India IT companies dropping smaller clients for better profits

Outsourcing players believe dropping "tail accounts" will help cut costs and channel resources to further grow business with customers with potential to spend more.
Written by Ryan Huang, Contributor

Indian information technology (IT) services exporters are dropping their smaller clients in favor of focusing their resources on strategic customers.

The companies are cutting back on the small umall clients, typically called "tail accounts", who usually do no not bring in more than a few hundred thousand dollars at most in a year in revenue, according to an article Monday by the Economic Times (ET).

"We are knocking off many of our tail accounts which do not have a value proposition,"said TK Kurien, CEO of Wipro, India's third-largest software exporter, in the report.

Kurien added it was a conscious decision to improve the quality of the company's revenues. Over the past few quarters, Wipro has dropped some 40 clients, forgoing about US$8 million in revenue and bringing down tail accounts to 45, noted ET.
While other firms have been less open about the decision to drop accounts, analysts point out most of them have been resorting to "tailtrimming".

The shift in focus comes as a time where India's outsourcing players are facing increasing global competition and pricing pressures.

HCL Technologies, for instance, on Apr. 18 announced its third-quarter 2012 results, with CEO Vineet Nayar noting that the company had stopped "hunting" for new clients, and would be more of a "farmer" to grab low-hanging fruits.

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