It has been a year of turmoil for economies across the globe, impacting the Indian IT services industry as well. Worse, the outlook for the next year isn't clear yet for players in this industry. CEO and MD of Infosys Technology,
Pricing has been impacted. But don't you get down to negotiate on pricing only after you have exhausted all other levers, such as offshoring, etc?
No. It depends on the deal. In some of the larger deals, clients tell us that they have 100 people on project with an idea of the cost and if they hand it over to us then they would expect between 20 and 30 percent savings. So they have a minimum expectation that they want us to better. It starts off as a rate game.
We move the discussion away from people — so we don't talk about the rate per hour but overall savings.
Rate per hour is not a good metric, in my opinion, because the productivity from one person to another varies dramatically. Ultimately what anyone wants is cost per function point, which is a better metric, along with quality of software delivered.
These metrics are relevant. The latter will determine the total cost of ownership because you develop software over six months or a year and use it for 5-10 years. If the quality is not good, then you keep on paying for the lifetime of the product.
Source: The Hindu Business Line
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