The Hindu Business Line : ‘Convergence of technology, consulting services inevitable’

Chennai, July 2 Recently, the markets were abuzz with unconfirmed reports about the likely takeover of a French consulting company by an Indian software major. As expected, the share price of both the companies shot up on the charts, even as it was only denial that came in from the official sources. While that may leave a near-term question mark to deal watchers, the broader question that arises is whether we are currently witnessing a convergence of technology and consulting services.

“Convergence is inevitable across every technology and every industry,” says Ms Shalini Pillay, Director, KPMG Advisory Services Pvt Ltd. “Businesses need simple choices and in today’s context, as technology pervades our businesses, convergence of services for consulting and technology to form a new business model is imminent,” she adds.

Triggered by the customer demand for unparalleled domain knowledge and seamless consulting and technology expertise, the next generation global delivery model continues to drive the marriages between technology and consulting firms, explains Ms Pillay.

As examples, she cites EDS-At Kearney, IBM-PwC, Kanbay-Capgemini, Genpact-Axis and the Satyam-Citisoft deals. “They are all driven by the need to secure a foothold into a larger customer base through providing an enhanced customer proposition through end to end solution delivery, backed by robust domain expertise, strategy, process and technology expertise.”

An undoubtedly strong proposition, but there are some big challenges underlying the mergers of technology and consulting firms, cautions Ms Pillay.

Foremost issue is of integrating people, “the most priced assets for the services industry. People integration challenges stem from basic differences in the organisation design and incentives, culture and competencies.”

Transitioning people into a new structure which leverages their existing strengths while enabling the combined proposition, in an efficient and timely manner is, therefore, critical.

Integrating knowledge is another challenge, according to Ms Pillay. “The challenge is not only of knowledge retention; the true success of the merger is in building upon and enhancing this knowledge base since knowledge is core to the consulting industry.”

Any tech-consulting deal has also to contend with seamless customer management, which necessitates the communication of “a coherent, consistent combined proposition to the customer, seamlessly managing the customer account and service delivery and impeccable project delivery.”

Handling partnerships

Finally, handling strategic partnerships is a key integration challenge, since consulting companies would need to provide technical expertise without compromising their independence. “Can a truly global services organisation premised on proprietary technology, be technology neutral and yet provide independent, objective solutions? One needs to communicate and handle customer and vendor perceptions and expectations.”

These challenges have plagued some of the past mergers in this space and continue to intimidate prospective deals, cautions Ms Pillay.

Pure play technology companies and consulting firms have tried to acquire access to consulting and technology expertise respectively through the organic resource building/skills development route and also through partnerships/alliances. In such an effort, a few have been successful; to those who have not, but are aspiring to become truly global services organisations, inorganic growth is key, she says.