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Business News/ Opinion / Columns/  For Indian IT services companies of all sizes, large deals are the holy grail

For Indian IT services companies of all sizes, large deals are the holy grail

For smaller cos, identifying the correct win theme is the most important step

Photo: Hindustan TimesPremium
Photo: Hindustan Times

Every IT services leader we engage with is keen to win large deals. For large companies such as Accenture and TCS, large deals may mean more than $250 million in TCV (total contract value). Smaller companies may consider $15 million TCV or higher as large deals.

Large deals are critical for three reasons: they accelerate growth more effectively than a collection of smaller deals. Once sold, they provide revenue visibility for multiple years and release the bandwidth of the sales team to pursue other opportunities. Most importantly, they establish the seller as a capable company and that leads to larger opportunities.

Large deals are notoriously difficult to land. Such deals typically impact the core business systems of customers and chief information officers only invite players with proven track records. While this creates a virtuous cycle of repeat opportunities for established players, it makes it difficult for smaller firms to break in. While large firms may win five to 10 large deals every year, smaller firms struggle to win even one.

At Auctus Advisors, we drive large deals for our clients in two domains: origination and conversion.

Origination refers to knowing what large deals exist in the market and being invited to bid. We find this to be the tougher challenge. The probability of success is markedly higher in existing clients, where the seller already has deep relationships. The most competent firms can track triggers, both in the business and technology ecosystems of the client, to craft large deals proactively. While this depends on the skills of individual account managers, a thorough account planning and governance process, anchored by the chief executive officer (CEO), is often what makes the critical difference.

In the absence of deep existing relationships, external channels such as alliance partners, analysts and vertical consultants may be considered, but the probability of successful large deals origination through these channels is low. Most of our clients break into large deals by prudently leveraging existing relationships.

The conversion process becomes critical once there is a pipeline of large deals. Unfortunately, our observation is that while many companies focus disproportionately on origination, they underestimate the criticality of the conversion process and fail to win painstakingly curated large opportunities.

The conversion process has two equally important steps: bid management and bid solutioning. Bid management involves identifying the right cross-functional team, building a feasible bid plan, proactively governing progress and meeting all submission requirements. This must necessarily be anchored by senior management, especially in the case of make-or-break opportunities.

Bid solutioning involves identifying differentiated win themes and then building aligned technical, people and financial solutions.

For a smaller company to win a large deal against established competitors, identifying the correct win theme is the most important step.

These win themes are typically highly contextual: depth of relationships, deep awareness of the client’s technology ecosystem, capability in a niche area, ability to transition and transform with minimum disruption, smart pricing mechanisms aligned to the client’s business objectives and so on are all valid win themes and must be prudently combined.

The win theme must not only play on the strengths of the bidder, but also address the competitors’ weaknesses. Trying to beat an industry leader with just a technical solution is unlikely to succeed. The process of identifying the win theme for large deals is often anchored by the CEO.

As is evident, originating and converting large deals regularly is a complex, cross-functional endeavour that needs to be anchored at the highest level of management. We advise our clients to set up a dedicated large deals office under the direct sponsorship of the CEO.

These small cross-functional teams anchor both the strategy and execution of origination and conversion of large deals. They heavily leverage teams across account management, pre-sales, resource management, delivery, HR and finance to craft winning deals. This team loops in external support as required at any stage in the large deals process, which often makes a critical difference for smaller companies.

IT services firms that hone the art and science of large deals enjoy disproportionate advantages and rewards over their competitors. CEOs of IT services firms must anchor large deals as one of their most important agenda items.

Abhisek Mukherjee is co-founder and director of Auctus Advisors.

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Updated: 20 Oct 2021, 12:45 AM IST
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