Infosys has beaten TCS in constant currency revenue growth in four of the last five years

• Despite the March quarter shocker, Infosys has beaten its larger rival TCS in four out of the last five financial years in terms of constant currency revenue growth.
• TCS’ underperformance during these years could be one of the reasons for outgoing CEO Rajesh Gopinathan’s sudden resignation, as per reports.
• While Salil Parekh-led Infosys has delivered during the highly volatile Covid-19 pandemic when TCS struggled, it remains to be seen if it can continue to outperform its larger rival.

Even as it delivered disappointing March quarter results, the Salil Parekh-led Infosys has beaten its larger rival Tata Consultancy Services (TCS) in four of the last five financial years in terms of constant currency revenue growth. Through all these years, TCS was led by its outgoing chief executive officer (CEO) Rajesh Gopinathan.

Gopinathan’s sudden resignation, announced in March, comes at a time when the IT sector’s future looks uncertain due to concerns of demand slowdown going ahead. TCS and Infosys’ commentary while announcing the March-quarter earnings further highlighted these concerns.

For context, Gopinathan received a 5-year extension as TCS’ MD and CEO in 2022, which means his term was valid till 2027. So, what explains his sudden resignation? We try to decode this by digging into numbers.

Gopinathan’s sudden resignation: More to it than meets the eye

It’s not just the uncertain future that might have led to the leadership change at India’s largest IT services company. There have been murmurs about Gopinathan bowing out because TCS underperformed Infosys under his leadership, and now numbers back this up.

According to a Business Insider India analysis, Infosys is ahead of TCS by 2.42% on average in constant currency (cc) revenue growth between FY19 to FY23. Noteworthy in this period is FY21, a year marred by the Covid-19 pandemic – Infosys delivered a 5% revenue growth (in cc terms) while TCS reported a degrowth of 0.8%.


Analysts at Nuvama Institutional Equities also termed Gopinathan’s resignation as a surprise. Further, while TCS said that Gopinathan would continue with the company till September this year to assist with the leadership transition, CEO-designate Krithi Krithivasan is now set to take charge three months earlier, in June.

It’s not just the revenue growth where TCS has underperformed its smaller rival Infosys – the company’s stock has also delivered a return of 84% over the last five years. Infosys’ shares, on the other hand, have recorded a growth of 114% in the same period.

To Gopinathan’s credit, however, TCS has beaten Infosys in terms of operating margin in all the past five financial years, recording an average of 25.1% as compared to Infosys’ 22.52%.

Tough times on the horizon

Leading TCS going forward will be Krithi Krithivasan, another company veteran who until now led the company’s BFSI vertical (banking, financial services and insurance). While Krithivasan has so far maintained that there won’t be any major strategy changes, the banking sector crisis in the US and Europe will require him to be more agile.

The going looks tough for Infosys, too, especially in light of its Q4 shocker and commentary about “unplanned deal ramp downs”.

With the US and Europe expected to record GDP growth of 1.6% and 0.8% respectively in 2023 according to the International Monetary Fund’s latest World Economic Outlook, navigating economic uncertainties will require a wartime CEO given that the US and Europe are the biggest markets for Indian IT companies.

Krithivasan will not only have to navigate these tough waters, he will also have to deliver on another front – outperform rival Infosys.

To Infosys CEO and MD Parekh’s credit, his company has outperformed its much bigger rival even during the highly volatile Covid-19 pandemic. It remains to be seen if Infosys can continue this outperformance.

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