A study by research firm Gartner stated that six of India`s IT service providers — TCS, Infosys, Wipro, Cognizant, Satyam, and HCL technologies, accounted for 1.9 per cent of the total USD 672 bn IT services market in 2006, compared to 0.5 per cent of the USD 554 bn IT services market in 2001.

Despite their relatively smaller size, the top six Indian IT service providers are making significant strides to challenge the market share leaders` positions by continuing to show strong annual revenue growth far exceeding the market norm.

The average annual growth rate of the switch companies was 42.4 per cent in 2006, compared with a 4.3 per cent growth of the market leaders during the same period.

Giving example Gartner said despite IBM`s USD 48 bn total IT service revenue, its dollar growth year over year was less than USD 1 bn. TCS, on the other hand, increased its revenues by over USD 1.2 bn in 2006, and achieved this increase from a revenue base 1/18th of IBM`s size.

These companies are collectively referred to as switch companies.

The increasing competitiveness of the Indian IT leading companies is evident in growth rates that outpace the market, and market share rankings that have grown stronger each year. In 2001, the ranking positions of the top 6 service providers in India spanned from 68 to 212. By 2006, they were within the top 100, with rank positions spanning from 35 to 86.

Allie Young, vice president and distinguished analyst at Gartner says, "Indian IT providers have perfected their respective value propositions through global delivery models (GDMs) providing high-quality, yet lower-cost labour to buyers globally. These companies are making inroads in key clients, often beginning with smaller, project-based or staff augmentation work."

According to Gartner, the Indian IT leading companies must carefully assess which type of acquisition is most suitable to their long-term objectives. If market share leadership in the top 3 is a goal, they`ll need to pursue an acquisition of a considerable size.

Partha Iyengar, vice president (distinguished analyst and regional research director) of Gartner said, "Large outsourcers are now re-evaluating their preferred vendor rankings to include Indian companies, especially for multi-vendor engagements. If the top Indian IT service providers continue to grow at the current pace, at least 2 companies will be a part of the top 10 companies globally."