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Article by Mohan Babu


 Title:  No time for India Inc to relax

As the focus of Indian media and the techie world rests on Indian companies, behind the scenes, the real big guys—IBM, Accenture, EDS—et al, are making inroads into our marketplace. It is time for Indian consultancies to roll up their sleeves and strategise, feels MOHAN BABU

The ‘big three’ of Indian software industry—Wipro, Infosys and TCS—are all set to cross the billion-dollar a year in revenues this fiscal year. Is it then time for India Inc to open the champagne bottles and celebrate? Yes, and maybe no! We have indeed come a long way and even with the grudging opposition over outsourcing to India, and protectionist legislation in the West, the trend is only likely to continue. As the focus of Indian media and techie world rests on Indian companies, behind the scenes, the real big guys—IBM, Accenture, EDS—et al, are making inroads into our marketplace. Is this a bane or boon? Depends on who you ask, I guess.

Indian companies are brushing off the entry of these multinationals into India—at least outwardly to the media—hoping that their strength built on the ‘secret sauce,’ the Global Delivery Model (GDM) that each of them have refined is going to see them through. However, the international consulting firms did not become multi-billion dollar giants for nothing: They are known for their brutal business tactics and tenacious adaptability. And, as far as the secret sauce goes, it is already up for sale; these multinationals have apparently given open-ended offers to veterans from Indian consulting companies who have been there, done it, in the field of outsourcing and global delivery, and are offering substantial jumps in pay packages to attract them. In business, there is a price for everything, and the multinationals are willing to pay the price of entry into a new market.

As the global consultants make inroads into the Indian market and attempt to grow organically, they are going to get a taste for the high-margin and revenues that can be generated by adopting the GDM by getting most of the grunt work done offshore at lower costs. Alongside, they will start realising the need to curb the distraction of established Indian consultancies nipping at their heels as they grow. How the Indian and multinational consultants react to this paradigm shift will take us into the real of speculation. And as the readers of this column already know, I am not one to shy away from voicing my opinion so here it goes—some of the scenarios that could pan out include:

* Scenario 1. Mergers and Acquisitions

(M &A): Global consulting companies are adept at the art of growing by acquiring. Remember how IBM bought PwC when it wanted to get a grip on Business Consulting, or Lotus when it wanted groupware? It will be fascinating to see a big consulting company wooing and trying to acquire a large Indian software house. Imagine the fireworks it would cause in India where M&A is relatively unknown, at least in the software arena.

* Scenario 2. Control by Proxy: Given that most large Indian software companies are still controlled by their founders either directly or by proxy, it may be harder for multinationals to ask the ‘big bosses’ to give up their baby. In that case, they may realise that the way to grow is to manage a Web of partnerships and gain control by proxy. GE’s entry into the Indian software arena is a case-in-point. GE started by sourcing parts of its work to several vendors in India and even had the option of acquiring a controlling stake in one of them before expanding its own development centre in India, bypassing the old partners.

* Scenario 3. If you cannot buy them…beat them at their game: While continuing to make noises about loss of jobs in the US, UK and elsewhere in the West, the big multinationals will continue to play the dual-game, one at home and the other in India. Back ‘home’ in the US, UK, Europe, Australia, etc, these companies will project a ‘home boy’ image, while throttling Indian competitors in India by reducing margins and growing here. Case in point: Though Accenture is registered and incorporated in Bermuda, the multi-billion dollar consultancy is comfortable projecting itself as a blue-blooded American company. Similarly, IBM is able to seamlessly project itself as a ‘local’ in most Western countries where it operates, though it is quintessentially an American company. On the flip side, though Indian companies like TCS have subsidiaries in the US and elsewhere, they find it extremely hard to shed their ‘low cost Indian techie’ image.

Regardless of how the scene pans out, one thing is for certain: This is definitely not the time to kick up the boots and party. It is time for India Inc to roll up the sleeves and strategise. How? Well, this is where I as the columnist take a back seat. You, the business leaders and managers need to strategise!




About the Author

  • A Bio and profile of the author, Mohan Babu, can be found at his homepage
  • Mohan has authored a book on Offshoring and Outsourcing (Publisher McGraw Hill, India), a link to which can be found here
  • Mohan has also authored an Online book on "Life in the US," available for free download.
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    ©Mohan Babu: All Rights Reserved 2005

    Mohan Babu is an international consultant trying to find the ‘sweet spot’ where IT meets business. E-mail: mohan He is also the author of a recent book on "Offshoring IT Services"

    All rights are reserved. Mohan Babu ("Author") hereby grants permission to use, copy and distribute this document for any NON-PROFIT purpose, provided that the article is used in its complete, UNMODIFIED form including both the above Copyright notice and this permission notice. Reproducing this article by any means, including (but not limited to) printing, copying existing prints, or publishing by electronic or other means, implies full agreement to the above non-profit-use clause. Exceptions to the above, such as including the article in a compendium to be sold for profit, are permitted only by EXPLICIT PRIOR WRITTEN CONSENT of Mohan Babu. 

    Disclaimer: This document represents the personal opinions of the Author, and does not necessarily represent the opinion of the Author's employer, nor anyone other than the Author. This Article was originally published in Express Computers


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