Financial Analysis of Companies:tcs,wipro,satyam

Overview-Indian IT Services Sector:

Indian IT industry started in 1970s had a slow growth in the initial years, with most of the efforts being made by Public Sector Undertakings and other large users like defense. It started in a big way in 1984, when some real reforms were brought in by the government. However 1990s saw the real action and the Indian expertise and talent was recognised; companies started getting quality certifications like CMM which is now CMMi and had the largest share of such certifications in the world. The Indian software industry is growing at a rate of more than 50 percent a year, and the country appears to be on track to achieve IT exports of U.S. $50 billion by 2008 (Carretek n.d). The IT industry's contribution to GDP rose from 1.2 per cent in 1999-2000 to an estimated 4.8 per cent in 2005-06 (IBEF, 2007). According to Nasscom , the strength of the Indian software industry is indicated by the fact that the export revenues has grown at a Compound Annual Growth Rate of 35 %.

Advantage India:

 Largest Pool of Technical Talent

 Comparatively high exchange value

 Young working population compared to the West

 Highly educated workforce fluent in English.

 High-end technological infrastructure to connect and communicate with any part of the Globe

 Low salary compared to other countries.

 Government support for setting up companies

 Tax Holidays under STPI for 100% EOU (Export Oriented Units)

Forces driving the Industry

Three major factors affecting software industry is given below (Wilson, 2001):

Threat of new entry:

• The barrier of entry which lies in some industry does not exists in IT or software services industry. Software Company can be started with very less capital investment. It basically needs computer and the knowledge to do software. Because of this low barrier to entry and high rate of success, competition tends to be acute.

• Another threat of entry is access to distribution channels. Company will be having their own marketing team to market their products. But it can be overcome by selling through