Status change in Indian IT as HCL Technologies overtakes Wipro to become third largest IT firm

HCL Technologies has been closing in on Wipro for a couple of quarters now with an aggressive growth strategy.

The pecking order among the multi-billion dollar Indian IT services companies has changed, with HCL Technologies becoming the third largest company, overtaking its immediate rival Wipro at the end of the first quarter results of FY19.

All this while it was Wipro as the third largest Indian IT services exporter followed by HCL Technologies.

At the first quarter ending June for the 2018-19 fiscal, HCL Technologies reported a revenue of $2,055 million while Wipro, during the same period, recorded $2,026 million. This is the first change after six years, when Cognizant overtook Infosys in 2012.

HCL Technologies reported a quarter-on-quarter revenue growth of 0.8 percent for the period ending June 2018, while for Wipro it was a decline of 1.7 percent.

HCL Technologies has been closing in on Wipro for the several quarters now. In the quarter ending March 2018, Wipro was still ahead of HCL Technologies with a small lead of $24 million. HCL Technologies has been aggressive in the marketplace either through the acquisition of companies or by bagging large deals. On the other hand, Wipro has had very tepid growth throughout FY18.

HCL Technologies Chairman and Chief Strategy Officer Shiv Nadar said, “As we continue to expand our global footprint, it is imperative that we accelerate, reinvent and reimagine ourselves to overcome the challenges of an ever-evolving technology and business landscape. At the same time, we also remain committed to creating a sustainable business with a clear focus on CSR, diversity and inclusion.”

At the end of 2017-18 fiscal, Wipro’s full-year revenue was $8.06 billion while for HCL Technologies it was $7.84 billion, revealing a gap of around $220 million.

Now, it will be an uphill task for Wipro to regain its third position as HCL Technologies has projected that its revenue for the current financial year is likely to grow in the range of 8.4 percent to 10.4 percent. This could mean that HCL Technologies will end FY19 with a revenue of $8.65 billion. On the other hand, Wipro, which does not provide full-year revenue guidance, will have to grow around seven percent in the current fiscal to overtake HCL. For the last financial year it grew at 4.6 percent.

Over the last three years, HCL has invested over $2.1 billion in acquiring companies and licensing intellectual properties (IPs) from companies and then building products around them. 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.