IT companies are hunting deals rather than waiting for clients to float tenders

Summary of the Article

The article discusses the changing strategies of Indian IT companies in securing large deals amidst a challenging macroeconomic environment. Traditional methods relying on Requests for Proposals (RFPs) are proving less effective due to reduced client spending and increased competition. As a result, companies like Cognizant are actively 'mining' existing clients for new opportunities, leading to significant revenue gains from large deals proactively created.

Key Players and Strategies

• Cognizant: Secured two large deals (>$500 million) through client mining, leveraging AI-led productivity gains to generate additional client investments.
• Zensar Technologies: Focuses on creating large deals rather than relying on RFPs, showcasing a strong pipeline for proactive deal creation.
• Birlasoft and Firstsource Solutions: Emphasize proactively creating large deals and developing strategic relationships with existing clients to enhance operational efficiencies.

Smaller IT companies, like Birlasoft and Firstsource, are actively pursuing large accounts to increase market share and potentially reduce price competition.

Reasons Behind the Shift

• Weak Economic Situation: Reduced client spending due to factors like import tariffs makes creating demand crucial.
• Competitive Landscape: Proactive deal creation helps companies bypass price wars associated with RFP-based bidding processes.
• Client Consolidation: Fortune 500 companies are increasingly consolidating their IT vendors, forcing companies to be more aggressive in their approach.

Analysts attribute this shift to the current macroeconomic uncertainty, the desire to avoid price wars, and a push to increase market share by focusing on building strategic relationships with clients and offering comprehensive IT solutions.