TCS generated incremental revenue of about $1.09 billion in the just-ended fiscal year, even though the overall topline grew just 7.1% to $16.54 billion - an ordinary year by the company's standards with it failing to post industry-leading growth rate for the first time in nearly a decade.
In comparison, Infosys raked in actual business of $790 million during a year that was widely seen as a comeback one for the company under the stewardship of Chief Executive Vishal Sikka.
Incremental revenue, or additional revenue generated in a given period, has become one of the most important benchmarks to track in India's $160 billion IT industry as it reflects the competitive strength of a company and its ability to win new contracts.
In the past five years, TCS has been the only Indian IT firm to consistently post well over $1 billion of incremental revenue every year. The only other IT services firm to enjoy similar success during the period is US-based Cognizant Technology Solutions, which also generated well over $1 billion on an average every year.
Experts tracking India's IT industry pointed out that while Mumbai based TCS maintained its lead over Infosys, the Bengaluru company has whittled the gap between the two considerably. For instance, last year TCS raked in nearly $2.01 billion of fresh annual business, about four-and-half times the incremental revenue that Infosys generated ($462 million). A year on, that gap stands at just about $300 million.
"While Infosys has the momentum, the road ahead is about balancing top and bottom line. Investments in industrialisation and automation have to be matched by sales execution. As TCS continues to the steal the march in terms of localization, the pendulum can easily swing again," said Thomas Reuner, managing director at HFS Research.
Experts said Infosys needs to consistently deliver robust numbers over a three-four year period to have any chance of snatching back market share that has already been conceded to rivals such as TCS and Cognizant and that one solid year will not disrupt the pecking order.
Cognizant has forecast revenue in the range of $3.18 billion to $3.24 billion for the March quarter. Even assuming that it meets the lower end of the guidance, the company would have generated at least $1.94 billion of incremental revenue for the April-March period.
"Infosys signed large deals worth $2.8 billion in FY2016, up from $1.9 billion in FY2015. We note that the company aspires to get the wins up to $1-1.5 billion/quarter, which will help build financial predictability," Kawaljeet Saluja and Jaykumar Doshi of Kotak Institutional Equities wrote in a note to clients last week.
"How will it get there? Relentless focus on execution, profitable conversion, automation and integration of capabilities will be some of the determinants in pulling up share gains in the renewals market.