HCL Technologies Ltd excels Wipro Ltd to become India’s third-biggest software services provider in the three months to 30 June, marking the first change in the pecking order of the country’s $167 billion IT outsourcing industry in six years.
The revenue of Noida-based HCL Technologies rose 0.8% to $2.06 billion in the quarter from the compared to the preceding three months, and 8.5% in comparison to the same period in the year 2017.
It is the second-best performance of the company among the top Indian IT companies. The net profit of the company has increased from 3.4% to $356 million as compared to the preceding quarter, and 5.7% compared to the same period of 2017.
Bengaluru-based Wipro’s dollar revenue declined 1.7% sequentially to $2.03 billion in the first quarter. Wipro’s full-year revenue totalled $8.06 billion, about $220 million more than HCL Technologies’ $7.84 billion In the Year 2017.
However, billionaire Shiv Nadar-led HCL Technologies expects its dollar revenue to grow by as much as 10.4% in the current fiscal year, implying that it expects to end FY19 with $8.65 billion in revenue.
Azim Premji-led Wipro, which does not give a full-year revenue outlook, will need to grow 7.32% this year to retain its third position, a tough ask as the firm has not reported this level of annual growth since 2012-13 when it grew 7.1%.
HCL Technologies’ rise has come on the back of years of underperformance by Wipro and a more aggressive approach in acquisitions. Until a few years ago, both companies used to generate significant business from managing data centres or offering infrastructure services to their clients.
Over the last three years, HCL Technologies has invested over $2.1 billion in acquiring companies and licensing intellectual properties from these firms and then building products around them for clients.
In the last three years, Wipro has spent about $1.3 billion in acquiring firms and buying minority stakes in start-ups through Wipro Ventures.
Wipro and HCL Technologies have looked at acquiring firms which can help them offer new technology solutions. For now, this approach appears to have proved financially lucrative for HCL Technologies, while Wipro grapples with its own set of challenges.