The new systems that clients were going to implement are delayed, which means there is more maintenance to be done – COO, Infosys
Indian IT vendors are seeing more revenues from application maintenance services as cautious customers continue to hold back investments on deploying new technology systems.
"Maintenance continues to be hot," said S. D. Shibulal, Chief Operating Officer, Infosys Technologies Ltd. "The new systems that clients were going to implement are delayed, which means there is more maintenance to be done," he added. Infosys has started implementing a new ticket-based pricing model for its maintenance services, where the customer is billed for the number of upkeep requests or the number of devices managed. The company earned 21.9 percent of its revenues from maintenance services in the year-ended March 2009, down from 23.7 percent in the previous fiscal.
Despite adding newer service lines such as testing and infrastructure management in the past few years, Indian vendors continue to earn about 40 percent of their revenues from the traditional application, development and maintenance (ADM) services. Maintenance revenues, which typically account for almost half the ADM earnings, lend some stability to these vendors, especially in an economic downturn. "Growth in maintenance revenues is typical and not surprising in a slowdown environment as development part of the ADM business will be less," said Harit Shah, an analyst at Angel Broking Ltd.
Source: The Hindu Business Line
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