Tips to cope with recession
Indian IT companies, under
pressure from clients to reposition themselves as a result of the global
economic crisis, are developing new models to not only stay afloat but also to
explore new business opportunities. Infosys Technologies, for instance, has
identified new “business models” in order to remain relevant to the needs of
its clients.
Revenue stream
Infosys had developed “new engagement models” that were aimed at
addressing the needs of clients who are increasingly cost-sensitive
irrespective of the strength of their balance sheets. Infosys plans to raise
“at least 10 per cent of its overall revenues from these new models within the
next three years.
Pricing model
The company has identified two broad areas in which these models are
applicable, apart from focussing on a diversification of business in emerging
markets had been relatively less affected by the global crisis.
The first relates to the development of a new business model that offers
clients “a value proposition” in a period when they are under severe pressure
to limit costs.
The most important feature of this model is the shift in the company’s
pricing model. This meant that Infosys
would offer clients a price that was “outcome-based”, “transaction-based” or
“function-based”.
The rates will be irrelevant and the client pays only for the result we
provide them,” he said. The model offered greater “transparency in pricing for
the client.
Risk level
The new pricing model raised the
level of risk for the company that there were risks associated with the
adoption of the model but that the company, by virtue of its long experience in
the field, was confident of assessing the risks associated with the new pricing
method. The company was “taking very
calculated risks” and these risks would be monitored. The company had even
rejected some deals because of the high risks.
Opportunities
The second set of Infosys’ “engagement models” centred around new
opportunities caused by the shift in consumer preferences. In many service industries such as music and
banking, consumers were increasingly inclined to use web or mobile-based platforms.
These changes required companies to plan business processes taking these shifts
into account. “Institutions and companies. “need to plan and invest in multiple
delivery channels”. Infosys plans to offer its clients solutions that enabled
them to service these platforms.Referring to the increasing dependence of
consumers on social networking sites for support on products. The company was
delivering platforms for social networking services as a Software as a Service
(SAS).
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