Pricing pressure looms over IT enabled services

Monday, 20 January 2003, 08:00 Hrs
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BANGALORE: After the IT services, it seems to be time for pricing pressure in the IT enabled services (ITES) sector.

However, the situation is not as worrying as in the software services sector, contended an official of a Business Processing Outsourcing (BPO) call centre company.

"What took four-five years in the IT industry is happening in 12-18 months in the IT enabled services sector," said Raman Roy, CEO Wipro Spectramind.

"Price pressure in the ITES is very rare. New companies coming into the sector are using price as a point of entry."

"Customers coming into India are prepared to pay higher prices. But, as they become comfortable, they come back seeking price reduction."

Roy is not worried about the trend as he thinks it's a passing phase.

"It's not a case of bursting of the bubble. We see it as a huge opportunity," he told reporters while announcing Wipro's third quarter results.

Wipro Spectramind acquired four new customers in the October-December quarter, taking its total number of active customers during the quarter to nine. Its clientele includes Microsoft Corporation.

"In the IT enabled services segment, intense price competition resulted in revenues of $11.6 million for the quarter ended December 31,2002 against our estimate of approximately $12.5 million," Azim Premji, chairman Wipro Limited, said.

"Despite the pricing pressure, it is a huge opportunity. The operating margin of 25 percent is higher than the 17 to 23 percent as per our expectations," Vivek Paul, vice chairman of Wipro, added.

Wipro Spectramind has added 686 employees since September to take the total number of employees to 3,884 by December 31.

Source: IANS
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