WFH helps IT sector win deals, not a long-term revenue driver, says industry3 min read . Updated: 25 Aug 2020, 11:07 AM IST
- Work from home has made It firms expand focus on communication and safety solutions for clients from productivity monitoring tools
- Though not a flagship offering, WFH solutions execution will reflect on IT firm's business resilience, say experts
MUMBAI: IT companies reported strong deal wins in the first quarter, offering large scale work-from-home solutions to existing and new customers. While it is an integral part of the business now, it does not look likely to be a revenue driver in the long term, although it could be a necessity to demonstrate resilience, say companies.
The solutions include video-conferencing tools, employee productivity and monitoring tools, networking and communication tools as well as solutions to secure these communications which are connecting to company servers from multiple employee devices. Traditionally, the IT sector has invested heavily on productivity monitoring tools only for client billing purposes. The pandemic has helped them not only offer this solution to clients but also enhance it for more dynamic use. In many cases, these solutions are also helping clients track employee sentiments, attention span and wellness.
During Q1 results, Tata Consultancy Services (TCS) reported $6.9 billion worth of deal total contract value (TCV) led by demand for cyber security, cloud and analytics solutions. These are being offered as part of remote working and digital transformation initiatives which are bundled as secure borderless workspace (SBWS). “We don’t know yet if this is going to be a sizeable business but the core focus is enabling secure connectivity, engaging with employees and monitoring productivity. It is currently being offered as part of the AI driven solutions of Ignio (TCS’ flagship platform solution)," said N. Ganapathy Subramaniam, COO, TCS during an interaction with Mint.
The management said that clients have started realising how well the SBWS solution works and increasingly want to implement it for their workforce. So, the process of prospecting, selling, contracting and onboarding clients has progressed remotely through the quarter. Similar observations were reported by Infosys, Wipro, HCL Technologies, Mindtree, Persistent Systems among others who have announced Q1 numbers so far. Irrespective of what the solution is called, the key offering here is enablement of remote working. Apart from TCS, Tech Mahindra has a solution called New Age Delivery and Larsen & Toubro Infotech has a solution called Canvas which offer solutions for distributed work environment.
“ At present, providers are all offering the solution as a measure for cost optimisation. This also shifts some of the end resource management cost on the employee, which can be further passed on as discounts to clients who are struggling," said D.D. Mishra, research director, Gartner. However, he adds, major IT customers globally—specially across the top financial services client base- are increasingly extending the use of this solution. The pandemic has helped organisations make the cultural shift to this model and IT vendors will be able to monetise it, he said.
“WFH may not be a flagship IT offering for the companies but successful execution will help to demonstrate their own business resiliency, helping them win additional deals when customers are already seeking vendor consolidation," said Mishra.
In addition, the top-tier companies are better placed at demonstrating this capacity simply because of their long-term investments in digital capacity over many years.
Lux Rao, director-solutions and consulting, NTT India, adds that while the initial remote working solutions were introduced with a view to run the business, it is developing into a permanent need across customers. “There was a 300% increase in cyberattacks at an enterprise level during the initial days of the pandemic as employees started shifting out of their workplaces. So, enterprise clients are investing seriously in protecting their employee communications which will continue to be a long-term requirement now," said Rao.
Further, as noted by all of the IT companies, these solutions allow them to hire across a wider range of geographies, reducing employee costs.