Tough global macro economic conditions, pricing pressure and delay in deal closure are some of the factors affecting information technology vendors. However, despite the gloom, tech firms are confident that they can pull through with reasonable growth. The reason? Each company has evolved its own ‘differentiation’ in pitching to clients, which include new areas like cloud and social media.
Some companies also feel that the ‘gloomy’ situation will actually bring in more business as clients will increase their outsourcing component with IT vendors to cut cost. “Most IT vendors are keen to retain their existing clients and therefore the total number of new client acquisition in the last few quarters has dropped,” says Sanjay Dhawan, Leader Technology, PwC India.
The aggregate number of new clients added by the top four Indian IT companies for the quarter ending June 2012 was the lowest in the last six quarters (showed a drop of 16 per cent as compared to the new client acquisitions six quarters prior). Even when compared with the previous quarter (quarter ending Mar 2012), there has been a fall of nearly 11 per cent, he said.
However, on the positive side, R. Chandrasekaran, Group Chief Executive, Technology and Operations, Cognizant Technology Solutions, feels that this market downturn, like those before, “will serve as a catalyst for clients to embrace a broader range of our services to fulfil the dual mandate of cost efficiency and innovation/business transformation.”
Strategies
IT companies are adopting different, but innovative strategies to woo clients. For instance, Cognizant's innovative marketing activities include running customer conferences called Cognizant Community across locations (such as US, Europe, Australia, Japan, and Singapore), running focused customer events across verticals and horizontals, leveraging a virtual platform called Cognizanti for customers to interact with Cognizant and among themselves, and driving customer CIO events. “We invite qualified prospects to all of our annual thought leadership conferences,” he said. Cognizanti is a private e-community for top-level clients (IT and line of business leaders). It helps the company to reinforce its existing client relationships.
At times, a client member will pass along insights they picked from Cognizanti to company colleagues working in functions or business units where Cognizant does not currently have a presence. Once they hear about this virtual community, they are intrigued and want to know more about how Cognizant can help them solve challenges in their specific domains. This virtual channel opens doors that help us radiate and then penetrate key accounts across industries, he said.
Cognizant has embarked on a Two-in-a-Box engagement whereby at every level of a client engagement, two people (one onsite and another offshore) jointly manage the account. Each pair of employees has joint accountability and their performances are assessed based on the same set of metrics. In this model, the centre of gravity is not geographic, but vested in a team of people.
“The market conditions are tough with uncertainty ruling large pockets of the world economy. The IT services market, however, like many other markets, can be divided by client spending into the two components of discretionary spend and non-discretionary spend,” says Shami Khorana, Senior Corporate Vice President, HCL Technologies.
Khorana said HCLT has taken a view that new age digital marketing will be successful when there is a simultaneous access of user demographics (Facebook and LinkedIn) along with user interests (YouTube and Twitter). “The simplest meeting point of the two is communities. Its marketing focus has shifted to multi level, multi touch community building with target segments,” he said.
The CIO StraightTalk Interactive is HCL’s flagship thought leadership platform run through a closed community of senior IT leaders across 2,000 organisations on LinkedIn. The community discussions offer insights on challenges faced by senior IT executives. It serves as a platform for industry peers to exchange ideas, best practices and network. The community also has an offline platform, an annual publication called ‘By CIOs, for CIOs’.
The Customer Advisory Council is a global, collaborative forum where 80+ of HCL’s Fortune 500 C-level customers and thought leaders convene on a regular basis to advise HCL on industry trends, changing business priorities, and its strategic direction. HCL then translates the advice into actionable plans to transform business requirements and technology needs, creating more value for HCL’s customers. “The company has realised tangible business benefits from CAC,” said Khorana.
Polaris Financial Technology Ltd has clearly segmented its target markets in the form of three ‘Worlds’ of opportunities. For World 1, comprising financial institutions in highly developed countries like the US, Western Europe, technology upgrade is key as they were the pioneers and early adopters of technology to optimise financial operations.
For World 2, where financial institutions embarked on their technology journey in the 90's and have accelerated their technology adoption in the last decade, these institutions have a large appetite for new products that enable them to acquire new customers and increase their speed and scale of operations.
For World 3, comprising small banks in developed as well as emerging markets to enable them build competitive advantage with the larger banks and help them leverage their deep customer relationships. “Decision cycles in some of the deals do get longer at times, and the product business can tend to get lumpy,” says Arun Jain, Chairman & CEO, Polaris Financial Technology Ltd. For the last fiscal, its product business actually recorded 43 per cent growth, highest in a single year. It also recorded 47 new wins last year. If one compares the growth of companies in the Financial Technology space, Polaris is amongst a handful of companies that has doubled its revenues in the last four years, despite tough market conditions.
Ranjan Tayal, Senior Vice president – Strategic Initiatives, Ramco Systems, feels that the tough market conditions have opened up a new opportunity. “We are able to better position and sell our cloud-based offerings to our potential customers as they have come to understand the value we offer. In the short term, they see a reduction in Capex while in the long term it helps them predict costs and reduce annual maintenance cost, ongoing IT management cost and hardware refresh cost after a few years.”
Ramco’s pitch to clients revolves around the strength of the architecture, ability to offer a truly cloud solution and at a price that is highly attractive. “We advice our prospects to focus on their core business and look at how quickly and effectively they can roll-out and offer their products/services to their end users,” he said. Ramco has been working on targeted brand building and marketing activities in global markets. It is also tying up with partners like Dell and Ingram and doing joint events to highlight the benefits that Ramco brings.