IT Services 152018The annual report on the worlds most valuable IT services brandsMarch 2018Brand Finance IT Services 15 March 2018 3.Foreword.What is the purpose of a strong brand: to attract customers, to build loyalty, to motivate staff? All true, but for a commercial brand at least, the first answer must always be to make money. Huge investments are made in the design, launch, and ongoing promotion of brands. Given their potential financial value, this makes sense. Unfortunately, most organisations fail to go beyond that, missing huge opportunities to effectively make use of what are often their most important assets. Monitoring of brand performance should be the next step, but is often sporadic. Where it does take place, it frequently lacks financial rigour and is heavily reliant on qualitative measures, poorly understood by non-marketers. As a result, marketing teams struggle to communicate the value of their work and boards then underestimate the significance of their brands to the business. Sceptical finance teams, unconvinced by what they perceive as marketing mumbo jumbo, may fail to agree necessary investments. What marketing spend there is, can end up poorly directed as marketers are left to operate with insufficient financial guidance or accountability. The end result can be a slow but steady downward spiral of poor communication, wasted resources, and a negative impact on the bottom line. Brand Finance bridges the gap between marketing and finance. Our teams have experience across a wide range of disciplines from market research and visual identity to tax and accounting. We understand the importance of design, advertising, and marketing, but we also believe that the ultimate and overriding purpose of brands is to make money. That is why we connect brands to the bottom line. By valuing brands, we provide a mutually intelligible language for marketing and finance teams. Marketers then have the ability to communicate the significance of what they do, and boards can use the information to chart a course that maximises profits. Without knowing the precise, financial value of an asset, how can you know if you are maximising your returns? If you are intending to license a brand, how can you know you are getting a fair price? If you are intending to sell, how do you know what the right time is? How do you decide which brands to discontinue, whether to rebrand and how to arrange your brand architecture? Brand Finance has conducted thousands of brand and branded business valuations to help answer these questions. Brand Finances research revealed the compelling link between strong brands and stock market performance. It was found that investing in highly-branded companies would lead to a return almost double that of the average for the S&P 500 as a whole. Acknowledging and managing a companys intangible assets taps into the hidden value that lies within it. The following report is a first step to understanding more about brands, how to value them and how to use that information to benefit the business. The team and I look forward to continuing the conversation with you.David Haigh CEO, Brand FinanceBrand Finance IT Services 15 March 2018 5.Brand Finance IT Services 15 March 2018 4.Foreword 3About Brand Finance 4Contact Details 4Definitions 6Executive Summary 8Full Table 11Methodology 12Understand Your Brands Value 13Consulting Services 14Communications Services 15Contents.About Brand Finance.Brand Finance is the worlds leading independent brand valuation and strategy consultancy. Brand Finance was set up in 1996 with the aim of bridging the gap between marketing and finance. For more than 20 years, we have helped companies and organisations of all types to connect their brands to the bottom line.We pride ourselves on four key strengths: Independence Technical Credibility Transparency Expertise.Brand Finance puts thousands of the worlds biggestbrands to the test every year, evaluating which are the strongest and most valuable.For more information, please visit our website:brandfinanceContact Details.For business enquiries, please contact:Richard HaighManaging Director rd.haighbrandfinanceFor media enquiries, please contact:Konrad JagodzinskiCommunications Director k.jagodzinskibrandfinanceFor all other enquiries, please contact:enquiriesbrandfinance+44 (0)207 389 9400linkedin/company/ brand-financefacebook/brandfinancetwitter/brandfinanceFor further information on Brand Finance®s services and valuation experience, please contact your local representative:Country Contact Email addressAsia Pacific Samir Dixit s.dixitbrandfinance +65 906 98 651 Australia Mark Crowe m.crowebrandfinance +61 282 498 320Brazil Geoffrey