It has emerged that the share of internal transactions at IT service affiliates of large domestic corporations reaches as high as the 90% range. A high share of internal transactions enables stable revenue, but there are concerns that competitiveness could weaken in the long term due to a lack of outward expansion. IT service corporations are seeking a breakthrough by increasing external transaction volume through artificial intelligence transformation (AX) and global businesses.
On the 17th, according to the Financial Supervisory Service's electronic disclosure system, Hyundai AutoEver's revenue in the first half of this year was 1.8751 trillion won, with internal transaction revenue reaching 1.7662 trillion won. That means 94.2% of total revenue came from internal transactions. Hyundai AutoEver supplies IT system operation and maintenance, as well as navigation and other in-vehicle software (SW), to Hyundai Motor Group affiliates. Notably, Hyundai Motor and Kia accounted for 36.4% of related-party sales. Some assess that the company's top-line growth, which surpassed 1 trillion won in quarterly revenue, was also driven by internal transactions.
POSCO DX posted first-half revenue of 569.6 billion won this year, with internal transaction revenue reaching 556.0 billion won. A total of 97.6% of revenue came from internal transactions. The issue is that POSCO DX's heavy reliance on POSCO Group sales led to deteriorating results as orders from group affiliates decreased amid a slump in the steel and battery sectors. In the first half, POSCO DX's revenue and operating profit fell 28.2% and 32.8%, respectively, from a year earlier.
Samsung SDS recorded first-half revenue of 7.0017 trillion won this year, of which internal transaction revenue was 5.6906 trillion won, accounting for 81.2%. The core of its internal transactions is "Samsung Electronics." During the same period, sales dependent on Samsung Electronics were 1.3006 trillion won, accounting for 22.85% of internal transactions.
Other IT service affiliates, though lower than competitors, still post internal transaction shares around 50% to 60%. LG CNS recorded first-half revenue of 2.6715 trillion won this year, of which internal transaction revenue was 1.4215 trillion won, or 53.2%. LOTTE Innovate posted first-half revenue of 565.5 billion won this year, with internal transactions at 367.3 billion won, accounting for 64.9% of the total. SK AX, as an SK Group business institutional sector, is not disclosed separately, so the exact internal transaction share is unknown, but the industry says it is in the 60% range.
Because IT service corporations started as system integration (SI) affiliates of large corporations, their business structure makes it realistically difficult to avoid heavy reliance on internal transactions. Entrusting a group's internal IT systems and data to an affiliate is safer from a security standpoint and advantageous for expense efficiency and responsiveness compared with outsourcing to external parties. Also, when a corporation's internal transaction share is high, there are positives in terms of securing stable revenue and generating synergies.
However, a high level of group dependence means the company's growth engine is relatively weak. Especially in the age of artificial intelligence (AI), where outward scalability has expanded, the continued high dependence on the group suggests limited capacity to cultivate new businesses. If order volumes from affiliates decline, there are limits to expanding external orders, and results can swing sharply.
IT service corporations have recently been seeking breakthroughs by increasing external transaction amounts through artificial intelligence transformation (AX) and global businesses. Samsung SDS is setting a strategy to expand its AI agent institutional sector by providing services that encompass infrastructure, platforms, and solutions for corporate AX. It also plans to expand its global solutions business, currently underway mainly in the United States, to Europe next year. LG CNS is also focusing on corporate AX. Leveraging the parent company's large language model (LLM) "EXAONE 3.5," it is building generative AI platforms for corporations. In addition, it collaborated with Canadian AI company Cohere to develop both large-scale and lightweight LLM models.
Hyundai AutoEver said it will strengthen services centered on the in-vehicle SW institutional sector. As the auto industry has recently reorganized around autonomous driving and connectivity, the importance of software capable of advanced computation has grown.
Seo Yong-gu, a professor in the School of Business at Sookmyung Women's University, said, "As it is a reality that excessive reliance on internal transactions weakens competitiveness in the market, there is a need at the group level to strategically set target ratios for internal and external business to increase external transaction amounts," adding, "Pioneering overseas markets is the best way to increase the share of external transactions, and IT service corporations need to maximize revenue through competition overseas."