An SME in Hyderabad has just lost a project to Accenture, the multi-national IT firm. Just under $2 million, the size of the deal is very big for the SME, though it is considered small for IT bigwigs.
Two trends
The IT industry is witnessing two trends in this regard. The medium and big IT companies are not leaving any project that they spot during slowdown. They are also admitting that the size of the deals is coming down as clients are distributing their IT requirements to different vendors instead of depending on one or two firms. “The client that had refused to renew the project was happy with our performance. But he was helpless as he couldn’t turn down the bid from the big firm, fearing criticism from his investors,” an executive of the Hyderabadi firm told Business Line , wishing anonymity.
This, in fact, is not isolated case. The medium and big IT firms are increasingly focussing on clinching smaller deals to offset the stagnation in bigger deals.
“There is a clear trend towards smaller deal sizes over the past few years. Multi-sourcing is a key driver for this trend, as clients seek deep process and technology expertise from their partners to solve specific business problems,” Prashant Ranade, Chief Executive Officer and President of the Nasdaq-listed Syntel Inc, said.
The number $1-million plus customers of Mahindra Satyam has gone up to 135 in the quarter ended December 2012, as against 126 in the same quarter previous year. The $5-million plus deals went up to 49 (47).
This trend can be seen in the top league firms such as Tata Consultancy Services and Infosys too. The $1-million clients of TCS went up to 551 (538) in the third quarter. Its $5-million clients went up to 273 (269).
Infosys gained 20 smaller dealers as its $1-million clients went up to 419 (391) in the third quarter. Its $5-million clients too went up to 209 (193).
Big challenge
“The moment the deal size is crossing the $1-million mark, it is attracting the attention of the medium and big companies. And when they enter the fray to grab such deals, it will be difficult for the small companies to win. It, in fact, is a big challenge for the smaller companies,” Ravi S. Rao, a leader of ITsAP (IT and IT-enabled services industry association of Andhra Pradesh), said.
Kurmanath.kanchi@thehindu.co.in