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Wednesday, February 09, 2005

Is The Global IT Consulting,Development And Integration Services Market Changing? -Part I

The worlwide IT services market estimated at 439billion USD in 2003 is expected to touch $569 billion in 2008. It is widely expected that there would be a significant change in the composition of the players in the services market with India headquartered companies making significant headway in the global IT services market.we covered the rise of offshore players in our coverage India Inc is growing twice as fast as Japan Inc where we covered the indian IT industry view as articulated by G.B.Prabhat of Satyam wherein he wroteAcross every industry spectrum, there is potential for knowledge work to relocate to India.
I just finished reading a gartner report titled -"Market Focus: Brand Awareness in Consulting and Development and Integration Services" written by Christine Adams, a gartner analyst. The Key findings in the report are:

This brand awareness study reinforced what consulting, as well as development and integration service providers know only too well — the market is crowded with hundreds of brands competing for "mind share", customer loyalty and a spot on customer shortlists. This is unlikely to change anytime soon. Further, the market seems unusually able to absorb all the clutter. Despite the dominance of powerful global brands, such as IBM, Accenture and Cisco, among others, buyers can still call to mind niche players. The market can be categorised as:

- Business consulting services — Advisory services that influence the adoption of IT. Business consulting includes corporate strategy, review of business plans, business process analysis or re-engineering, and business requirements analysis, as well as change management and organizational consulting pertaining to the adoption of IT solutions.
- IT consulting services — IT consulting services are advisory services that help clients assess different technology strategies and, in doing so, align their technology strategy with their business or process strategy. These services support customers' IT initiatives by providing strategic, architectural, operational and implementation planning.
- Application development services — These services create new functionality for custom-developed or packaged applications. They may include conversion applications to run on different platforms or architectures.
- Integration services — These are detailed design, implementation and management services to link applications (custom or prepackaged) to each other or with the established or planned IT infrastructure. Specific activities might include project planning, project management, detailed design and implementation of application programming interfaces.
- Deployment services — Deployment services support the implementation and rollout of new applications and infrastructure. Activities may include hardware and software procurement, configuration, tuning, staging, installation and interoperability testing.

Across these categories, distinct groups of competitors — IT hardware and software providers, consulting and system integration pure plays, and Big Four accounting firms — commanded the greatest brand awareness and perceived brand strength. IBM, which dominated all three services categories, might well be a group unto itself.
Brand associations were much more fragmented than expected. Remarkably, all of the Big Four accounting firms received multiple mentions in the IT consulting category, even though Ernst & Young, KPMG and PwC spun out their IT consulting divisions several years ago.
Of equal interest, Dell ranked among the top 10 in first-to-mind and total unaided awareness, outpacing Oracle and BearingPoint, among others. Tata Consulting Services was the only Indian offshore brand to receive multiple mentions.

The report writes, "We expected the Indian offshore vendors would be top of mind in application development and integration.Tata, however, was the only offshore vendor to receive multiple mentions for total unaided awareness.The brand halo effect benefited the Big Four accountancies in this category, with E &Y and PwC receiving multiple mentions,even though application development and integration are no longer part of their businesses".

Infosys and Tata were the only two Indian offshore providers to receive multiple mentions as strong application development and integration brands. No offshore provider received more than one mention as a preferredprovider, while 44.7 percent of participants indicated they maintained a preferred provider list for application development and integration. Further Gartner's data show that the leader of the pack IBM has a marketshare less than 8% marketshare in the entire IT services market and that the marketshare of India headquartered vendors at )2003 data)like Infosys stood at 0.8%,TCS at 0.7% and Wipro, Satyam and Cognizant hovering between 0.5% to 0.6%. In the next part of the article we shall cover how these companies perceive the markets to evolve and how these companies are gearing to face competition. An assessment from an inside out perspective comes from G.B.Prabhat, where he writes,IT industry — Indian firm clicks as well as MNC and compares the maturity and competitiveness between Indian headquartered conmpanies and global MNC'salong the dimensions of developing offshore workforce,delivery processes,leadership,relationship management,diversity, secular trends.Tomorrow, in the second part on this topic, we shall do an analysis of the emerging trends, challenges and opportunities for the professional service firms.

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