HCL Technologies chairman Shiv Nadar. Photo: Priyanka Parashar/Mint
Bengaluru: HCL Technologies Ltd surpassed Wipro Ltd to become India’s third biggest software services firm in the three months to 30 June, marking the first change in the pecking order of the country’s $167 billion information technology (IT) outsourcing industry in six years. On Friday, Noida-based HCL Technologies said that its dollar revenue increased 0.8% to $2.05 billion in the quarter ended 30 June from the preceding three months. Bengaluru-based Wipro’s dollar revenue declined 1.7% sequentially to $2.03 billion in the first quarter.
Last year, Wipro’s full-year revenue totalled $8.06 billion—about $220 million more than HCL Technologies’s $7.84 billion.
However, billionaire Shiv Nadar-led HCL Technologies expects its dollar revenue to grow by as much as 10.4% in the current financial year, implying that the company expects to end the current financial year with $8.65 billion in revenue. Azim Premji-led Wipro, which does not issue a full-year revenue outlook, will need to grow 7.32% this year to retain its third position, a tough ask as Wipro has not reported this annual growth since 2012-13.
Nasdaq-listed Cognizant Technology Solutions, which in April-June 2012 edged past Infosys Ltd in quarterly revenue, has not been considered in the list as it not listed in India and only listed in the US.
HCL Technologies’s rise has come on the back of years of underperformance by Wipro and a more aggressive approach in acquiring companies. Until a few years ago, both companies used to generate significant business from managing data centres or offering infrastructure services to their clients. That revenue disappeared with the rise of cloud computing or offerings of computing power by the hour by firms such as Amazon Web Services.
To mitigate this, both Wipro and HCL Technologies have looked at investing in acquiring companies that can help them to 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.
Over the last three years, HCL Technologies has invested over $2.1 billion in acquiring companies and licensing intellectual property (IP) from companies and then building products around it for clients. Wipro in the last three years has spent about $1.3 billion in acquiring companies and in buying minority stakes in startups through Wipro Ventures.