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SAP’s latest financial results provided the applications giant with plenty of ammunition to hit back at its voluble rival.

Highlighting a 20% growth in net profit of E405 million ($507.8m) and revenues up 11% to U2.24 billion ($2.69bn) for the quarter ending 30 September 2006, SAP’s executive vice president of large enterprises, Ferri Abolhassan, told Information Age that SAP’s strong results served as “a very nice answer to [statements] regarding SAP on the Oracle side”.

His reference was to remarks made by Oracle CEO Larry Ellison following the publication of his company’s first quarter results in September. Ellison openly goaded SAP with apparent evidence Oracle had taken a significant chunk of the applications market from its rival, with Ellison predicting its rate of market share gain against SAP would “stay very, very high”.

With its latest numbers, however, SAP was able to retaliate with executive board member Leo Apotheker announcing that SAP had enjoyed an 85% head-to-head win rate against Oracle in the quarter. That boils down to a 0.9% overall gain in market share, giving SAP 22.6% of the pie and – as its executives are at pains to point out – twice Oracle’s share.

That gain is reflected in the growth in SAP’s software license revenues, which were up 17% on the year-ago quarter. Abolhassen stressed that this latest quarter represents SAP’s “eleventh quarter in a row where SAP has delivered.“

Its winning formula over Oracle? “You really have to take care that you create value for customers and continue to develop functionality and products, deliver on time and on promises. SAP has consistently delivered on its promises.”

SAP attributes its consistency to a long term focus on organic growth – a strategy often mocked by Oracle’s Ellison for its lack of nerve. Unlike its bitter rival, which has spent $20 billion on over 20 acquisitions during the past year, SAP’s acquisition activity has been negligible. SAP claims organic growth makes for better customer satisfaction rates which ultimately translate into revenue and market share.

OFFSHORE LINE

Benefiting from a strong growth in demand from its US and European customers, India’s three dominant IT services companies each reported turbo-charged revenues and profits for the three months ending 30 Sept 2006.

Leading the charge was TATA CONSULTANCY SERVICES (TCS), the IT services unit of Tata Group, one of India’s largest conglomerates, with revenues rising 42% to Rs 44.8 billion ($986.0m) from Rs 31.6 billion ($694.5m). Sales were boosted by the signing of deals with 58 new customers, a growth in business that increased its customers in the one million-dollar and above band from 258 to 274. This led the company’s CEO S. Ramadorai to hint that that it could hit $4 billion in revenues for the current fiscal year, an upswing of $1 billion from last year’s annual numbers.

Benefiting from the same forces was TCS rival WIPRO. The latter reported a jump in second quarter revenues of 41% to Rs 35.1 billion rupees ($764.7m), while net income rose 48% to Rs 6.9 billion ($151.5m).

Part of that growth was spurred by a series of tactical acquisitions that have taken Wipro into key niche markets. This year alone, Wipro has spent around $200 million on six companies. This strategy is set to continue for the remainder of its fiscal year, says Wipro’s chief financial officer Suresh Senapaty, adding that the company would not hesitate to make large acquisitions where the strategic growth plans and profitability of a particular company was right.

Meanwhile, the third of the big Indian IT services companies, INFOSYS, was running just as fast. While it signed fewer new customers than its rivals, it nonetheless added Rs 10.1 billion ($222m) to its revenue over its year-ago quarter, an increase of 42% to Rs 33.9 billion ($746m).

But, Infosys, along with its rivals, is starting to feel the pain of the country's infrastructure limitations and of fierce competition for skilled staff, according to Samad Masood, an analyst at IT market watcher Ovum. Infosys’ attrition rate has risen to 12.9% from 10% last year; that compares with 10.6% at TCS during the latest quarter, where 8,919 joined the company and 2,256 left.

THE PARTY CONTINUES

The companies most impacted in years recent by that explosive growth – the US and European IT services giants – have been showing something of a rebound in recent quarters as their global delivery models (which now include a large Indian component) have kicked in.

France’s CAPGEMINI reported revenues for its third quarter to the end of September up 12% to EU1.88 billion ($2.26bn). Growth was strongest in its outsourcing services unit where new contract and existing customer revenue was up by 20%.

Nowhere is Capgemini’s confidence better reflected than in its October acquisition of India’s Kanbay International for $1.3 billion, its largest purchase since the acquisition of Ernst & Young Consulting in 2000. Through Kanbay’s development centres Capgemini should now have the scale to compete much more aggressively with its India-based rivals.

Also announcing plans to expand its Indian presence was COGNIZANT TECHNOLOGY SOLUTIONS. The US-headquartered but Indian run service company reported revenue growth of 60% to $377.5 million in its latest quarter, Having added nearly 5,000 staff in the three months, it announced plans to spend $200 million over the next two years recruiting more than 30,000 new employees, mostly in Pune, Hyderabad and Chennai, but also in Coimbatore and Kolkata.

Click here to download a full table of key IT suppliers' November financial results