A comparative analysis was conducted among five prominent companies in the IT sector, namely TCS, INFY, HCLTECH, WIPRO, and TECHM, covering the fiscal years FY18 to FY23. These companies were considered collectively to represent the industry as a whole for analytical purposes.

This analysis was based the total forecasted revenue for the industry, derived from the quarterly earnings of these companies up to the present date. TCS emerged as the market leader among the IT firms, accounting for 37.9% of the total revenue, followed by Infosys at 24.4%. Over the five-year period, Infosys exhibited the highest revenue growth among the group, with a compound annual growth rate (CAGR) of 15.8%, trailed by HCLTECH at 14.9%, and TCS at 12.9%.

The above graphs shows the net income for FY23 among the peers with 5 years ROE average. Looking further, TCS has the highest average net income margin of 20.3%, while the average margin of TECHM stood the lowest margin at 11.7%. TCS maintained a consistently high Return on Equity (ROE) throughout the period, averaging 38.2%, followed by Infosys with an average ROE of 27%. The highest annual ROE was attained by TCS in FY23 at 46.2%, whereas Wipro recorded the lowest at 15.97% in FY18.

As of March 31, 2023, the combined workforce of these firms totalled to 15.93 lakhs, with TCS employing 6.14 lakhs people, the most among the firms. The average compensation per employee across the industry stood at 22 lakhs per annum, with HCLTECH offering the highest average compensation of 24.5 lakhs, and TCS offering the lowest at 20.7 lakhs. When assessing the average revenue generated per employee, HCL led the pack with an average of 44 lakhs per annum. Followed by INFY with an average of 40 lakhs.

Observing the net returns gained by shareholders for each 100 ruppee spent for employees, TCS showed the highest 5-year average of Rs.36.8 for every Rs.100, followed closely by INFY with Rs.35.2 while the peer average was at Rs31. INFY recorded the highest net returns in FY18 (Rs.42 per 100), while TECHM experienced its lowest returns in FY23(Rs.19) among the group.

Insolvency risk, None of the selected companies face this risks, as their current assets exceed their combined liabilities by at least 1.42 times.

Date - 12th Feb '24; Source - Company Annual reports ;

LR