If you have looked at Accenture’s Q1 09 results announced a few days back, what stands out is the sharp dip in new bookings in their outsourcing business – 45% QoQ and 12% YoY. What is more – this is the lowest in the past 5 quarters. This clearly indicates the way of things to shape in the next few quarters.
How will this impact service providers? We keep hearing about decisions being postponed, price negotiations and project cancellations. To address these challenges, Service providers will have to find creative ways to win and retain clients. TCS for example has offered free transitions and volume discounts to win large contracts. It has won 38 large contracts in the last 18 months and is reported to have 20 more in the pipeline.
In conclusion, the short-term looks gloomy and this period will distinguish between the haves and have-nots in a business context.
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The results of Infosys announced 2 days back have bucked the trend and caused some cheer. The company has posted a more than healthy increase in margins, thanks to its ability to control costs and bring in the right thrift measures.
The lesson is, if you can’t control the topline, owing to uncertain market conditions, work on what’s within your control- the costs and hence, bottomline.