Tata Consultancy Services (TCS) has overtaken some of the world's top technology firms like IBM, Accenture and HPE in IT Service sector this year, adding $1.3 billion of value to its brand, which is now worth $10.4 billion, said a report. TCS rose 14% in brand value compared to 1% of IBM and negative growth of 4% and 65% of Accenture and HPE respectively.
According to Brand Finance, an UK based independent brand valuation and strategy consultancy firm, TCS's growth contrasts with stagnation in the sector, which saw the combined value of the 13 brands in both 2017 and 2018's rankings slip 1% to $94.4 billion. TCS's 14% rise in brand value is in stark contrast to many of its peers, including cognizant (-10%), Infosys (-3%), Fujitsu (-14%), Wipro (-7%) and Xerox (-33%), whose brands have either stagnated or lost value.
The report attributes TCS growth to its digital services which includes Cloud, Cybersecurity, IoT, Digital Interactive, Enterprise Intelligent Automation, Enterprise Application Services, Consulting & Service Integration and Cognitive Business Operations among others. Digital services saw 40% increase in year-on-year revenues in the third quarter to December 2017 with more than 150 contract wins, including the division's first $50 million-plus client. An additional 12,543 employees were recruited, taking the total to 390,880. Despite its strong business performance, TCS' Brand Strength Index (BSI) score and brand rating stayed at 78 and AA+, said report.
“Spending on traditional IT outsourcing has reached a natural limit and companies have been slow to reposition around value-added services with a few exceptions. TCS has done a great job over the past 4-5 years shifting perceptions, positioning themselves as an international company at the forefront of technological developments, which is a fair reflection as that is where they generate the majority of revenues and where they are expanding,” said Savio D'Souza, Director at Brand Finance.
Overall, IBM retained its position as the IT Services sector's most valuable brand, with a 1% rise in brand value to $19.5 billion. IBM's brand rating improved two scores to AAA and its BSI was the highest in the sector by almost 10 points at 87.6. In fourth quarter of 2017 IBM broke a 22-quarter streak of declining revenues with 3.5% growth, though 2.5% of this was attributed to the weaker dollar and annual sales were down 1% at US$79.1 billion.
“IBM is a very strong and well respected brand within the industry. If it can leverage that reputation, it will be able to gain momentum in areas where it has been slow to move, particularly cloud computing. IBM is focusing on repositioning itself as the leading provider of cloud services, blockchain and AI for enterprises,” said D'Souza.
Accenture, the sector's second most valuable brand, lost 4% of its brand value, which now stands at $16.8 billion. The fall is likely to be a blip for the consultancy, which has invested heavily in differentiating itself in digital, cloud and security services, which now account for more than half of its revenues. Of the $10 billion in new bookings for first quarter of 2018, 59% were in consulting.
Aside from TCS, Capgemini was the only company in the top 15 to achieve double-digit brand value growth, gaining 10% to $4.6 billion. Capgemini generated 30% of its €12.5 billion revenue from its new Digital & Cloud offer and has positioned itself well as understanding how to implement these key technologies.
HPE's woes continued, with brand value down 65% to $3.1 billion. The company plunged from 4th to 12th in the ranking. HPE was formed in November 2015, when Hewlett-Packard split the PC and printers business from the enterprise products and services business. In 2017, HPE spun off its enterprise services division as DXC Technology and its software business to Micro Focus, with DXC now treated as a separate brand with a brand value of US$6.0 billion, a BSI of 64.0 and a lowly brand rating of A+.