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IT majors rejig business models to focus on client geographies as service lines blur

With the US’ economy struggling and high stress in industry segments like retail, transportation, and hospitality, the realignment of models is a viable solution, analysts say. 

Published: 14th November 2020 11:35 AM  |   Last Updated: 14th November 2020 01:12 PM   |  A+A-

For representational purposes

Express News Service

BENGALURU:  IT services firms globally are re-shaping their business models and focussing on geographies past the United States. Analysts note that the changes are being driven by post-Covid realities which have demonstrated the need for a more agile and simplified organisational structure which is also crisis resilient. 

India’s fourth-largest IT services provider, Wipro, has followed global peers like Capgemini and Accenture in setting up an operating model with a simpler classification of service lines based on their client geographies rather than industry verticals. This is essential  since a large number of services provided by IT firms are now clubbed into fewer segments as the companies move away from the traditional vertical-based services to focus more on a geography-wise go-to-market strategy. 

Wipro CEO Thierry Deleporte had earlier said that his focus would be to go for a simplified, linear structure within the organisation, which may also involve doing away with several roles. The IT firm is also realigning its strategy in non-US markets in order to drive significant revenue from these markets.

“Effective January 1, 2021, we will replace the current structure of various Strategic Business Units, Service lines and Geographies with four Strategic Market Units (SMUs) and two Global Business Lines (GBLs),” the Bengaluru-headquartered IT firm  had told the stock exchanges.

A stronger trend since the outbreak of the pandemic has been  a focus on revenue generation from existing clients for large size deals, particularly on the part of tier-1 IT firms, and on new client acquisitions in non-US markets, such as Europe, Africa, and the Middle East. With the US’ economy struggling and high stress in industry segments like retail, transportation, and hospitality, the realignment of models is a viable solution, analysts say. 

‘Time to realign business strategies is here’
Pareekh Jain, Founder and  Lead analyst at EIIRTrend had written in his blog recently that now is the opportune time for IT firms to break away from traditional vertical, service-line based silos, since new offerings like telematics, platforms, cloud engineering, IoT security are resulting in service lines blurring.


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