1. No churn in Infosys’ client base despite management change

No churn in Infosys’ client base despite management change

UB Pravin Rao, the interim CEO of Infosys, during a Citi Global Technology Conference held in September, had said they had gone out on a massive outreach programme with their clients.

By: | Bengaluru | Published: October 19, 2017 4:59 AM
Infosys, which reported a client base of 1,164 at the end of June quarter of FY18, did not see the movement of any major account to its rivals, according to sources. (Reuters)

India’s second-largest IT services exporter Infosys, which is set to announce its second quarter results for FY18 on October 24, the first since the exit of Vishal Sikka as chief executive officer (CEO) on August 18, did not witness any churn in its clients portfolio despite this top management change. Infosys, which reported a client base of 1,164 at the end of June quarter of FY18, did not see the movement of any major account to its rivals, according to sources. The exit of Sikka was expected to bring in certain sense of uncertainty among the clients with the likelihood of competitors making a beeline to them. “Infosys has certainly not lost any major client and the credit should go not only to the current top management, but also to the sales force on the ground,” said an executive familiar. Infosys announced the resignation of Sikka as CEO on August 18, and there was a brief period of uncertainty as the company announced the return of founder Nandan Nilekani as the non-executive chairman on August 24. Nilekani, during his earlier tenure at Infosys, was generally regarded as a person with very good networking skills and maintaining excellent relationship with the clients.

UB Pravin Rao, the interim CEO of Infosys, during a Citi Global Technology Conference held in September, had said they had gone out on a massive outreach programme with their clients. “Many of the clients are saying that they are sad to see Vishal leave. They enjoyed all the interaction they had with him. But at the same time, they have also talked about the fact that the relationships between both organisations last beyond individuals. In many cases we have had relationships spanning over a decade or so,” he said. In the IT services business, companies strive to have long-term relationship with their clients which ensure that there is certain stickiness and the resultant repeat business which comes along with it. In many cases, companies have a couple of anchor clients which provide bulk of the business. Another executive on condition of anonymity said: “It is generally not the case where a client moves from one vendor to the other due to certain management instability. In Infosys case, they have held onto to all their all long term relationships.”

Besides the reassurance from the top management which also included certain Board members of Infosys, the ground level sales force team of the company also ensured that they were constantly engaged with the clients to give them the confidence about the future stability of the IT major. Infosys currently has 18 clients which provide them over $100 million in revenue with the top client accounting for 3.3% of its topline. The IT major will announce its second quarter results on October 24. It has provided a revenue growth guidance in the range of 6.5-8.5% in constant currency terms for FY18 with an operating margin band of 23-25%.

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