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The WITCH Report:  Annual Review

A review of the financial and market performance of global IT consulting firms in healthcare

*Get free 1-year subscription of the WITCH Monthly Monitor with every purchase of The WITCH Report – Annual Review.

This annual review report covers the healthcare and life sciences (HLS) business of 12 major global IT consulting and services firms. Our analysis shows that healthcare revenue growth has lagged their overall company growth. Within HLS, the life sciences segment has performed better than healthcare for the companies covered in the report.

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  • The WITCH group of companies collectively grew their HLS revenues by $509 million, from $9.07 billion to $9.58 billion or by 5.61% during the calendar year 2019 compared to the same period in 2018. The overall HLS operating margins for the three companies that reported segment-wise OM’s (Wipro, Infosys, CTS) was 24.99% in 2019, compared to 27.21% for the same period in 2018.

  • Wipro’s healthcare  business had a “slow and bumpy ride” in 2019. The HealthPlan Services (HPS) business (which was acquired in 2016) continued to impact the overall healthcare business of the company (see detailed timeline of the HPS business vs. the overall HLS business on page 14). However, the company has offset the steady decline in HLS revenue with revenue growth from other parts of their healthcare business. As a result, the overall growth remained flat for the year 2019.
  • Infosys’ HLS business, the smallest of the group at $802 million, won several large deals in the life sciences segment, and one large deal in healthcare. Overall growth in HLS was 7.65% for the year, which is below the company growth rate of 9.80%. The company’s leadership expressed concerns about a possible slowdown in their healthcare business at the beginning of 2019; however, the business recovered in the latter half of the year.
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The WITCH Monthly Monitor

Monthly update on major global IT consulting and services firms in healthcare

*Get free 1-year subscription of the WITCH Monthly Monitor with every purchase of The WITCH Report – Annual Review.

The WITCH Monthly Monitor is a monthly update on major global IT consulting and services firms in healthcare. It provides latest financial and market performance updates on WITCH companies along with other global IT consulting firms.

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  • TCS’ HLS business, which is primarily in the life sciences segment, consistently witnessed double digit growth during the year, ending with 15.98% for 2019. Their HLS growth rate is over twice as much as the company growth rate of 7.31%. All companies in the WITCH group have done well in life sciences. The ones that had greater exposure to healthcare, specifically payers, have seen declines. TCS’s growth in life sciences R&D has been led by the ADD drug discovery platform. While the platform deal sizes were relatively small, the deals have been effective as a “tip-of-the-spear” for more broad-based IT services deals. The company also signed a contract with Walgreens Boots Alliance in Q1 2020, one of the largest IT services deals announced in recent times worth $1.5 billion.

 

  • Cognizant witnessed the biggest negative impact to its HLS business in 2019 compared to other companies in the WITCH group. The HLS business is largely affected by contract renegotiations arising from consolidation among its payer clients, movement of client work to captive operations, and a contract termination which impacted revenues. The life sciences segment delivered double-digit growth. However, this was offset by ongoing declines in their healthcare vertical, which after declining for the first three quarters, was up 1.8% in Q4. Overall, the HLS business, which accounts for nearly a third of the company’s revenues, ended the year with a marginal growth of 0.57% against the company’s growth of a little over 4%.

 

  • HCL witnessed a YoY growth of 16.70% in HLS segment, led by life sciences. The HLS growth rate is the highest compared to the other companies in the WITCH group. The growth is led by core IT infrastructure deal wins during the year and is roughly in line with the company’s overall growth at 15.23%.

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*Get free 1-year subscription of the WITCH Monthly Monitor with every purchase of The WITCH Report – Annual Review.

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Financials and market performance: the WITCH group

  • The WITCH group: healthcare financials (January 2019–December 2019)
  • Wipro
  • Infosys
  • Tata Consultancy Services
  • Cognizant
  • HCL

Financials and market performance: select global IT consulting firms

  • Accenture
  • Atos
  • Deloitte
  • DXC Technology
  • IBM
  • NTT Data
  • Optum

Figures

  • Figure 1: HLS vs. overall company revenue growth % comparison, The WITCH group
  • Figure 2: Revenue growth over the last four quarters, Wipro
  • Figure 3: Revenue growth over the last four quarters, Infosys
  • Figure 4: Revenue growth over the last four quarters, TCS
  • Figure 5: Revenue growth over the last four quarters, Cognizant
  • Figure 6: Revenue growth over the last four quarters, HCL

Tables

  • Table 1: Revenue and operating margin for overall company and HLS for the WITCH group
  • Table 2: Revenue and operating margin for overall company and HLS, Wipro
  • Table 3: Innovation centers since 2016, Wipro
  • Table 4: Revenue and operating margin for overall company and HLS, Infosys
  • Table 5: Innovation centers since 2016, Infosys
  • Table 6: Revenue and operating margin for overall company and HLS, TCS
  • Table 7: Innovation centers since 2016, TCS
  • Table 8: Revenue and operating margin for overall company and HLS, Cognizant
  • Table 9: Innovation centers since 2016, Cognizant
  • Table 10: Revenue and operating margin for overall company and HLS, HCL
  • Table 11: Innovation centers since 2016, HCL
  • Table 12: Company and H&PS revenue, Accenture
  • Table 13: Company and public & health revenue, Atos
  • Table 14: Company and segment revenue, Optum

Exhibits

  • Exhibit 1: HPS–Adverse policy changes in healthcare insurance exchange markets have depleted value from the acquisition
  • Exhibit 2: Innovation centers launched by WITCH companies (since 2016)
  • Exhibit 3: Leadership changes in WITCH companies (since 2015)
  • Exhibit 4: Healthcare related acquisitions of WITCH companies (since 2014)
  • Exhibit 5: WITCH companies healthcare revenue against other segments
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THE HEALTHCARE DIGITAL TRANSFORMATION LEADER

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THE HEALTHCARE DIGITAL TRANSFORMATION LEADER

Join the digital healthcare revolution. Stay on top of the latest news, trends, and insights with Damo Consulting.