Let’s forget bellwethers, focus on bottom lines!

13th July 2012
Let’s forget bellwethers, focus on bottom lines!

IndiaTechOnline Opinion: Time to forget this ‘bellwether’ game , focus on the core message: Indian IT players continue to deliver value, show profit in difficult times.

Bangalore, July 13 2012: The coincidence of two of India’s top Infotech outsourced service providers – Infosys and TCS – both declaring their quarterly balance sheets on the same day, yesterday, gave the media a chance it couldn’t miss: to make gleeful comparisons, and concoct headlines like: Infosys disappoints, TCS sparkles ( Hindu Businessline); TCS balm after Infosys pain ( Business Standard) and IT’s over for Infosys: TCS is the new bellwether ( Economic Times).
Let’s look at the actual numbers that triggered these simplistic gloom-versus-glee judgments:

1. Infosys reported a profit of Rs 22.9 billion in the last quarter. TCS posted a profit of Rs 32.8 billion.
2. Infosys revenues rose 28.5 % to Rs 96.2 billion. TCS revenues grew 38% to Rs 149 billion
3. Infosys added 51 clients in the quarter ending June 30, and 1157 employees. TCS added 29 clients and 4962 staff. 

To us at IndiaTechOnline,  this does not look like the stuff of dramatic rise or fall, of so-called bellwethers toppling or rising.
So why the drama, the drum beats and the doldrums? NASSCOM, the Indian software industry body suggested that the business would grow at between 11 and 14 percent. TCS thinks it can do even better based on its book on June 30. Infosys is more cautious and expects to grow at around 5%.

This is hardly surprising: TCS is the larger company, with a wider spread of offerings. Infosys has traditionally concentrated most of its efforts in the highly competitive outsourced IT services business in the US and to a limited extent in Europe – so it is more affected when the economies in these geographies slow down. But let’s concentrate on the larger message rather than seeing a baton change in a relay race that no one is running. The message is this: Temporary, and short term glitches notwithstanding, the Indian IT services industry continues to hold its own and collectively offers a global customer base, a Godfather-like offer-it-can’t-refuse: world-class, quality services at attractive prices. 
There is competition – all innovative business ideas, will attract imitators -- but nothing in the fine print of Thursday’s balance sheets at two of our biggest ( and let’s remind everyone—most respected) IT providers suggests, that any big rise or fall is imminent. 
In  striking contrast to the doubts about sane economic and industrial policy at the national government level, India’s privately-led infotech industry continues to deliver quality and service to the world, even if the rewards might be less than expected – or deserved. Keep it IT up  guys, you are doing India proud – ALL of you!  - Anand Parthasarathy