As an example of aggressive discounting, analysts cite HCL Technologies recently winning a contract worth several million dollars from Deutsche Bank. Although not clear of the discounting happened, executives aware of the deal negotiations, described the pricing offered as ‘significantly lower’. Once a major client of Infosys, Deutsche Bank now brings in excess of $50 million in business to HCL Technologies.

Competition seems to be heated further as large outsourcing contracts from Procter and Gamble, American Express, Bank of America and Unilever which were first signed during 2002-03, come up for renewal this year. Deep pricing discounts and even paying money upfront are becoming commonplace with associated negative implications for margins, say senior executives.

According to Wipro’s CEO, TK Kurien, fierce fights exist between the rational and irrational players. In a recent interview, as per his observation, he feels that some which were categorized as rational have moved on to the other side.

Analysts believe that Infosys which has been extremely profit-margin conscious  is now beginning to show increased flexibility on pricing and a greater willingness to take on deals which it had earlier shunned. Infosys seems to be under pressure to grow faster as compared to how it was being outpaced by partners previously.

However, analysts on seeing the company’s strong performance in the December quarter say that Infosys is being led by a desire to protect turf in a slowing market with enhanced competition. A deal wins for Infosys means a deal loss for another vendor, who may necessarily get their share of business and can drive a competitive response.

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