The tables are turning in India’s glamorous information technology sector. Some smaller niche software exporters have garnered more attention of investors than blue-chips such as Infosys Technologies Ltd., Tata Consultancy Services Ltd. and Wipro Ltd., especially after their modest financial performances in the six months through March 2011.
In the last three months to date, shares in medium sized IT companies KPIT Cummins Infosystems Ltd. are up 15%, Hexaware Technologies Ltd. is 22% higher and outsourcing firm eClerx Services Ltd. has gained 22%. In contrast, sector heavy weights TCS – India’s largest software exporter – is up 3.3%, second-largest outsourcer Infosys is down 7.5%, while Wipro is 1.2% higher. The benchmark Sensex rose 3.5% during the period.
Sustaining their winning streak, Monday, shares of mid-cap companies KPIT Cummins closed up 3.8% at 170.05 rupees ($3.78), while Hexaware was up 2.5% at 64.50 rupees. Larger players Tata Consultancy closed up 1.0% at 1,153.25 rupees, while Infosys Technologies was down 0.3% at 2,780.20 rupees. The benchmark index was down 0.2%.
The small-sized Indian technology companies were trailing their larger counterparts in growth through a greater part of the global slowdown that began in 2008. Most of them lacked the scale to deal with the severe cutback in IT spending by global clients and incurred heavy losses.
And in 2010 the smaller firms didn't reap the benefits of a peak in outsourcing demand for India's IT sector as clients cleared backlogs of projects which they had deferred for nearly two years. They lacked exposure to the financial services sector that led the turnaround and faced competition with the larger firms, which started eyeing low value deals, too.
But as growth is returning to the near pre-recession levels, the large companies are expected to focus on high-value deals, leaving room for smaller peers to spread t [...]
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