Despite being one of the pioneers of the "Global Offshore Delivery Model" (which entails managing software projects from remote/offshore locations such as India, leveraging on lower labour costs and project management capability), the offshore contribution of TCS at 36 per cent for the period ended December 31, 2003 was lower than 49 per cent for Infosys for the same period and 42 per cent for Wipro (from its Global IT Services and products business unit) for the year ended March 31, 2004. Typically, lower offshore revenues contribute to lower operating profit margins, while higher onsite contribution account for higher realisation. This, to a large extent, holds good for TCS, especially in relation to Infosys.

In contrast, however, for the same period, the contribution of TCS from fixed price projects at 56 per cent was higher at 56.3 per cent vis-à-vis 36 per cent for Infosys and 27 per cent for Wipro, with the balance coming from time and material projects. The higher contribution from fixed price, fixed time projects represents both an opportunity and risk. A higher proportion of fixed price projects points towards better project management expertise and systems maturity to undertake these projects. In turn, this can also translate into higher gross margins (Total revenues - Cost of software development revenues). It is also a risk, however, as any delay in project execution will have to be borne by a vendor such as TCS.

However, it may be important to note that the GE Group is one of the largest offshore customers of TCS and accounted for nearly 16.7 per cent of its total revenues (of Rs 5,085.2 crore) for the nine months ended December 31, 2003. Among the listed entities, Patni Computer Systems and iGate Solutions are the two other large companies that rank the GE Group as each largest customer. For TCS, the GE group is one of its valued customers, with whom it has had an association exceeding 10 years. Unlike Infosys, which did not renew its software sourcing agreement with GE in 1995-96, and Wipro which ramped it down in the first quarter of 2001-2002, TCS has continued to nurture this relationship.

On the service offerings front also, TCS and Infosys are more or less on an even keel at a broad level, as break-up under different heads is not available. For instance, application development, maintenance, re-engineering, testing and engineering services (taken as a whole) account for 77 per cent and 70 per cent of revenues of TCS and Infosys respectively. The other major contributor is package implementation for both these players.

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