Tata consultancy services (TCS) overtook International Business Machines (IBM) by market value on June 10, signifying the emergence of the Indian IT services giant as a global name. Only Accenture remains ahead of the Tata group’s crown jewel.
At the close of Mumbai trading on June 12, TCS was valued at ₹8.49 trillion ($122.4 billion), whereas IBM’s market capitalisation was $119.58 billion. Accenture was at $123.76 billion. By revenue, IBM ($79.6 billion in 2018) is almost four times bigger than TCS ($20.9 billion for year ended March 31, 2019). But IBM saw six years of declining revenue between 2012 ($104.5 billion) and 2017 ($79.1 billion).
TCS followed a two-pronged strategy to ensure continued growth: Winning large contracts in the traditional IT outsourcing space, while investing heavily in digital technologies, computing and artificial intelligence. The latter is now winning the company higher-margin contracts.
Analysts expect TCS to further expand its leadership. In an email to Forbes India, Ray Wang, founder and principal analyst at Silicon Valley-based Constellation Research, says even as market capitalisations fluctuate daily, this single data point is a milestone indicative of TCS unseating an industry legend. “At the rate of growth TCS has shown, this will become a more common and permanent position over the next few years… TCS has earned its way to the top spot with decades of hard work.”
In five years, Wang expects the company “to be dominant as they are still growing, taking market share, and expanding their approach”.
IBM, on the other hand, is in the midst of reinvention—shedding lower-value services, and building software and services around its cognitive intelligence technologies. It is likely to emerge as a more nimble firm.
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(This story appears in the 05 July, 2019 issue of Forbes India. To visit our Archives, click here.)