Large IT services companies like TCS, infosis and wipro have widened the gap with their smaller peers in terms of revenue, strategy and differentiation. The top-tier firms have been outperforming in terms of profitability, revenue-per-employee and growth. The country’s top three IT vendors have accounted for 46.4% of exports from India during FY08. Report in this regard was recently released by Forrester.

Small and mid-sized IT companies are struggling to grow the base in their existing clients. On the other hand, the companies with revenue above $1 billion are growing their revenue by 30% despite tougher economic conditions.

There is a growing divide between top companies and other sub-billion firms. Most of small and mid-size vendors are marginalized and plagued by low growth in terms of revenue and orders by big companies like TCS, Infosis and Wipro. The shares of top 3 vendors in IT Services export have continued to grow at a steady rate. These companies had 26 percent share in IT services exports in 2004, 40 percent in 2007 and will have 46.4 percent share in 2008 according to estimates by market experts.

The top 3 Indian companies enjoy offshore vendor revenue of more than $4 billion. The next three companies Cognizant, Satyam and HCL Tech, have revenue of $1 billion. This polarization has significantly increased in the past two years following which small IT companies are suffering loss.

Forrester's study has also thrown light into higher profitability enjoyed by the big league in Indian IT industry. Their revenue growth is 30 percent and profitability is at 20 percent. Most small and mid-sized vendor in India lacks specialization despite clients over the globe. These companies have a high ADM concentration, poor vertical strategy and domain capability which are primary reasons for decline in their growth. Most small and medium companies are also unable to handle competition. Falling dollar, and drop in resource productivity have created a negative effect on their growth. That’s why they were struggling to grow with their current clients and unable to get into large relationships with clients.