.

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The difference between the two IT majors also extends to the utilisation rate,with TCS at 82% while for Infosys it was 73.9%.

Infosys CEO SD Shibulal had said,the revenue growth of our clients is slowing down so we took a safe view of our guidance given our portfolio and environment. This volatility will continue unless growth picks up in the global markets.

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