V. Sridhar

The software major identifies new business models

Company delivers platforms for social networking services as a Software as a Service (SaS)

BANGALORE: 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

Speaking to a group of journalists here on Wednesday, Subhash B. Dhar, member of the company’s Executive Council, said 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,” Mr. Dhar said.

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”, which Mr. Dhar said, 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. Mr. Dhar said 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,” he said.

Risk level

Asked whether the new pricing model raised the level of risk for the company, Mr. Dhar told The Hindu 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. He said 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, said Mr. Dhar. He said in many service industries such as music and banking, consumers were increasingly inclined to use web or mobile-based platforms. These changes, he said, required companies to plan business processes taking these shifts into account. “Institutions and companies,” he said, “need to plan and invest in multiple delivery channels”. Infosys plans to offer its clients solutions that enabled them to service these platforms, he said. Referring to the increasing dependence of consumers on social networking sites for support on products, Mr. Dhar said the company was delivering platforms for social networking services as a Software as a Service (SAS).

He said the company had “won three significant deals” from Indian companies in the last five months, one of which was a telecom service provider and the other two being manufacturing companies.