Why Indian IT companies are biding adieu to smaller clients?
Added On:11/26/2012 3:21:00 PM
Amid the hard times that Indian IT is facing, Indian information technology services exporters including Wipro, MindTree, iGate are discarding a number of small clients to have a check on costs and to focus more on strategic customers.
It is reportedly said that small clients, typically called 'tail accounts', usually do not earn more than a few hundred thousand dollars at most, in a year in revenues.
In order to cut cost of servicing accounts and channelizing the man-power to customers with potential to spend more, Indian IT firms are taking this bold step, industry experts believe.
TK Kurien, Chief Executive Officer at Wipro has recently shared his views in an interview. He said, “We are knocking off many of our tail accounts which do not have a value proposition. Over the past few quarters, Wipro has dumped some 40 clients, foregoing revenues of about $8 million (Rs. 45 crore) and bringing down tail accounts to 45”.
Besides TK Kurien, another industry veteran Phaneesh Murthy, CEO at iGate has also shared his views regarding reduced number of tail clients. He said, “We have always been a margin-centric company. We believe fewer clients and deeper relationships will help us deliver more value to each engagement. Presently, iGate has 293 active clients, against 344 earlier.
Market analysts further added, the trend is likely to continue with the slowdown in the Europe and the US. To the reader’s surprise, these two regions, account for nearly 80 percent of India's IT exports.
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