Infosys, Wipro Scrambling to Secure $2 Billion Worth of Contracts

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BENGALURU: With an eye on regaining double-digit growth rates, former IT sector stars Infosys and Wipro are scrambling to fight and protect top outsourcing contracts worth more than $2 billion ( Rs 12,000 crore) that will expire this financial year, executives familiar with the discussions said.

At Infosys, chief executive Vishal Sikka has personally taken charge of nearly a dozen top customer projects to ensure the company not only holds on to those clients, but also increases its share of their spend.

Both Infosys and Wipro, which are struggling to catch up with average industry growth rates, are incumbents in large customer accounts that include AstraZeneca and Home Depot that outsource millions of dollars of b

ack-office software projects every year. Infosys currently counts the likes of Bank of America, Procter & Gamble and Apple among its top customers while Wipro gets millions of dollars of annual business from companies such as Citigroup and ArcelorMittal.

On an investor call early on Thursday, Sikka said he had met about 500 clients since he took over last August.

“Right now we have about 23,000 projects… There are about 10 of these projects that I’m tracking personally. It is amazing, the kind of energy that unleashes, for people to think differently and to find ways to contribute to the work they are doing already,” Sikka said in February. “The roots of the company were always like that and that tells me that we are right there.”

For Wipro, top customer contracts coming up for renewal include deals from steelmaker ArcelorMittal, US-based healthcare chain Catholic Health Initiatives and Central Bank of India. For Infosys, the priority would be deals from clients such as Alcoa, Alstom Power and Australia’s Westpac Bank — all of which are coming up for renewal this year.
Experts tracking the two companies said that neither Infosys nor Wipro can afford to lose any part of these marquee contracts, if they are to regain double-digit revenue growth and have any chance of closing the gap with larger rivals such as TCS and Cognizant. On a conference call with investors earlier this week, Infosys COO Pravin Rao conceded that pricing wars were becoming even more competitive with each passing year and the company had to rely on automation to protect margins.

“A lot of the deals that are coming up are obviously incumbent Infosys or Wipro clients, so it’s their market share to lose,” said Frances Karamouzis, research vice president at Gartner. “Also, Infosys has not been the clear leader of late as far as winning big deals is concerned, and that’s an area that Vishal needs to address as the same time.”

Executives familiar with negotiations on some of these contracts said that pricing would obviously be key and both companies would go to any lengths and may even drop prices significantly to protect some of these strategic accounts against TCS, Cognizant, HCL Tech and other rivals.

Infosys, which during its glory days used to command a pricing premium over rivals, has been forced to cut prices over the past two-three years for select customers to retain them and the company under Sikka will look to do more of the same in the coming 12 months. Sikka, at the same time, is also eyeing projects from newer areas of technology such as big data analytics and has set a target of 1,000 such projects over the next few years.

Source: The Times of India

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