The Hindu Business Line : Impressive client additions in Dec 2004

With the exception of Infosys, which added 38 clients but lost 35 for the quarter ended December 2004, most others seem to have adopted a cautious policy towards client acquisition.

For the same quarter, both Wipro Technologies and Satyam Computers lost less than half the number of clients they each added. HCL Tech has recorded a client addition of 16 while losing none.

An unusual increase in client additions is also caused by acquisition of companies. For instance, MphasiS had a net loss of only one client in the last four quarters ending December 2004. In April 2004, it had acquired Kshema Technologies that brought in about 30 clients at a shot. As for the December 2004 quarter, it lost only two clients while bringing in 13.

Interestingly, Infosys, with its aggressive client addition, has seen its sales and marketing expenses jump a mere 9.7 per cent between the quarters ended December 2003 and December 2004. but had jumped 25 per cent from Rs 73.60 crore between in December 2002.

Mastek saw the same number of clients come in and go out in the quarter ended December 2004. Mr Sudhakar Ram, CEO, Mastek Ltd, had earlier told Business Line, "We don't add several customers every quarter. We believe this is not a business similar to retail where numbers of customers matter. We want to work with good clients who would typically give us $10 million in billing per annum. If you see our share of an average client's IT budget, it would amount to 30 per cent in some cases. That's how closely we want to be involved."

Infosys' dependence on its top client reduced from 5.5 per cent to 4.9 per cent between December 2003 and December 2004. Wipro did better to reduce it from 5 per cent to 4.2 per cent.

Though Polaris' figures for client addition and loss were not immediately available, its Web site says that its dependence on the top client has increased from 12.3 per cent to 13.4 per cent between the two December quarters. Likewise, its dependence on the Citigroup had also increased from 57.2 per cent to 61.8 per cent.

Interestingly, the industry does not consider client churn a cause for concern. Mr Vivek Paul, Vice-Chairman, Wipro Ltd and CEO, Wipro Technologies, had last year said, "New clients come in for a while, take a small pilot project, go out and come back later. That is common."

Infosys showed a healthy increase in the number of clients that gave it $5 million a year between the December quarters. That number rose 35.42 per cent from 48 to 65. Similarly, Satyam showed a 53.25 per cent rise in clients that give it $ one million a year from 77 to 118.

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