Major Changes in Indian IT Services Scenario since 2000
Last 10 years have presented unprecedented opportunities to Indian IT services companies and they have delivered it by creating structures to capitalize on these opportunities and getting into next orbit where only BIG 3( Accenture, IBM and EDS) used to have play. Indian IT companies have transformed themselves in a big way and have positioned themselves with highest mindshare as compared to global players.
Rise to the Prominence -SWITCH Companies
Till 2000 most of the IT buyers(large and medium) companies favored large companies like IBM/Accenture and EDS while considering their outsourcing contracts. Post 2000 it has been observed that CIOs at the buyer companies have acknowledged presence of SWITCH(Satyam, Wipro, Infosys, TCS, Cognizant and HCL) companies. If you look at growth of these companies since 2000, it has shown growth of more than 40% year on year.
According to Forrester comparison done between the big 3(Accenture, IBM and EDS) and SWITCH companies
There are three areas where SWITCH companies have delivered well and that make them comparable to the BIG 3.
1. Capabilities: They have created vertical industry capabilities by way of creating teams from various domains.TCS and Infosys have created exceptional capabilities in Banking and Financial vertical. They not only have service leadership but they have created portfolio of products catering to some of the toughest areas like Core Banking.
2. Financial Strength: All large IT services companies have created a big financial strength. This is evident by looking at their balance sheets. All of these companies have huge market capitalizations and lot of cash on balance sheets. That makes them far more prepared to acquire niche companies in various verticals with product or consulting capabilities
3. Ability to do IT transformation deals: Earlier only IBM was considered to be a serious player who can pull through complex transformation deals involving software, BPO, KPO and last but not the least taking customers assets on the balance sheets. Looking at some of the deals signed by TCS, HCL, Infosys in last 3 years it is evident that most of SWITCH companies have created that mindshare as well as strength to do the same.
Emergence of Tier II Indian Players
Companies like Mindtree, Zensar, Mastek, Polaris , L & T Infotech, Hexaware and IGate have filled the place for niche players in certain verticals as well as companies who could service medium enterprises(Turnover of USD 1 billion and less) across the globe While large companies were getting into Fortune 1000 contracts smaller tier II companies from India too were getting pieces of large 5-year and 10-year deals from these and medium companies since 2000. This has been achieved by way of having a faster learning curve for these companies as compared to SWITCH companies. SAP and Oracle enterprise package implementation practices were built in less than 5 years by all these tier II companies. This is almost twice as fast as compared to SWITCH companies.
There is very tendency to create strong vertical practice in these companies and that has given them consistent business over the years. Mindtree has created excellent outsourced R & D practices taking cues from its parent organization Wipro. Zensar has achieved a good name in MRD vertical(Manufacturing Retail and Distribution), Hexaware created India’s largest(at one point in time) practice of PeopleSoft professionals), L & T Infotech created very good strengths on Mainframe and other IBM technologies and so on.
These tier II companies have achieved this by innovative changes which are as follows:
1. Niche Practice Creation: They have taken make or buy option, but clearly their strategies have been laser sharp focused on their market segments. When Zensar realized that they have to create a very strong team of SAP consultants apart from Oracle consultants they went ahead and acquired OBT Global, a pool of more than 300 SAP Consultants.
2. Creation of Strong Sales Presence in US and Europe: All of the Tier II companies have created teams of local sales people supported by Indian sales onsite. This is supported by team of people who do lead generation sitting in India
3. Build relationships with Analyst firms: Most of the large and medium business CIOs rely heavily on the advice of Gartner, Forrester and IDC. It is important to get in their radar as well as allow them to have organizational visibility. This has been actively pursued by most of the tier II companies mentioned above.