Indian IT companies like HCL Technologies, TCS pounce on HP deals – Source The Economic Times

In the wild, it is a common strategy for the predator to single out the weakest prey and chase it down for a kill. In the cut-throat market for outsourcing deals, too, it works much the same way, and a woundedHewlett-Packard is fair game for Indian software companies desperate to win new contracts. “Indian outsourcing companies are aggressively attacking HP, which is a very vulnerable target right now,” said Peter Bendor-Samuel, founder and CEO at Everest Group, a Texas-based outsourcing advisory and market research firm.

HP, sitting on plum contracts with the likes of American Express and Bank of America, is vulnerable as these deals worth billions of dollars are coming up for renewal. About $100 billion (Rs 5.4 lakh crore) worth of IT outsourcing deals will expire in 2013, the Everest Group estimates, with 15% of it being with HP. PC maker HP entered IT services with its 2008 buy of EDS for $14 billion, but successive leadership changes in 2010-11, took a toll on investor confidence. HP, whose shares have fallen 60% since early 2010, recently wrote down about $8 billion in the value of its services business and is cutting about 29,000 jobs, raising a red flag for clients. Bangalorebased MphasiSBSE 0.03 %, earlier an EDS company, is now part of HP. While every outsourcer in the top tier is competing hard for HP’s clients, the most aggressive and successful ones are HCL TechnologiesBSE 0.45 % and Tata Consultancy ServicesBSE 0.67 %, observers said.

So while the success rate for Indian companies in the renewal market is around 30%, TCSBSE 0.67 % and HCL Technologies are winning 60% of the renewals involving HP clients. While the companies declined to comment for this story, those familiar with their functioning said the sales teams are systematically chasing and winning clients from HP.

“Large clients working with HP for last the 5-7 years are seeing relationship fatigue and are ready to work with new vendors,” said a senior industry executive, requesting anonymity. “What we are promising instead is more value with lower price, transparency in delivery and flexibility.” The fate of HP, which Chief Executive Meg Whitman is looking to rebuild, is neither new nor unique.


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