it outsourcing

Accenture, TCS, and Cognizant remain atop an IT Outsourcing service provider market in a year of global upheaval and talent challenges, according to Everest Group’s 6th annual rankings.

The top four outsourcers on Everest Group’s annual ranking of the IT Outsourcing Service providers remain unchanged this year, with Accenture taking the top stop for the fifth year in a row. Coming in behind Accenture are TCS, Cognizant, and Wipro.

All four continue to be the preferred partners for large enterprise buyers, particularly during the uncertainty of 2020. “Despite early challenges during COVID, all of them continued to be strong on execution even as service resilience and India as a reliable location for global IT Outsourcing Services delivery came into question,” says Abhishek Singh, partner with Everest Group.

While the top four remain solidly atop this list, their future rankings are not necessarily certain giving ongoing challenges of talent availability and upskilling.

Another nuance to note among the top four IT outsourcing providers is the significant amount of changes seen within Wipro and Cognizant in the past two years. Brian Humphries, former CEO and board member of Vodafone Business, joined Cognizant as CEO in April 2019, where he has focused on growing the company’s international market and expanding its innovation portfolio. Thierry Delaporte — the former COO of CapGemini, who was credited with overhauling its India operations — took over as the new CEO of Wipro in July, driving the company’s stock price up before he even began his tenure.

“Both organizations — especially Wipro — appear to have stabilized under their new leadership,” Singh says.

This year’s ranking has HCL edging out Delaporte’s former employer CapGemini for the No. 5 spot, pushing CapGemini to sixth. The switch is more a reflection of HCL’s array of services aligned with pandemic-related needs than any underperformance by CapGemimi’s.

“Capgemini did not do anything wrong. It continues to be a strong and a very fast evolving player,” says Singh. “However, HCL was able to position itself slightly better given its portfolio of services, including workplace solutions, and were primed for demand arising out of the COVID situation.”

Top 10 IT Outsourcing Service providers of the year

  1. Accenture
  2. TCS
  3. Cognizant
  4. Wipro
  5. HCL Technologies
  6. Capgemini
  7. Infosys
  8. IBM
  9. DXC Technology Company
  10. NTT DATA

Credit: Everest Group 2021

Other IT Outsourcing Service providers moving up the overall list of top 25 IT Outsourcing Service providers were India-headquartered Infosys (moving up from eight place to seventh) and LTI (Larsen & Toubro Infotech, from 16th to 11th). US-based Deloitte also moved up, to the 12th spot from 15. “Infosys continues to perform better in the market, both on new deal wins and existing deal executions,” Singh says. Infosys does particularly well on the Everest ranking because client feedback is a significant factor in the calculation.

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 year the company consolidated that information for 100 providers to come up with the overall rankings for the global IT outsourcing industry.

LTI tied with HCL and Accenture for the special distinction of top star performer, denoting that they say the greatest positive movement in evaluation year over year. “All three have shown strong movement on capability enhancement — Accenture on cloud, HCL on products and platforms, and LTI on overall infrastructure services — and achieved growth at the same time,” explains Singh.

LTI was also named the top IT Outsourcing Service provider challenger, Everest Group’s designation for companies with less than $2 billion in revenue that are credible partners for enterprise customers in the digital-first era. Also worth noting in the small but mighty category is Coforge (formerly NTT Tech) up from seventh to fifth place on the challenger ranking. 

“Coforge has continued to make significant advances under a new leadership,” says Singh. “It has transitioned from a slow growth midsize player to be considered in the fast growth pack of challengers.”

While six of the top 25 IT Outsourcing Service providers retained their ranking on the top 25 list, seven slipped. Within the top 10, IBM fell from No. 7 to No. 8, held back in part by its infrastructure business (since renamed Kyndryl and spun off).

“IBM’s fall is part of a secular trend we have seen across the years,” says Singh. “With the divestment of Kyndryl, we hope to see a stronger growth profile from IBM. However, since our awards are based on a wide range of evaluations that range from the new (IBM) to the old (Kyndryl) service types, IBM’s rise in our service provider ranking may take a few cycles to accomplish.”

Looking ahead, Accenture remains the firm to beat. “From the depth of services (from design to implementation) and breadth across horizontal and vertical segments, Accenture continues to stay ahead of the pack,” Singh says. “TCS continues to be a strong contender as they are able to manage transformation at scale.”

Availability and project-ready talent will make the difference: both big issues for enterprise IT buyers. “There is a huge demand-supply gap, which is spiking attrition for IT Outsourcing services players, impacting execution,” says Singh. “For next-gen technologies such as cloud and data, quality of available talent is adding to the complexity. Hence, service providers have a two-pronged challenge: talent acquisition and skill development. Both are challenging, but upskilling is a long game: much more difficult plan and execute.”

Accenture could falter if it is unable to keep its execution engine running. “High attrition, high prices, combined with poor provisioning or execution are aspects that enterprises watch closely from a supplier risk perspective,” Singh says. “Any vulnerability or opening and competitors are prepared to jump in and snatch their meal.”

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