Client mining to determine IT firms' future growth: Study

TCS and Cognizant have been quite successful in growing existing accounts

Indian information technology (IT) services companies have been steadily adding clients over the past two years, but this has not necessarily fetched enough revenues for all of them, according to a study by advisory firm Offshore Insights.

It says growth is, instead, coming by increasing relationships with existing clients, which account for almost 90 per cent of their revenues. That underscores the need for a deeper client-facing engagement model, something Tata Consultancy Services Ltd (TCS), the country’s largest IT company, has rolled out, it said.

“During the last eight quarters, Infosys added the maximum number of 119 clients which increased its client base by 20 per cent to 711. However, its revenue growth was not impressive during this period. In fact, it lagged substantially compared to TCS which added 96 clients,” the report said.

Among the offshore-centric IT services companies, TCS has been successful in growing its accounts a followed by Cognizant and HCL Technologies. While the $1 million-plus clients’ base has grown for all companies, TCS and HCL have grown it much faster. Both companies have also seen a steady growth in their $5 million and $10 million customers’ base.

In terms of clients which contribute revenues of over $100 million per annum, while TCS has maintained its number at 14 for the last three quarters, it has gone up both for Wipro and HCL Technologies.

Infosys is the only company among the Indian top-four which has seen a decline of $100 million-plus clients from 13 in Q4 of FY12 to 12 in Q1 of FY13.

“Much of the growth for Indian IT services players in the next five years will be determined based on their grip on accounts (clients), relationships with key decision makers and their ability to sell incremental revenue to same clients,” said Sudin Apte, chief executive officer and research director, Offshore Insights.