1. The Growth Story
Revenue growth rates across the industry fell to modest levels
by Ed Nair
T He 2010 GS100 survey participants repre-
sents about $73 B in revenues. This is a sig-
nificant measure though it is the aggregate of
companies of different sizes and therefore diverse
customer types. According to a recent report by
tion on projects, subcontracted programming and
others. Clearly, this was neither the year for such
companies to get work from companies with ma-
ture outsourcing practices nor it was the year to get
work from companies who were venturing out to
TPI, the Forbes Global2000 companies collectively outsource the first time.
spent $71B in annualized contract value on out- There are many bright spots of excellence
sourcing in 2009. amongst companies in the revenue range of $10M
Since the companies in the GS100 survey repre-
sents a diverse set of companies, it would be useful
Revenue Growth
to look at growth patterns across different catego-
ries of company sizes. The average industry revenue Category 2008 (in $M) 2009 (in $M) Growth %
growth rate is 15.7 % over 2008. $1M to $10M 48 55 14
It was decidedly a bad year for upstarts in the out- $10M to $100M 1,237 1,393 12.6
sourcing industry represented by companies with $100M to $1B 12,298 12,917 5
annual revenues of less than $ 10M. Many of these $1B+ 49,810 58,999 18.4*
companies have very narrow specializations or they Total 63,393 73,364 15.7
offer undifferentiated services like staff augmenta- *due to merger between Stream and eTelecare. Leaving this outlier, the growth rate is 3.5%
12 GlobalServices www. globalservicesmedia.com GS100-2010

2. Special Report
to $100M. Such companies have the critical mass $1M-$10M $10M-$100M $100M-$1B $1B+
and the ability to aggregate resources into one or
North America 60 62 52 57
more areas of specialization- often in areas like ap-
Latin/ South
plication development, product development, low 4 5 7 5
America
footprint infrastructure services like desktop man-
EMEA 18 25 29 27
agement, and others. These companies often look
for opportunities to scale up. In 2009, this group of Asia 14 7 9 10
companies that traditionally enjoyed high growth Japan 1 0 1 0
levels had to settle in for tapered down growth of Australia 3 1 2 1
12.6 %.
Companies in the revenue range of $100M industry average growth rates (XChanging, Wipro,
to $1B, a wide swath of revenue, make the most HCL Technologies), a few of them posting single digit
promising group. These service providers are large growth figures (Genpact, TCS, Infosys, nCO, CSC,
enough to handle almost two-thirds of the market CGI) and a few of them posting declines in revenues.
opportunities (in terms of scope, contract sizes, The geographical revenue splits for companies
etc.) and they are small enough to concentrate their across all categories are nearly uniform. It shows
efforts, seek leadership, and innovate. While these that north America continues to be the most im-
companies have the ambition to scale up to $1B portant market followed by europe. Asia and Latin
and are constantly seeking growth new opportuni- America are emerging markets partly due to local
ties, they also go through the excruciating pains of companies serving the domestic market ( and many
growing up. Unfortunately, these are also the com- of them are represented here) and the rest due to
panies who get stuck in the ‘mid-tier conundrum’. large companies by foreign companies. For exam-
The year was the toughest for this group: a growth ple, a Chinese provider like neusoft handling the
rate of 5 % due extreme price pressure, unwilling- domestic Chinese market or an IBM Global Services
ness from companies to hand out projects with new handling strategic outsourcing for an Indian bank
scope, clients rationalizing their vendor portfolio, would have higher revenues in Asia.
and a depressed demand from verticals like finan- Despite being the largest market, the share of
cial services, telecom, retail, and CPG amongst oth- north America in 2009 has come down from what it
ers that were the mainstay verticals for companies was in 2008. This is due to the combined effect of the
in this category. relative but temporary softness of the US market and
Amongst the larger companies ( above $1B) the the geographic de-risking strategies employed by ser-
growth rate of 18.4% that we see is an anomaly that vice providers. especially, many of the Indian vendors
stems from one outlier- the merger between Stream ramped up focus on the european market (which in
Global Services and eTelecare. Read the growth rate 2009 seemed more stable) because of the softening of
here as a very modest 3.5 %. Such a growth rate comes demand from US financial services segment and the
on the back of a few of the vendors posting above mid-year rupee-dollar fluctuations. GS
Top 5 Fastest Growing Companies Top 5 Fastest Growing Companies
$10M to $100M $100m- $1B
No. Company Country No. Company Country
1 Bleum Inc. China 1 Hildebrando Mexico
2 Corbus USA 2 Aegis Limited India
3 Transactel S.A Guatemala 3 CPM Braxis Brazill
4 eClerx Services Limited India 4 VanceInfo Technologies China
5 Globant Argentina 5 ITC Infotech India
Notes:
1. Company revenues and revenue growth rates are not published as per GS100 survey guidelines. Revenue growth rates reflect both organic and inor-
ganic growth but excludes internal reorganization of business units that may lead to an upsizing of the company.
2. Fastest growing companies are listed for company sizes $10M-$100M and $100M-$1B only because revenue growth in these two categories are better
evidence of companies’ quest for growth.
GS100-2010 www. globalservicesmedia.com GlobalServices 13