Mumbai : With digital services emerging as the next growth driver for information technology services firms, quality of revenue is taking precedence over quantity, leading to a fair amount of rationalisation of customers.
This trend is reflected in the active customer base of Indian IT services firms, which grew at a tepid pace for the last three years despite healthy additions of clients every quarter.
For instance, despite adding on an average 300 new clients every year, Infosys’s active customer base at the end of 2017-18 (FY18) stood at 1,204, compared with 950 in 2015.
The same holds true for Wipro, which, despite adding 200 new clients every year for the last three years, only saw its client base grow to 1,248 in FY18, from 1,054 in 2015.
On an average, the pace of client leakage has also increased for these two IT firms over the years.
Even though Tata Consultancy Services (TCS) and HCL Technologies don’t share their client numbers any more, industry experts believe the trend is similar for them.
‘I don’t consider customer leakage as a cause for concern unless the revenues take a major hit’
“Customer ‘leakage’ can happen due to many reasons such as a contract not being renewed or due to a conscious decision by the vendor not to pursue a specific client due to a revamped vertical or services strategy.
“So, I don’t consider customer leakage as a cause for concern unless the revenues take a major hit,” said Hansa Iyengar, senior analyst at Ovum Research.
She also said that client mining has emerged as the area of focus for most IT services firm.
“The focus for most vendors is to get closer to existing clients and if you look at client retention rates, they are in the high 90 per cent range.
“This is the right way to proceed as digital gains traction,” Iyengar added.
Analysts also pointed out that most digital deals in the current market place are of a shorter duration.
Even the value of these contracts are lesser, compared to deals in the legacy business, leading to a churn in the customer base.
“As the services industry pivots to the digital space, projects are moving from legacy services to digital services.
“Often, clients utilise new business models and different vendors to deliver digital works, leading to shorter tenure of contracts,” said Peter Bendor-Samuel, founder & chief executive officer of global research firm Everest group.
With change in the business model, Indian IT firms are eyeing more revenue from the digital services segment.
For instance, in the second quarter of the ongoing fiscal year, digital constituted 31 per cent of Infosys’ total revenue of $2.92 billion, with a year-on-year growth of 33.5 per cent.
Similarly, TCS reported 60 per cent growth in digital services that accounted for 28 per cent to its total revenues of $5.215 billion.
For Wipro, digital business constituted 31.4 per cent of overall revenues of $2.04 billion in the September quarter.
Sensex sheds 298.82 to close at 38,811; Nifty shrinks to 11,650
Mumbai: The benchmark BSE Sensex erased early gains to end 299 points lower Thursday as investors booked profits after stocks soared to record highs after BJP’s strong showing in the Lok Sabha polls.
Sensex and NSE Nifty went on to record highs even as Lok Sabha election results showed that PM Modi-led NDA leading on over 300 seats. However after the euphoria during the morning session, Sensex shed 298.82 to close at 38,811 and Nifty shrank to 11,650 on the closing bell.
During the day, the Sensex hit the 40,000 mark while the Nifty crossed the 12,000-level for the first time ever. However, the indices succumbed to profit booking towards the fag-end of the session.
The 30-share Sensex tumbled 298.82 points, or 0.76 per cent, to close at 38,811.39. Similarly, the broader NSE Nifty settled 80.85 points, or 0.69 per cent, lower at 11,657.05.
IndusInd Bank was the biggest gainer in the Sensex pack, rallying 5.23 per cent, followed by Hero MotoCorp, Coal India, Yes Bank, PowerGrid, ICICI Bank, HCL Tech, L&T, Kotak Bank and Bharti Airtel, rising up to 1.56 per cent. On the other hand, Vedanta, ITC, Tata Motors, HDFC twins, Bajaj Finance, Sun Pharma, Tata Steel, TCS, ONGC and Infosys fell up to 5.53 per cent.
Riding on a massive Modi wave sweeping through most parts of India, the BJP was set to return to power Thursday as it led in 298 seats while the Congress trailed far behind with 52, according to trends released by the Election Commission for all 542 seats that went to polls.
“Markets were initially enthused to see the election results falling in line with the exit polls. However, the run up to the D-day was so sharp that it turned out to be a sell on news phenomenon,” said Devang Mehta, Head – Equity Advisory, Centrum Wealth Management.
Participants would now be keen to know the future course of action for bringing the economy back on track, solution to the liquidity situation, the union budget, onset and progress of monsoon in June and most importantly the earnings trajectory, he added.
According to traders, weak cues from other global markets and a depreciating rupee also weighed on investor sentiment. The rupee depreciated 37 paise to 70.04 against the US dollar in afternoon trade. Globally, bourses in Asia ended in the red.
Indices in Europe were also trading on a negative note in early deals. Brent crude, the global oil benchmark, was trading 1.79 per cent lower at USD 69.72 per barrel.
Silver up on increased offtake; gold steady
New Delhi: Silver prices rallied by Rs 200 to Rs 37,400 per kg in the national capital on Thursday, while gold held steady, according to the All India Sarafa Association.
Traders said silver prices rose on pick-up in offtake by industrial units and coin makers at the local spot market. Globally, spot gold was trading marginally higher at USD 1,276 an ounce, while silver was slightly up at USD 14.53 an ounce in New York.
In the national capital, gold of 99.9 per cent and 99.5 per cent purity dropped by Rs 10 each to Rs 32,670 per ten 10 gram and Rs 32,500 per 10 gram. Sovereign gold, however, held steady at Rs 26,500 per eight gram.
Silver ready surged Rs 200 to Rs 37,400 per kg, while weekly-based delivery fell by Rs 66 to Rs 36,234 per kg. Silver coins held flat at Rs 79,000 for buying and Rs 80,000 for selling of 100 pieces.
India PC mkt declines 8.3 per cent to 2.15 mn units in Jan-Mar qarter
New Delhi: Personal Computer (PC) shipment in India fell by 8.3 per cent in the January-March quarter of 2019 to 2.15 million units, registering a year-on-year decline for the third consecutive quarter, according to research firm International Data Corporation (IDC).
Besides, big commercial deals, market remained weak due to weak consumer demand, high inventory from previous quarters, and supply issues for Intel chips.
Shipments in the consumer segment saw a 26.5 per cent dip in the said quarter compared to the year-ago period. The commercial PC market saw a total shipment of 1.35 million units in the said quarter, a growth of 7.3 per cent over last year.
“The announcement of central elections on March 10, 2019 resulted in the model code of conduct coming into immediate effect further resulting in a delay in execution of government projects and impacting the commercial segment,” IDC said in a statement.
However, IDC expects the overall PC market in India to witness a growth in the second quarter. The commercial market is expected to pick up post new government formation in May, while the consumer market is expected to pick up largely driven by back to school campaign by vendors and online sales.
HP maintained its leadership position with an overall market share of 28.1 per cent in the first quarter of 2019, followed by Dell (25.9 per cent), Lenovo (25.2 per cent) and Acer (11.7 per cent).
The notebook PC (laptop) category accounted for 61.4 per cent of the shipment and witnessed a 9.8 per cent year-on-year decline.