Hamilton-Jones g.hamilton-jonesbrandfinance +55 1196 499 9963Canada Bill Ratcliffe b.ratcliffebrandfinance +1 647 3437 266Caribbean Nigel Cooper n.cooperbrandfinance +1 876 8256 598China Scott Chen s.chenbrandfinance +86 1860 118 8821East Africa Jawad Jaffer j.jafferbrandfinance +254 204 440 053France Victoire Ruault v.ruaultbrandfinance +44 0207 389 9427Germany Holger Mühlbauer h.muehlbauerbrandfinance +49 1515 474 9834India Savio DSouza s.dsouzabrandfinance +44 0207 389 9400Indonesia Jimmy Halim j.halimbrandfinance +62 215 3678 064Ireland Simon Haigh s.haighbrandfinance +353 087 6695 881Italy Massimo Pizzo m.pizzobrandfinance +39 0230 312 5105Mexico & LatAm Laurence Newell l.newellbrandfinance +52 1559 197 1925Middle East Andrew Campbell a.campbellbrandfinance +971 508 113 341Nigeria Babatunde Odumeru t.odumerubrandfinance +234 012 911 988Romania Mihai Bogdan m.bogdanbrandfinance +40 728 702 705Spain Teresa de Lemus t.delemusbrandfinance +34 654 481 043 South Africa Jeremy Sampson j.sampsonbrandfinance +27 828 857 300Sri Lanka Ruchi Gunewardene r.gunewardenebrandfinance +94 114 941 670Turkey Muhterem Ilgüner m.ilgunerbrandfinance +90 216 3526 729UK Richard Haigh rd.haighbrandfinance +44 0207 389 9400USA Amy Rand a.randbrandfinance +44 0207 389 9432Vietnam Lai Tien Manh m.laibrandfinance +84 473 004 468Brand Finance IT Services 15 March 2018 7.Brand Finance IT Services 15 March 2018 6.Definitions.Definitions. Brand Value+ Enterprise Value The value of the entire enterprise, made up of multiple branded businesses. Where a company has a purely mono- branded architecture, the enterprise value is the same as branded business value.+ Branded Business Value The value of a single branded business operating under the subject brand. A brand should be viewed in the context of the business in which it operates. Brand Finance always conducts a branded business valuation as part of any brand valuation. We evaluate the full brand value chain in order to understand the links between marketing investment, brand- tracking data, and stakeholder behaviour.+ Brand Contribution The overall uplift in shareholder value that the business derives from owning the brand rather than operating a generic brand.The brand values contained in our league tables are those of the potentially transferable brand assets only, making brand contribution a wider concept. An assessment of overall brand contribution to a business provides additional insights to help optimise performance.+ Brand Value The value of the trade mark and associated marketing IP within the branded business. Brand Finance helped to craft the internationally recognised standard on Brand Valuation ISO 10668. It defines brand as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.TataTata Consultancy ServicesBrand ValueTata Consultancy ServicesTata Consultancy ServicesEnterpriseValueBrandedBusinessValueBrandContributionBrand Strength IndexWidely recognised factors deployed by marketers to create brand loyalty and market share. Marketing Investment A brand that has high Marketing Investment but low Stakeholder Equity may be on a path to growth. This high investment is likely to lead to future performance in Stakeholder Equity which would in turn lead to better Business Performance in the future. However, high Marketing Investment over an extended period with little improvement in Stakeholder Equity would imply that the brand is unable to shape customers preference.Stakeholder Equity The same is true for Stakeholder Equity. If a company has high Stakeholder Equity, it is likely that Business Performance will improve in the future. However, if the brands poor Business Performance persists, it would suggest that the brand is inefficient compared to its competitors in transferring stakeholder sentiment to a volume or price premium.Business Performance Finally, if a brand has a strong Business Performance but scores poorly on Stakeholder Equity, it would imply that, in the future, the brands ability to drive value will diminish. However, if it is able to sustain these higher outputs, it shows that the brand is particularly efficient at creating value from sentiment compared to its competitors.MarketingInvestmentPerceptions of the brand among different stakeholder groups, with customers being the most important.Quantitative market and financial measures representing the success of the brand in achieving price and volume premium.StakeholderEquityBusinessPerformanceBrand StrengthBrand Strength is the efficacy of a brands performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding rating up to AAA+ in a format similar to a credit rating.Analysing the three brand strength measures helps inform