Are Indian IT companies real technology company or just an employment Bureau??

India has successfully written its IT services glory for last 20 years for its cheap labour cost.However this is now not true any longer . That’s why the companies which were once showing 20-40% CAGR growth now struggling for 3-7% growth….

In India we have TCS, Infosys, CTS, TechMahindra and many other companies are doing their business since last couple of decades.

Among all TCS is more valued company with $90 Billion market.

In FY-14 TCS had over 3,00,000 (3 lacs) employees and reported a revenue of $13.44 billion. To grow it’s revenue at the rate of 15% for next 5 years it has increase it’s employee base to 6,00,000 (6 lacs) by FY-19. Managing attrition, productivity, quality and very high fixed wage costs will be a huge challenge for the company. Any downturn in business from western world would severely hurt the company’s financials and profits.

From the above analysis one thing is evident that TCS is increasing their employee base to cater service and do not have real product line up to boost their revenue like Apple , Google and Microsoft etc. All Indian IT companies are staffing companies. In fact in the above case Revenue per employ almost stagnant and it is negative in 2014 if i will compare with 2005!!!!!

Just have a look on Apple revenue per employee which increased YOY.

Note: Investors friendly technology companies dependents on technology for its growth not Human Resources like above.

Mr. Murthy(Ex Infosys Founder) truly told:

Indians have failed to produce any invention that has had global impact like electric bulb, MRI or GPS in the past 60 years.
Murthy claimed that "the only two ideas that have transformed the productivity of global corporations - The Global Delivery Model and the 24-hour workday - came from the company called Infosys". There can't be anything farther from truth than this statement. Indian companies are focused on services based on "Global Delivery Model" and low-end coding business, while American companies sell products.

Why are Indian companies not developing products? Where is the innovation?

Disclaimer:

I have not invested in any of the above IT companies now for this reason.My view may change if i will see any development in any of the Indian IT companies from product and non-liner growth in revenues on the back of innovation..My writing has been inspired by http://vikrammg.com/ , http://www.dailyo.in/ and http://www.businessinsider.in/

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