The Hindu Business Line : ‘No opening of purse strings suddenly’

Bangalore, Oct. 21 Sonata Software, which reported a flat September quarter, said some of its international clients have begun spending on selective deals, but the overall sentiment has not changed drastically. In an interview with Business Line, Mr B. Ramaswamy, President and Managing Director, Sonata Software Ltd, spoke about the business environment in the foreseeable future.

Excerpts from the interview:

What kind of technology budget do you expect from your clients for the next year?

I feel the budgets are going to be the same. There won’t be any opening of purse strings suddenly. Because, what is lurking at the top management level is the feeling that things have been managed well. But what is bothering them is the thought that once the so-called effects of the steroids (stimulus packages) wear off, what will be the impact on the economy. On the ground, certain things have not changed — unemployment rates have reached the highest levels, automobile sales have declined, and even in housing I don’t think there has been any major improvement. The stock market has gone up, but for what reason I don’t know.

Have your clients begun ramping up?

Some of our international clients have started ramp-ups. Apart from the maintenance deals, they are doing selective development work. Testing is one such area, and business intelligence (BI) is a new area of spending. Our clients in the outsourced product development (OPD) business, apart from the likes of Microsoft, are not taking up new product development-related work. They are saying ‘we will deliver the bare minimum required.’

Clients are asking for more with less. How do you deal with this issue?

We have been forced to look at more automation. We are forced to use more tools. And we also have to look at improvement in productivity. These are the levers and I have to make sure that the productivity of the team is higher. Also, the environment is better for offshore. If you say I will move work offshore, they will willingly look at it now.

Have your clients consolidated their vendor base?

It goes through cycles. Some large customers (Fortune 500 companies) have started looking at mid-tier vendors. They said ‘scale is fine, but I am not getting any innovation, I am not getting any specialisation, and so I need to look at guys who have that.’ It was like an opportunity that was given to us in terms of working with them, and then we had to scale it up or mine the company. In the process we became credible vendors. There has been vendor consolidation, and in some of these cases we have become the vendor of choice. So that means that volumes are going to increase from there.