IT companies’ current faring in India

The Spoken Web is the World Wide Web in a telecom network, where people can host and browse “VoiceSites”, traverse “VoiceLinks”, even conduct business transactions, all just by talking over the existing telephone network.
Does IBM, which does not share India-specific figures, make money in India, aside of exports? Since 2007 it has invested in the domestic market and expanded its presence in 14 new cities. Today, it continues to invest and focus in more cities and sectors, bringing in new products and services and strengthening the channel network. In addition, they continue to leverage their global footprint to help clients in India. It works the other way too. For example, as a result of its strong relationship with Bharti Airtel, it has been able to generate take aways that have helped it serve other telecom clients elsewhere in the world.
So IBM India seems to be in the “investment mode”, which means it is building resources here. Industry sources say that what it does for the Indian market clearly makes money today but the investments are aimed at making things better for the future. Globally, IBM is doing well and India is a part of its global scheme of things.
Dismissed until recently as a low margin business, the domestic market has come to hold the key for Indian IT companies. Some top companies have been vying for projects in their own backyard. Recently Wipro, Infosys, TCS and others bid for the home ministry’s Rs 2,000-crore online FIR (first information report) project to devise an automated complaint filing and tracking system across the country.
Wipro went past rivals IBM, Tech Mahindra and TCS to bag the Rs 2,200-crore, nine-year contract from Unitech Wireless which is rolling out mobile services in the country. Earlier this year, Wipro had signed a contract worth Rs 3,000 crore with Aircel and got an e-governance order of Rs 1,182 crore from the Employees’ State Insurance Corporation.
The price quoted by Wipro in most of the recent bids is said to be far below rivals’, which has helped it bag deals. For instance, the company’s quote of Rs 1,182 crore for the ESIC bid was way lower than TCS’s Rs 1,530 crore and Infosys’ Rs 1,791 crore.
What has worked in its favor, says the company, is its emergence as “an end-to-end solution player.” The company spent time till 1987 “establishing a pedigree in hardware”, concentrated next on systems integration and networking, graduated to professional services and managed IT services, and has now got into application development and consulting. This, according to Wipro, has helped it bag large multi-layered deals like Unitech Wireless.
Wipro has also mastered the art of transaction-based pricing which has played a key role in the recent orders it has won. For instance, a bank will be billed for each customer transaction rather than a pre-decided sum. If footfalls increase, it’s a win-win situation for both the bank and the IT vendor. If there’s a fall in the customer base, the risk is contained for the bank. This is opposed to outcome-based pricing where the bank shells out a huge sum of money upfront.
TCS, the country’s largest information technology company, is not far behind. In September, the company won the country’s largest State Wide Area Network (SWAN) project from the Andhra Pradesh government on a five-year build, own, operate and transfer model.
TCS expects to double the revenue from the country over the next three or four years. The company believes in bringing its entire branding and global experience to its local clients. Like Wipro and IBM, it has an integrated business unit (as opposed to just sales offices) to address customer acquisition, management and delivery. The company has around 12,000 people dedicated to the India business. TCS has a very strong footprint in the finance sector which happens to be the largest buyer of IT services in the country. Fifteen of the top 30 players in the industry are its customers.
Experts say TCS is the company to watch in the domestic space because of the work it has done with the central and state governments. The space poses a Rs 24,000 crore-Rs 48,000 crore opportunity over the next five years for TCS as the government plans to roll out its 30 mission mode projects (of which TCS has already bagged two).
Infosys, too is getting its feet wet here. India contributes around 1.3 per cent to its total revenues, the larger part of which comes from its banking products. Last year, however, it announced the formation of a separate business unit to focus on just the domestic market. Infosys signed an e-governance deal with the Income Tax Department to establish back-office hubs in four states. In the private sector, the company has about six customers including Thermax. And it is ready to up the ante. The company also bagged a prestigious 10-year eBiz project of the Department of Industrial Policy and Promotion in a bid which also saw participation from TCS, HCL and Wipro among others. Infosys will develop and maintain the eBiz portal which will work as a one-stop shop to provide efficient services to investors, business and industry.