Midsize IT scripts a growth story around top clients
There is a reason why some firms are strengthening existing client ties and focusing more on select areas.
At Zensar, revenue share from the top 20 clients grew to 62.6% from 56.6% in the past year.
“This strategy has worked for us in the USA and Africa. Currently, we provide cloud infrastructure services to 30-35% of our customers, but will work to integrate that into all the top 20 accounts over time.” Zensar chief executive Sandeep Kishore said. It’s a similar story at Persistent Systems under new CEO Chris O’Connor, who changed its internal structure and adopted a solutionsdriven approach to increase the overall revenue stack.
“We are mapping the client’s IT spends to our services to see what are all the areas where Persistent can contribute with the managers being incentivised to do this,” he said.
The company expanded its top ten accounts, offering them multiple services compared to a year ago.
At Mindtree, newly appointed CEO Debashis Chatterjee said there was huge opportunity in cross-selling and upselling and that it had recently hired a leader in the US to chase such deals. “If you can grow with your top strategic clients, nothing like it. For topline, focus on strategic accounts and mine those accounts even more,” Chatterjee recently told ET.
Companies such as these are doing well in terms of bringing in key leaders at different levels, said Pareekh Jain, founder of Pareekh Consulting. Sandeep Kalra, President- Technology Services at Persistent, Abhishek Sinha, COO at LTTS and Nachiket Deshpande, COO at LTI has brought in fresh perspective, he said. Most of the leadership at midtier companies has come from larger companies where they have experience in client mining. NIIT Technologies’ head Sudhir Singh was earlier at Infosys, as was LTI's Sanjay Jalona. “All mid-tiers are investing in digital such as AI, automation, Cloud, SaaS, analytics, microservice, cybersecurity, IoT and pushing it with agility. Their share of digital is greater than large firms though they are not winning large transformation deals. That shows their penetration of digital is more broad-based,” Jain said.
All these companies have reported an increase in digital deal sizes in the past few months.
“One of the challenges (for midtier IT firms) is that the growth rates in the BFSI (banking and financial services, and insurance) and retail sectors in the US are going down, and together they make up almost half the client base for many of these firms. While digital deal sizes are going up, there is an increase in transition costs for them which results in margin pressures,” said Amit Chandra, assistant vice president, HDFC Securities. The strategic decision to focus on a few select areas, like BFSI, travel and transportation, retail, and hi-tech manufacturing, has helped these companies grow faster and deeper in defined areas.