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Bharat Kumar

CHENNAI, Feb. 17

CLIENTS of IT companies seem to be going through a revolving door. Companies are gaining clients as fast or almost as fast as they are losing them - depending on which way you want to look at it.

When the slowdown in the IT industry began last year, opinion was divided on whether clients would come to Indian companies or not. Indian expertise was inexpensive and so more clients would look here, ran one argument. Equally convincing was the other argument that lower IT budgets would shrink the pie for these companies. A look at the client list of software companies shows that the argument does not seem to have swung decisively one way or the other. The numbers suggest that both events (clients opting in and opting out) may be happening.

For bigger companies, the inflow and outflow of customers is more or less equal. In the last three quarters, Infosys added 87 new clients while losing 61. For Wipro, the numbers were closer to each other at 78 and 70 respectively.

HCL Technologies gained 65, but lost 53. HCL Technologies and Wipro were among those whose number of active clients actually came down between September and December. For HCL Tech, the active client numbers for September and December stood at 360 and 344 respectively, while for Wipro it stood at 232 and 225.

Interestingly, both Infosys and Satyam have shown an increase in active client status for the two quarters from 293 to 299 and 230 to 247 respectively.

A Mumbai-based IT analyst attributes this to the fact that, ``Wipro and HCL have some exposure to technology and the telecom industry, while Infosys and Satyam are exposed to financial services and manufacturing respectively.''

A spokesperson for HCL Tech - whose active clients stood at 344 in December as compared to 360 in September - told Business Line: "First, client numbers do not matter as much as the value of the order or the size of the client which is of strategic importance. Secondly, we are in the process of rationalising our client numbers. We want to move up the value chain. We do not want customers who do not add value. For instance, there are some who will not scale up. It does not make sense for us to work with them. Further, we wish to move work offshore to help the margins. In cases where we want to work with clients but they are not ready, we have to wait.''

The analyst said, "In their conference call with analysts the last quarter, most companies indicated that they were going through the process of client rationalisation. But let us also not forget that clients are now going through vendor rationalisation. In other words, if they were earlier working with two or three vendors, they now prefer one. Finally, the last 2-3 quarters have seen many companies struggle for growth. They will not want any customer to go away.''

Among smaller companies, the signals are mixed. Mastek's active client status in December came down to 82 from 98 in September, while Mascot's slumped to 97 from 109. VisualSoft's went up to 47 from 43 while Polaris' went up to 93 from 87.

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