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Thursday, March 16, 2006

Global Service Players & India Push

For quite sometime, people had been talking about this. Many field reports corroborate this – huge investments that IBM is making and plans to make more and more activities India centric. Informationweek writes about IBM's investments and plans for India.Today IBM needs growth- with flat software sales & its global services business showing downward trend – (apparently it went down by 5% last year). IBM says its existing delivery centers outside India won't be closed but will be "remapped" into demo centers. IBM needs big ideas that drive software and consulting sales, not just cost cutting from a lower-wage operation but I must say for a company of their size, the pace of change and direction setting that we see from outside indeed looks impressive. Stephanie Moore recently wrote that Accenture has done a brilliant job in adopting to the changing reality and has built good delivery mechanisms centered on India. Accenture however refused to reveal in their reent quarterly call the numerical strength of its indian operation - so much for transparency. I recently spotted that globally, Accenture hired more people than Infosys last four quarters - but their global attrition is twice in percentage terms that of the average of Indian headquartered firms. EDS and CMG Logica have gone on record saying that they would like to acquire mid tier Indian enterprises. Does this mean end of the road for indian headquartered players? No way - As I see it more and more opportunities are beginning to get won in large numbers and I wrote, most of the indian big players are anyway big six veterans to go after bigger deals. An acquisition of the big players may be the final assault on the dominance of big six – but this could mean that the Indian companies may need to have a different mindset to manage –(with limited margins and more long term in their outlook).It may disrupt the traditional economics of the indian players, but nonetheless would be a move much needed in time. Certainly, I expect that one/two acquistions would be made by indian players in the mega deal outsourcing players space in 2006. This is possible, as adaptability and speed of operations have always characterized their growth in the last decade – the important thing is to not lose sight of humongous opportunities that lay in front and go after them as aggressively as they used to do while growing. Its still not game even -the gap may seem to be narrowing but even then, Indian HQ players have a lot more advantages sitting on their side but this is not to underrate the significant strides that multinational players are making with their India centric plans.

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