Accenture is eating into the market share of Indian IT services giants

Having struggled to outperform Indian IT services firms since its entry into the country in 1989, global management consultancy Accenture appears to be occupying a greater market share in the domain of IT consultancy, according to new analysis from Normura Financial Advisory & Securities. 

As one of the largest IT services and outsourcing hubs in the world, the Indian economy has long been a breeding ground for IT consultancies. Firms such as Infosys, Wipro and Tata Consultancy Services (TCS) that were founded in India decades ago have fast grown into some of the largest IT consultancies in the world.

TCS, for instance, recently surpassed a market capitalisation of $100 billion, and has been labeled by analysts as the fastest growing IT services firm in the world. In the domestic market, however, TCS and the other IT services giants appear to be losing market share to Accenture.

Accenture’s revenues grew by nearly 13.5% throughout 2018, while the other IT firms combined grew at a cumulative rate of just over 8.5%. Normura Financial Advisory contrasts this scenario with that in 2015, when Accenture revenues grew by 2.3% while other firms grew at an average of 9.6%.As per the firm, the shift can be attributed to the lack of emphasis on digital services amongst domestic IT firms – a longstanding complaint that has spelled trouble for the firms in the past. Indian IT firms were conceptualised primarily to support with IT infrastructure and maintenance, and have struggled to evolve in tandem with shifting market needs.

Wipro is one example of a firm that struggled with stagnating revenues as a result of its traditional suite of services becoming obsolete. Last year, the firm made the decision to focus more on digital business and financial services, and saw an instant spike in revenues per quarter.

While TCS has also invested heavily in digital services capabilities, a majority of this investment has come in foreign markets, particularly the US. As a result, revenues from digital services constituted only 30% of overall income for domestic firms, while Accenture attributed 60% of its revenues to these services.

Accenture has been particularly active in developing its digital capabilities for the Indian market, and has been investing in recruiting top talent to drive this emphasis. Last year, Managing Director of Accenture India Mohan Shekhar recommended that most consulting firms in the country shift their focus to Industry 4.0 technologies.