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With the old model of outsourcing getting outdated, Indian IT companies may need to tweak their strategies to grow further.
“Outsourcing is undergoing a lot of changes and the focus should be on giving value to the client instead of merely lowering costs,” Mr Sanjoy Sen, Senior Director, Deloitte, India, told Business Line .
The PwC Executive Director, Consulting, Mr Ambarish Das Gupta, said Indian IT companies will find it a challenge to bag new contracts and hence they should focus on new geographies. “They should get into more niche segments as well as sectors like healthcare and utilities,” he said.
Some of the changes in outsourcing are being reflected in the nature of deals and companies themselves admit that they are seeing this change. In a recent interview with Business Line , Mr T.K. Kurien, Wipro CEO, said: “The offshoring business is getting commoditised and we have to provide upfront differentiation of our services offerings in order to bag deals.”
Zinnov Consulting's Manager Consulting, Mr Sundaraman Viswanathan, said clients have still not come out of the US financial crisis and hence could impact Indian IT companies' earnings for some more quarters. “But Infosys and Wipro will continue to be bellwethers of the industry,” he said.
When the economic climate was good in the US, companies such as Goldman Sachs or Citibank used to outsource coding-related work, which was considered a part of the discretionary spend. But post the 2008 slowdown, flow of outsourcing work has reduced. This can be seen from the fact that the top four IT companies, on an average bagged about 40 clients in excess of $500 million in FY 12. Compared to that in 2007, the top four bagged about 100 deals in excess of $500 million.
Others suggest that companies should look beyond differentiation. Mr Peter Schumacher, CEO, Value Consulting, said: “Offshore firms must also ensure their business propositions have positive impact on their customers and to move up the value curve, they must re-frame their thinking about cost leadership and apply more innovation in thought and business practices.”
>venkatesh.ganesh@thehindu.co.in
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