The Indian IT services pecking order may undergo a shake-up with Infosys reclaiming its No. 2 rank in the coming year as it is swiftly catching up with Cognizant.
Infosys in the September quarter had revenue of $4. 6 billion, just $300 million lower than Cognizant’s $4. 9 billion. And there’s a huge gulf between the two companies’ growth rates. While Infosys grew at 18. 8% year-on-year inconstant currency in the quarter, Cognizant’s growth was a mere 5. 6%. And while Infosys is guiding for a revenue growth of 15-16% in constant currency for financial year 2022-23, Cognizant is guiding for a 7% growth in constant currency for the calendar year 2022 (which is also the company’s financial year).
Cognizant saw searing rates of growth under the previous CEO, Francisco D’Souza, during which the company first crossed Wipro in revenue, in 2011, and then Infosys, in 2012. But the growth started slowing in his final years at the helm.
It has revised its revenue projection downward three times this year, most recently citing macroeconomic difficulties as well as personnel difficulties, particularly the high turnover rates in the US.
Hansa Iyengar, IT analyst in London-based advisory Omdia, said “Cognizant’s large exposure to verticals that are usually harder hit in recessionary scenarios as well as greater reliance on the US market is a threat that will come into play in the coming year. Infosys, on the other hand, has done a good job of diversifying its portfolio across verticals and markets, which provides some insulation against headwinds. It would be good to see some excitement in the sector in the next couple of quarters!”