managers of a brands potential for future success.InvestmentEquityPerformanceBrand Finance IT Services 15 March 2018 9.Brand Finance IT Services 15 March 2018 8.Executive Summary.TCS Grows Fastest Tata Consultancy Services (TCS) is the star of the IT Services sector this year, adding US$1.3 billion of value to its brand, which is now worth $10.4 billion. TCSs growth contrasts with stagnation in the sector, which saw the combined value of the 13 brands in both 2017 and 2018s rankings slip 1% to US$94.4 billion.TCSs digital services are driving the business forward, with a 40% increase in year-on-year revenues in the third quarter to December 2017. Digital services, including Cloud, Cybersecurity, IoT, Digital Interactive, Enterprise Intelligent Automation, Enterprise Application Services, Consulting & Service Integration and Cognitive Business Operations, saw more than 150 contract wins, including the divisions first US$50m-plus client. An additional 12,543 employees were recruited, taking the total to 390,880. Despite its strong business performance, TCSs brand rating stayed at AA+.TCSs 14% rise in brand value is in stark contrast to many of its peers, including Cognizant (-10%), Infosys (-3%), Fujitsu (-14%), Wipro (-7%), Hewlett Packard TCS has done a great job over the past 4-5 years shifting perceptions, positioning themselves as an international company at the forefront of technological developments, which is a fair reflection as thats where they generate the majority of revenues and where they are expanding.Savio DSouzaDirector, Brand FinanceExecutive Summary.Enterprise (-65%) and Xerox (-33%), whose brands have either stagnated or lost value.IBM Stays at #1 IBM retained its position as the IT Services sectors most valuable brand, with a 1% rise in brand value to US$19.5 billion, IBMs brand rating improved two scores to AAA and its Brand Strength Index (BSI) was the highest in the sector by almost 10 points at 87.6. In 4Q2017 IBM broke a 22-quarter streak of declining revenues with 3.5% growth, though 2.5% of this was attributed to the weaker dollar and annual sales were down 1% at US$79.1 billion.Accenture Well Positioned Accenture, the sectors second most valuable brand, lost 4% of its brand value, which now stands at US$16.8 billion. The fall is likely to be a blip for the consultancy, which has invested heavily in differentiating itself in digital, cloud, and security services, which now account for more than half of Top 10 Most Valuable BrandsRank 2018: 1 2017: 1 BV 2018: $19,512m BV 2017: $19,404mBrand Rating: AAA1+1%Rank 2018: 9 2017: 7 BV 2018: $4,006m BV 2017: $4,670mBrand Rating: AA9-14%Rank 2018: 10 2017: 11 BV 2018: $3,876m BV 2017: $3,716mBrand Rating: A+10+4%Rank 2018: 7 2017: 8 BV 2018: $4,573m BV 2017: $4,463mBrand Rating: AA+7+2%Rank 2018: 8 2017: 10 BV 2018: $4,558m BV 2017: $4,137mBrand Rating: AA8+10%Rank 2018: 6 2017: New BV 2018: $6,035m Brand Rating: A+6Rank 2018: 2 2017: 2 BV 2018: $16,805m BV 2017: $17,464mBrand Rating: AA+2-4%Rank 2018: 3 2017: 3 BV 2018: $10,391m BV 2017: $9,081mBrand Rating: AA+3+14%Rank 2018: 4 2017: 5 BV 2018: $7,761m BV 2017: $8,631mBrand Rating: AA+4-10%Rank 2018: 5 2017: 6 BV 2018: $6,035m BV 2017: $6,224mBrand Rating: AA+5-3%Brand Value Change 2017-2018 (%)TCSCapgeminiTech MahindraAtosHCLIBM (IT Services)-3%-4%-7%-10%-14%-32%-66%14%10%6%4%2%1%InfosysAccentureWiproCognizantFujitsuXeroxHPE (IT Services)Brand Finance IT Services 15 March 2018 11.Brand Finance IT Services 15 March 2018 10.Executive Summary. Executive Summary.Top 5 Strongest BrandsBSI Score87.6BSI Score78.9BSI Score78.2BSI Score77.8BSI Score75.3revenues. Of US$10 billion of new bookings for 1Q2018, 59% were in consulting.Aside from TCS, CapGemini was the only company in the top 15 to achieve double-digit brand value growth, gaining 10% to US$4.6 billion. CapGemini generated 30% of its 12.5 billion revenue from its new Digital & Cloud offer and has positioned itself well as understanding how to implement these key technologies, which has helped it win business.Hewlett Packard Enterprises woes continued, with brand value down 65% to US$3.1 billion. The company plunged from 4th to 12th in the ranking. HPE was formed in November 2015, when Hewlett-Packard split the PC and printers business from the enterprise products and services business. In 2017 HPE spun off its enterprise services division as DXC Technology and its software business to Micro Focus, with DXC now treated as a separate brand with a brand value of US$6.0 billion, a BSI of 64.0 and a lowly brand rating of A+. Meg Whitman stepped down as CEO after six years running HP and was replaced by company veteran Antonio Neri.Brand Value Over Ti