The Hindu Business Line : Software cos earn more per client in June quarter

WIPRO Technologies continued to grow faster than Infosys Technologies in terms of average revenues per client for the quarter ended June 2004. In March this calendar, it clocked higher revenues per client than Infosys and it continues to show higher numbers on this count against Infosys. Only Satyam Computer has grown faster than Wipro on this count, but on a smaller base.

In this exercise, Business Line has excluded revenues from top 10 clients to present a clearer picture of clients with a medium-sized IT budget.

Most other companies have shown similar rates of growth in average revenues per client between March and June this calendar year. On a yearly basis, Mastek posted the biggest jump on this count. Only Polaris and iGate slumped in average revenues between June 2004 and March 2004 and June 2004 and June 2003. Polaris went through a major merger with Orbitech Solutions last year while iGATE made a string of acquisitions, including eJive, Aqua Regia and IT&T, last fiscal.

Significantly, Polaris recorded the highest percentage growth in average revenues per client between June 2002 and June 2003 from about Rs 29 lakh to about Rs 48 lakh.

On the client addition front, the industry seems to have returned to its earlier status by adding a sizeable number of clients every quarter. In June last year, net additions were not sizeable. For instance, net client additions between June 2003 and June 2004 for Infosys were 73 compared to 40 net additions between June 2002 and June 2003. Net additions between March 2004 and June 2004 were 26 while only one addition was made between these two quarters in the previous year.

Client losses may not be entirely due to a client's dissatisfaction with a vendor. Many vendors refuse to further work with clients when there is little promise of future growth in revenues. Cognizant, which lost 12 clients in the June 2004 quarter, said they contributed only $1 million in revenues for the calendar year 2003.

This means that the industry could have turned a corner with regard to the comparison between the number of new clients and client losses. For the four quarters ending June 2004, Infosys added 126 clients compared to losing only 53 - less than half the total additions.

Wipro Tech and Satyam both show similar patterns - a consistent decrease in dependence on revenues from top ten clients. This is seen as a good sign, for, revenues from more clients reduce the risk of revenues slumping suddenly if a handful of clients cut back on spending. Here, Polaris showed a consistent increase in dependence on top ten clients for revenues across the three quarters under consideration.