India’s software giants are moving in a significant shift from piecemeal projects paid for on a per-hour-per-person basis by clients to a sophisticated one in which they use software platforms and business consulting to boost profit margins.
Tata Consultancy Services (TCS), Infosys, Wipro and HCL Technologies are in a new avatar where turnkey solutions and shared resources are altering the pricing model, now based on what is delivered than how many were employed.
“What we do today is very different from what we did say ten years ago. Today we are working with a large number of clients as their strategic partners,” said N Chandrasekaran, chief executive officer (CEO) of TCS.
SD Shibulal, CEO of Infosys, said pay-per-use software and consulting were catching on, rather than code-writing assignments. “The consulting and system integration works contribute close to 34% of our revenue,” he said.
Indian companies are also involved in bidding for re-opened outsourcing deals that earlier were the preserve of multinationals such as Accenture or IBM. Anant Gupta, CEO of HCL Technologies, said his company was winning a large number of such “re-bid” deals.
Productivity has also shot up.
“Today if a software vendor employs a hundred people or a thousand on a project, the billing remains the same,” said Sangeeta Gupta, senior vice-president at industry association Nasscom.
“Earlier every bit of revenue came in by virtue of the addition of headcount,” said Suresh Senapaty, chief financial officer of Wipro.