WNS posted a solid Q4 in 2020 with a slight revenue decline over 2019 at -0.3% and an operating margin of 17.3%. However, in-spite of COIVD the firm did manage to post an overall growth for the calendar year at 3% – largely due to its strong Q1.
Mphasis continued to post strong results in spite of COVID, with an 8.4% growth for the quarter and operating margin improvement to 16.4%. It grew an impressive 11.9% in spite of the COVID head winds.
Zensar continue to post poor growth figures with -14.8% decline in revenue from the same period in 2019. However, the firm is maintaining operational strength posting improved operation margin at 15.9% and has indicated improvement in pipeline going forward.
There is no easy way to put it, this quarters results for IBM’s services groups aren’t great. With another quarter of declining revenue and negative operating margin for its Global Technology Services (GTS) unit. When many of the other large services companies showed positive growth in Q4, GBS posted an improved -1.7% and GTS posted -5.5%. Although sequentially the revenue is up, this is typical seasonality for IBM in Q4. However, the declines are not as steep as last year and there is an improvement in GBS as we move away from COVID. As this is the business IBM is looking to retain that is positive news – as is the uptick in revenue for its BPO business. IBM is still balancing the need to drive opportunity from its legacy application management business through modernization projects, refocus on bringing more of its innovative technology like AI and Automation to bear with its professional services and leveraging its hybrid cloud technologies through Red Hat.
Louis Gerstner, exIBM CEO, once said” It isn’t a question of whether elephants can prevail over ants. It’s a question of whether a particular elephant can dance. If it can, the ants must leave the dance floor.” IBM is changing the music once more, let’s hope the new tune will encourage the reluctant elephant to dance once more.
As I mentioned in my first of the blogs this is a placeholder for the Q4 2020 data – so the charts here will change and get updated as more results come in. So apologies if the text doesn’t change that much here – the data is really telling the story and that is what is being updated.
Looking at the first chart we can see the results on a quarterly basis for all these firms – the top chart plotting year on year growth for the quarters and the bottom chart showing operating margin. You can see calendar Q4 2020 results have continued to show improvement and these companies navigate away from the COVID-19 related problems of Q2 and Q3. It’s encouraging that all of the firms have see sharp improvements in growth and have maintained robust margins. This has been limited to just the global major providers as the chart was starting to get very busy, but I have posted a full chart with growth lower down in Exhibit 4. Don’t forget that the key on this chart can be used to highlight the provider you want to see and you can see the exact data used for any data point by rolling the cursor over it.
Exhibit 1 – Digital IT Services quarterly results 2018 to 2020 for the global major providers
[iframe width=”750″ height=”900″ seamless frameborder=”0″ scrolling=”no” src=”https://public.tableau.com/views/EarlyBirdRev2/MarginvRevenueSoFar?:language=en-GB&:display_count=y&publish=yes&:origin=viz_share_link&:showVizHome=no&:embed=true”]
Source: Market Prescience Analysis of Company Financials. All quarters as a close to calendar quarter as possible.
Whilst you can see a strong curve back to growth for all of the players, the stellar Q3 and Q4 helping to get Infosys back on track – with growth in this quarter similar to rates pre-pandemic.
The second chart shows the calendar year performance of these companies – with the total revenue and annual growth. This just combines the revenue from the four calendar year quarters.
Exhibit 2 – Digital IT Services annual results 2018 to 2020 for players with published Q4 2020 results
[iframe width=”640″ height=”720″ seamless frameborder=”0″ scrolling=”no” src=”https://public.tableau.com/views/EarlyBirdRev2/USDComparisonYTDEB?:language=en-GB&:display_count=y&publish=yes&:origin=viz_share_link&:showVizHome=no&:embed=true”]
Source: Market Prescience Analysis of Company Financials. All quarters as a close to calendar quarter as possible.
Of the large services firms HCL, Accenture and Infosys have managed to grow revenues for the year, and are likely to have grown market share given the likely flat overall growth.
The third chart shows the results for each supplier in calendar Q4 2020 on a grid comparing operating margin against revenue growth.
Exhibit 3 – Digital IT Services quarterly results Q4 2020 (Calendar)
[iframe width=”600″ height=”600″ seamless frameborder=”0″ scrolling=”no” src=”https://public.tableau.com/views/EarlyBirdRev2/SupplierPerf?:language=en-GB&:display_count=y&publish=yes&:origin=viz_share_link&:showVizHome=no&:embed=true”]
Source: Market Prescience Analysis of Company Financials. All quarters as a close to calendar quarter as possible.
As you can see the performance from all most of the players has been a marked improvement over Q2 and Q3 2020. Which further shows investment in digital platforms and business agility has been a priority not just in spite of the pandemic, but in some cases because of it.
As the number of results increases some of the charts can become a little busy, so I have included a chart with just the revenue growth for all of the players at Exhibit 4.
Exhibit 4 – Digital IT Services quarterly growth all players so far
[iframe width=”750″ height=”900″ seamless frameborder=”0″ scrolling=”no” src=”https://public.tableau.com/views/EarlyBirdRev2/Growthsofar?:language=en-GB&:display_count=y&:origin=viz_share_link&:showVizHome=no&:embed=true”]
Source: Market Prescience Analysis of Company Financials. All quarters as a close to calendar quarter as possible.
Watch this space as I will be providing further updates as the results continue to come in Table 1 shows the timeline for the rest of the service players results. By all means contact me if you think I should include another services firm.
Table 1 – Results Calendar for Q4 2020
|
Supplier |
Publication date quarterly results to Dec 2020 |
| Coforge | End Jan (est) |
| CGI | 27th Jan |
| Fujitsu (Services) | 28th Jan |
| Persistent | 29th Jan |
| Tech Mahindra | 29th Jan |
| Cognizant | 3rd Feb |
| NTT Data | 3rd Feb |
| AWS | 4th Feb |
| Unisys | 4th Feb (est) |
| Genpact | 9th Feb |
| DXC | 11th Feb |
| Virtusa | 11th Feb (est) |
| Hexaware | 15th Feb (est) |
| Capgemini | 17th Feb |
| Tieto Evry | 17th Feb |
| Atos | 18th Feb |
| EPAM | 18th Feb |
| EXL | 20th Feb (est) |
| SopraSteria | 26th Feb |
| T-Systems | 26th Feb |
| Indra | 4th Mar |
