Tuesday, September 25, 2012

Infosys to treat its top 50 clients in a special way

Customer intamacy is at the key of our operating philosophy, others are only now starting to get it. Aivars Lode, Avantce

Infosys to treat its top 50 clients in a special way 

Infosys has overhauled its client engagement strategy by dedicating senior executives to watch over each of its top customers, its latest adjustment in the face of complaints that the company may be losing its mojo.
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Infosys Ltd.
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BANGALORE: InfosysBSE -0.80 % has overhauled its client engagement strategy by dedicating senior executives to watch over each of its top customers, its latest adjustment in the face of complaints that the company may be losing its mojo.

The top 50 clients, who together account for half of Infosys' $7-billion ( Rs 38,000 crore) revenue, will be waited on hand and foot by two executives, with one of them permanently based at the same location as the customer.

The revamped strategy, which is about a month old, has come to light following interactions between customers and analysts who track India's second-largest software exporter.

One of the two senior executives will be designated a 'client partner' and there will also be a 'delivery partner' based in India to ensure that work commitments are adhered to. Together, these senior executives - just two levels removed from the chief executive - will be responsible for not only ensuring client satisfaction but also growing the account.

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"The results of these changes would factor in the September quarter. This is when we would see the first signs of the sales reorientation," said Hitesh Shah, director-research atIDFC Securities. So far, these clients had to deal with several managers who would also have other customers to handle.

Infosys, which has been making a series of adjustments after delivering below-par results in the April-June first quarter, declined to comment citing the silent period before it announces second-quarter earnings next month.

Since July, it has been obvious that the company is attempting to make tactical adjustments which can help it grow sales faster while also engaging more robustly with the media to change perceptions that it is no longer an information technology bellwether. Earlier this month, it announced the acquisition of a Zurich-based consultancy Lodestone, signalling its intention to better use its nearly $4-billion cash hoard.

Infosys, which has guided for a 5% revenue growth in the year to March compared to 11-14% for the industry, has been lagging most peers in its sales growth. By paying more focussed attention to clients, the management believes that some of the 50 key accounts have the potential to scale up to $100 million in annual revenues at least.

Unlike in the past, long-term, multi-billion technology outsourcing contracts are few and far in between, making it necessary for companies such as Infosys to not only retain clients, but generate more future business from them.

"Incumbent (vendors) are under pressure from the market to retain customers and the business," said Sid Pai, partner and managing director at the Indian arm of outsourcing advisory ISG, according to whom several billions of dollars worth of IT contracts signed 7-10 years ago are now nearing the end of their term.

Besides promoting a bulk of its current delivery managers to the new role, Infosys is expected to hire senior professionals from the market. As Infosys waits for the new model to deliver, analysts have flagged its close resemblance to the one followed by its rival Cognizant Technology Solutions Corp. Called 'Two-in-a-Box', it is a name trademarked by the New Jersey-based firm.

"At the surface, Infosys' shift in account strategy appears to be a competitive response to the success of Cognizant's 'Two-in-a-Box' model," said Jesse Hulsing of Pacific Crest Securities in his latest research note on Infosys. "Though late to the game, we view this shift as an appropriate response to Cognizant's client mining success."

Cognizant, which claims to have been following the 'two-in-a-box' model for over a decade-and-a-half, is now adding a consulting partner to the mix, thus making it 'three-in-a-box'.

"The key objective of the consulting partner programme is to help provide greater strategic value to the client organisation by proactively solving clients' business issues, demonstrating domain or functional knowledge and innovation, delivering higher-value strategic and transformational projects," R Chandrasekaran, group chief executive for technology and operations at Cognizant, wrote in an email.

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