Cognizant and Indian IT’s Big 4: The ‘David’ is Fast Closing in

Stories abound about how Cognizant is closing the gap with its big 4 rivals, notably Wipro. Given that, we at BusinessViewsReviews.blogspot.com thought it apt to do a comparative analysis so as to get a better idea about how the David Cognizant is chasing the four Goliaths, TCS, Infosys, Wipro, and HCL Tech.

A look at the table clearly shows that Cognizant has performed stunningly well in the third quarter ending September 30, 2010 (Cognizant’s financial year ends on December 31st) as compared to its bigger rivals such as TCS and Infosys. And that Wipro is clearly in danger of losing out the third slot (in the Indian IT’s big league) to the Nasdaq-listed firm. Yet, it would be a little tough on Wipro to say that by the end of the 4th quarter result itself (Cognizant will declare it on February 7, 2011), the Bangalore-headquartered firm will slip to fourth rank. According to our rough estimates, Wipro’s IT Services revenues would total about $5.2bn (after assuming that it achieves the top end of its revenue guidance given for Q42011).

However, then there is no denying the fact that Wipro is staring at a defeat at the hands of Cognizant in a couple of quarters from hence. In other words, to say that the Teaneck-, New Jersey-headquartered firm is only a few quarters away is only confirming the obvious, given the break-neck pace at which Cognizant is growing. Our estimates show that if Cognizant manages to grow at 39-40% as per the guidance it has given for the FY10 and assuming the same pace of growth in its Q1FY11, on a sequential basis, Cognizant’s revenues will reach $6.37bn by March’11 quarter (its first quarter) while Wipro’s Q1FY12 (i.e., first quarter of the FY12) will grow to $5.75bn (assuming it manages to grow at a much higher rate of 10%, sequentially).

Indian IT's 'Big 5': Cognizant Closing the Gap
Quarterly Performances: A Comparative Picture
(All figures in $ Millions, except otherwise stated)
Company	TCS	Infosys	Wipro*	HCL Tech**	Cognizant
Quarter	Q3'11	Q3'11	Q3'11	Q2'11	Q3****
Revenues	2144	1585	1343.8	864.1	1216.9
Q0Q (Growth)	7	6	5.6	7.5	10.1
YoY (Growth)	31	28.7	19.3	32.6	42.6
Net Profit	517	397	296	89	203.7
Q0Q (Growth)	13.62	6.1	2.1	39.2	18.29
YoY (Growth)	34.63	18.9	10	23.7	49.12
EPS ($)	0.26	0.69	0.12	0.51	0.66
OPM %	28	30.22	22.2	13.1	18.8
Note:
*Contains only IT Services Revenues
**Q2FY11
Q3****  Ending September 2010

But we would urge the readers not to read too much into the comparisons as these are just estimates and real performances might differ from the assumptions made in this story. Also, don’t rule out a smart come back by Wipro, post-the recent reshuffle at the top.

Amy,

Chief Editor,

www.businessviewsreviews.blogspot.com

You can contact the author by Twitter or Mail at: businessbanter@gmail.com