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Saturday, August 12, 2006

The Indian Headquartered Service Players : Sustained Lead

Stephanie Moore writes that major global service providers continue to lose ground to large Indian firms, especially in the application services market. She finds that the tier one Indian providers have continued to thrive while most legacy service providers have posted minimal to negative growth and goes on to assert that Indian firms will continue to grow — and not just because they are a lower-cost option but they have caused a fundamental and structural change in the service provider/client relationship. More importantly, she nails the fact that offshore providers have taught clients to expect transparency, efficiency, and accountability in service delivery. Stephanie, well known in the analyst community/industry for her superior understanding of the Indian offshoring phenomenon earlier wrote how Accenture & Cap Gemini are scaling/distributing/perfecting their global delivery models.
Better delivery is ensuring that Indian headquartered companies are growing better than the global majors with offshore presence says this article. Due to their focus and operational efficiencies, Indian headquartered vendors are winning more deals than traditional players. Gartner's Partha Iyengar is quoted therein in support of this observed trend.A few months back, while acknowledging the impressive ramp up of offshore presence of global majors, I wrotethat more and more opportunities are beginning to get won in large numbers and most of the indian big players are anyway hiring big six veterans to help strategise better 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. Infosys in their recent analyst meet again emphasized that acquisition for scale is not an approach aligned with the disruptive business model for the offshore players but niche/special expertise may be the drivers for acquisitions. Certainly, I expect that atleast one/two acquisitions would be made by indian players in the mega deal outsourcing players space in 2006/early 2007. 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. The collective share of the offshore players business in the global outsourcing industry is still very small, but they are gaining marketshare rapidly.The services industry is by itself a very different type of industry governed by an entirely different set of drivers.

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