TCS Is Now More Valuable Than Global IT Giant IBM

As far as the story of Indian IT goes, this will be a milestone.

India IT major TCS is now more valuable than global giant IBM. As of close of trade on Monday, TCS’s market capitalization was $120 billion, just nudging past IBM’s, which at the close of trade on the US stock exchanges was valued at $119.6 billion. This is the first time that TCS has overtaken the US-based tech giant which was founded all the way back in 1911.

tcs more valuable than ibm

TCS’s market capitalization has surged in recent times, with its stock up 18% since the beginning of the year. TCS has clipped past several milestones in the recent past — in April last year, it had become the second Indian company to touch the $100 billion market in capitalization, and since then, has traded places with Reliance for the title of India’s most valuable company.

At the moment, TCS is India’s most valuable company, but its market capitalization going past IBM might be a more significant milestone. IBM is the quintessential tech bell-weather, having been founded 107 years ago, and the original companies which eventually became IBM had invented some of the most important technologies in the tech world, including the computing scale, the dial recorder, and the Electric Tabulating Machine. In the 60s, IBM made the first computer system family, and in the 70s dominated the industry with its computers and mainframes. In the 80s, the IBM PC was the industry standard.

TCS, for its part, was founded in 1968, and its earliest clients were other Tata companies, such as Tata Steel, and large public sector banks. By the 70s, it was servicing international clients. Interestingly, IBM had entered India in the 1950s, but had to leave in the 1970s because of the country’s protectionist policies. In 1992, it re-entered India in a joint venture with the Tata Group, the promoters of TCS. But IBM parted ways with the Tata Group in 1997 and now operates independently in India, where it hires the most employees of its many locations in the world.

Head to head, IBM earns more revenue than TCS, making $78 billion in 2018 compared to TCS’s $21 billion. The gap in the operating income is much lower — IBM earned net income of $8.7 billion, while TCS managed an net income of $4.5 billion. TCS, though, has more employees than IBM, having 4.24 lakh people on its rolls, compared to IBM’s 3.5 lakh.

But TCS going past IBM in terms of market capitalization is an epochal moment in the history of Indian IT. The Indian IT industry started off in the 1970s through companies like Infosys and TCS. Conditions back then hadn’t been easy — India was among the poorest countries in the world, the government didn’t encourage innovation, and India didn’t have a large pool of engineers to recruit from. But these early companies persisted, and eventually found their place among global peers. And with India’s most valuable tech company now being worth more than venerable IBM, Indian IT might have finally come of age.