Damo Consulting, one of the leaders in the consultancy for healthcare enterprises and technology, recently studied the quarter ended December 31th for the top 5 offshore IT services firm. They came up with some interesting insights. Given that the healthcare is one of the hottest markets for technology firms, the research team at Damo Consulting initiated an effort to understand the IT major’s footprint and growth in this sector.
The research kicked off from the most recent quarter’s earnings releases from numerous public companies. And according to Damo Consulting, the following are the rationale behind it:
• To focus on the immediate situation to get a quick snapshot that can provide directional insight
• To focus on facts that were part of regulatory reporting requirements and avoid press releases and other information that could pertain to marketing or promotional messages.

Five companies were randomly selected for this research; Cognizant, HCL, Infosys, TCS, and Wipro. These are referred to as the big 5 offshore IT major. As far as this analysis is concerned, there is no attribution to any significance to where the companies are incorporated.
In December 2015, Chennai, India, one of the big offshore centers for IT and IT-enabled services experienced devastating floods. The impact of the floods on operations during December with regards to the statements from the companies is highlighted below.
• Cognizant (CTS): the impact of the flood is negligible. Their revenue is $951.9 million which is 29.47% of total revenue. And they recorded a growth of 1.4%.
• HCL: HCL Technologies has been positioned as a leader in the IDC Marketspace Worldwide Life Science Manufacturing and Supply Chain ITO Assessment 2015, released in October 2015. HCL won a deal to Design, Build, Host, and Operate a Primary Source Verification system for a US based healthcare services firm. Their revenue is $191.05 million which is 12.2% of the total revenue, with a 0.3% growth. Their cash flows was negatively affected as a result of the Chennai flood.
• Infosys: the flood had a negligible impact. Their growth was 3%, revenue $185.34, a 7.7% of total revenue.
• TCS: their growth declined by .5% which the management attributed to factors which include the Chennai flood. Their revenue is $302.58, 7.3% of total revenue. Their services were engaged by a leading European Life Sciences company to transform its product safety monitoring operations by leveraging data analytical insights from social channels.
• Wipro: they also recorded .5% reduction in their quarter on quarter growth margin due to the Chennai flood. Their revenue is $220.56, 12% of total revenue. A leading global nutrition, health and wellness company selected Wipro to enable the migration of a significant portion of its global IT applications estate to a hybrid cloud. As part of the engagement, Wipro will provide IaaS (Infrastructure as a Service), PaaS (Platform as a Service), an integrated hardware-software-services stack, and billing-metering-chargeback in a completely outcome-based model. In February 2016, they announced buying HealthPlan Services worth $460 million.
The result provides the following insights:
• Size matters: the fact is Cognizant’s revenues are an order of magnitude higher than the nearest competitors in the sample, but the overall revenue numbers are only a part of the picture. Size can be a very important factor for some buyers.
• The composition of revenues from the healthcare practice in the sample varies widely: the variations are due to the representation of segments (for example, Life Sciences) or the offering type (for example, infrastructure support) in overall revenues. Unfortunately, segment level information is not available for the most part. But considering the qualitative remarks, one can draw some inferences. For instance, HCL emphasizes their growth in the life sciences space and in infrastructure, so directionally; these appear to be their areas of strength.
Cognizant, with its recent acquisition of Trizetto, is likely to have a revenue mix today that is significantly different from the peer group and also from its past revenue profile. So will Wipro, with its recent announcement to acquire Healthplan Services. No company has provided a breakout of revenues between payer and providers segments within healthcare.

One of the biggest questions that arose during this research was what defines a healthcare practice? Another question was what is the level of engagement for these companies in next-generation offering such as cloud, digital, analytics and IoT in healthcare? The answer to these questions and the difference are very important for buyers when selecting a strategic partner. These are also important technology firms in determining growth and competitive strategy.