The top four outsourcers on Everest Group’s annual ranking of the top IT service providers has remained unchanged this year, with Accenture taking the top stop for the third year in a row. However, the real headliner may be the outsourcing market itself, which grew nearly 9 percent over the previous year in constant currency terms. “This momentum in growth was visible across the top four in the IT services categories Everest Group evaluated,” says Everest Group vice president Abhishek Singh.
But an increased reliance on outsourcing wasn’t the only thing boosting Accenture, TCS, Cognizant, and Wipro to the top of the charts. “The top four invested significantly in enhancing their capabilities [through intellectual property], upgrading their talent model, and increasing their local presence across the globe,” Singh says.
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But each of these outsourcers is taking a slightly different tack. Accenture has made a case for itself as a business transformation partner while TCS has focused on systems modernization. Cognizant and Wipro meanwhile have built solid brands at both ends of that spectrum.
“To be retaining their positions while playing varied roles in the market is a testament to the strong demand for IT and digital services,” says Singh.
Top 10 IT service providers of the year
Credit: Everest Group 2019
Everest Group has been ranking service providers based on their performance in 26 categories, including key business lines, geographies, and technologies. The consulting and research firm also categorizes service providers as leaders, star performers, major contenders, or aspirants in each area. This is the fourth year the company consolidated that information for 85 providers to come up with overall rankings for the global outsourcing industry.
Elsewhere on the list, HCL rose one spot to No. 5 in the past year on the strength of its next-generation services, according to Everest Group. These services include cloud-native services, analytics, and digital transformation, and HCL performed particularly well in its largest sector, banking and financial services.
Capgemini also improved its position, leaping two spots to No. 6. “Their efforts to re-organize along key verticals and create a unified go-to market globally resulted in a better value proposition and better adoption in the market,” says Singh.
IBM, on the other hand, fell from fifth to seventh in the rankings due to a mix of missed opportunities and misaligned strategies, Singh says. “IBM Watson was hit and miss. Their cloud story faced strong headwinds from AWS, Azure and, Google.” As a result, IBM appeared more flat-footed in meeting changing enterprise demands than its more nimble competitors Accenture, TCS, and Cognizant.
Infosys, too, slipped from seventh to eighth, despite a year of stable growth and decent improvement in capabilities. “The acceleration witnessed from others, especially Capgemini, pushed them down the leaderboard,” says Singh. The company was also going through a leadership transition with a new CEO taking over at the beginning of the year.
Accenture was also named leader of the year by Everest Group, a title it has retained for the past few years with no likely challengers on the horizon, except for TCS, which offers a very different value proposition.
“The only situation which may lead to Accenture dropping from its overall leader position is if the nature of demand shifts significantly towards modernization-first, where TCS excels,” Singh says. “Accenture’s transformation-first strategy is paying them good dividends, and we do not see them changing that despite the fact that they have a strong modernization value proposition.”
For its part, TCS was named Everest Group’s “star performer.”
“TCS’s ability to expand existing relationships through strong execution credentials has been talked about for a while,” Singh explains. A platform approach has created strong traction with customers enabling the company to extends its existing relationships beyond traditional contractual constructs.
Also worth noting, just outside the top 10, is LTI in 11th place. LTI’s upward momentum is proof that size no longer matters as much in IT outsourcing. This long-time “mid-tier” player is now a solid challenger in the IT services market.
“LTI has shown a good appetite and built credentials for large deals focused on modernization, transformation, and digital,” Singh says. “In a market where the enterprise procurement lens is shifting from a ‘Tier 1-2-3’ methodology to a role-based methodology, LTI’s growing presence is a case in point about small but nimble and capable organizations becoming highly relevant for large enterprises.”
While the story for 2018 was robust growth, 2019 may be the year customers and their providers really roll up their sleeves and address technical debt and systems modernization.
“In many ways, the push towards digital in the last few years left the modernization question hanging in between,” says Singh. “What the market has realized is that digital cannot truly succeed with a suboptimal technology and data estate. In 2019-2020, that is where the focus of IT spend will — and should — be.”
This content was originally published here.