Bangalore: As Indian software exporters see business return to normal with Western firms stepping up outsourcing, they are also witnessing a growing openness among clients willing to be identified.
For several years now, many Western firms have been reluctant to admit they worked with Indian information technology (IT) firms while cutting jobs back home, fearing a political backlash.
Photo: Hemant Mishra/Mint
That’s changing now. In April alone, India’s third largest software firm Wipro Ltd has named customers such as US electronics retailer Best Buy Co. Inc. and insurer Main Street America Group; it’s bigger rival Infosys Technologies Ltd announced a three year $150 million (Rs666 crore) contract from Microsoft Corp. to manage internal IT systems; and HCL Technologies Ltd has named seven clients, including US publishing group Advanstar Inc. and French glass maker Saint Gobain.
“They (customers) are communicating that to their own shareholders...that they are taking efforts to restructure their own cost structure,” said Suresh Senapaty, chief financial officer at Wipro. “(But) not everybody is doing that; it is still a minority.”
HCL did not comment.
Infosys, India’s second largest IT vendor, said while it makes exceptions it has a policy of not naming customers.
“There are various reasons for that,” T.V. Mohandas Pai, director for human resources and training at Infosys, said without elaborating. Still, Infosys has already identified two clients so far this year.
A decade ago, at the beginning of India’s IT growth story, Infosys and Wipro hadn’t been reluctant to name customers, but the practice stopped soon after the tech meltdown of 2000-02, when it found overseas customers unwilling to be named because of growing agitation back home at losing jobs to Indian companies.
The companies also didn’t want to tip off smaller local rivals, which had begun playing the price card to woo customers.
During the recent downturn, the worst in decades, many Western companies were forced to slash technology budgets and jobs just to remain afloat. Now, as they start making new investments in a recovering economy, they want to continue keeping costs low to be competitive, say analysts.
“By outsourcing to Indian vendors, customers are telling their investors that they are lowering operating costs to be competitive,” said Arup Roy, senior analyst at technology researcher Gartner Inc.
“These guys (Indian vendors) are price competitive compared to other multinationals. MNCs have a substantial global delivery presence, including (in) India, yet they still have to go some more to really match the prices,” he said.
IBM Corp., Accenture Ltd and Hewlett-Packard Co. (HP) have a large workforce in India, the bulk of which has been hired in the past few years. IBM has more than 73,000 people in India; HP employs at least one-fifth of its global workforce here; and Accenture has 47,000 people in the country.
Another analyst said Indian IT firms are more confident about naming customers now because they have grown bigger and are present in several nations, employing locals in the US and other Western countries.
Also, most of the pricing is transparent to customers and the differentiator is the value each vendor brings.
“We are no more talking about $500 million companies. These are huge $4-5 billion companies. They have scale, can execute larger contracts and (have) built their brand over years,” said Siddharth A. Pai, partner and managing director at the India office of TPI Inc., an outsourcing advisory.