TCS rejects price cuts in pursuit of new clients
Rivals drop prices, but TCS is not worried about pricing play, says COO
Tata Consultancy Services Ltd (TCS) said it won’t engage in a price war although some of its rivals have offered discounts to win new business.
“We are seeing in the market some of them are dropping prices,” chief operating officer N. Ganapathy Subramaniam said without naming the companies that are resorting to discounts to boost revenue growth. “We are not worried about the pricing play of our competition because we have always maintained you cannot compromise margins to funnel growth.”
Examples abound in the world of business of how retaliatory price slashing results in a precipitous drop in industry profitability. With TCS’S December quarter operating income of $1.35 billion almost double that of its nearest local rival Infosys Ltd, the Mumbaibased company can use other tactics in its arsenal to stave off the debilitating effects of a price war.
“Pricing alone is not the cri- teria. So, when we say we will be aggressive, what we are saying is that you need to have a solution, the sleekness of the solution, the ability to create business value, and how you are committing to growth parameters (of a client). All of this makes a winning proposition for clients,” clarified Subramaniam.