IT companies use cutting-edge tools to blunt slump
Market analysts say the global financial slowdown could prove to be yet another opportunity like the Y2K for India to cash in on. Top Indian outsourcing companies
By Shelley Singh, ET Bureau |
NEW DELHI: Deepening demand slump in key western markets, prospects of a protectionist wave in the US and dwindling quarterly growth rates are forcing India���s $60-billion IT & IT services industry to think out of the proverbial box.
Market analysts say the global financial slowdown could prove to be yet another opportunity like the Y2K for India to cash in on, and top seeds like Infosys and Wipro are obliging with custom-made tools that help companies monitor and squeeze every dollar spent on offshoring.
Smaller players are focusing on jacking up their sales team, exploring markets such as West Asia and Latin America, besides tapping hitherto untouched sectors like green energy.
���So far, it has been a problem of plenty. The slowdown can be a second Y2K opportunity for India. But for that,
companies have to change the mindset from mere order-taking to evolving savvy strategies,��� says Partha Iyengar, VP & regional research director, Gartner India.
For services companies that already have a breadth of offerings, slowdown is the time to make offshoring more relevant. ���Our consulting group came out with a tool called Impact Framework that helps customers to focus on things that add value and where downside is minimum.
Wipro Technologies joint CEO Girish Paranjpe says the company���s new Performance & Capital Efficiency (PACE) helps clients optimise costs by identifying areas where IT spends can be reduced or systems can be consolidated. ���We have 20% of our revenues from Asia, and in the next six quarters, this region will be less affected by the slowdown. We are offering global domain expertise to customers in this region,��� he says.
Analysts say such tools are getting increasingly sought after, as customers are shying away from investing in new expensive technologies. Clients, searching for the most utilitarian option, are also taking longer to decide. The decision-making process has stretched from an average of six weeks last year to 10 weeks, or longer now, according to Patni Computer Systems CEO Jeya Kumar.
Market analysts say the global financial slowdown could prove to be yet another opportunity like the Y2K for India to cash in on, and top seeds like Infosys and Wipro are obliging with custom-made tools that help companies monitor and squeeze every dollar spent on offshoring.
Smaller players are focusing on jacking up their sales team, exploring markets such as West Asia and Latin America, besides tapping hitherto untouched sectors like green energy.
���So far, it has been a problem of plenty. The slowdown can be a second Y2K opportunity for India. But for that,
companies have to change the mindset from mere order-taking to evolving savvy strategies,��� says Partha Iyengar, VP & regional research director, Gartner India.
For services companies that already have a breadth of offerings, slowdown is the time to make offshoring more relevant. ���Our consulting group came out with a tool called Impact Framework that helps customers to focus on things that add value and where downside is minimum.
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It understands how each industry works with benchmarks for segments like manufacturing, retail and high-tech. With this, customers can know the impact of each $1 of outsourcing on their business,��� says Infosys Technologies CEO Kris Gopalakrishnan. Wipro Technologies joint CEO Girish Paranjpe says the company���s new Performance & Capital Efficiency (PACE) helps clients optimise costs by identifying areas where IT spends can be reduced or systems can be consolidated. ���We have 20% of our revenues from Asia, and in the next six quarters, this region will be less affected by the slowdown. We are offering global domain expertise to customers in this region,��� he says.
Analysts say such tools are getting increasingly sought after, as customers are shying away from investing in new expensive technologies. Clients, searching for the most utilitarian option, are also taking longer to decide. The decision-making process has stretched from an average of six weeks last year to 10 weeks, or longer now, according to Patni Computer Systems CEO Jeya Kumar.
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Value of contracts being renewed are also shrinking by at least 4-5%. ���Yet, offshoring is a compelling business proposition and we have increased our sales force by 30% to scout for new business,��� says Mr Kumar. That compelling business proposition is what companies such as MindTree are planning to extend to sectors such as green energy, the new darling of the West, looking to hedge its exposure to oil and natural gas. ���We are using the slowdown to prepare for the future. US President Barack Obama is basing economic recovery partly on alternative energy, and we see this emerging as a big growth area,��� says MindTree chairman & managing director Ashok Soota.
���Slowdown is the best time to re-look at strategy. Companies need to shift focus from automobiles and financial services to new growth areas such as energy. This is also a time for cheap acquisitions and focusing on new geographies like the Middle East,��� adds Booz & Company partner Suvojay Sengupta.
HCL Technologies and the industry topper Tata Consultancy Services are two companies that see West Asia and India less immune to the current slowdown, and are banking on more business from these geographies. ���As companies merge with each other to survive, they need to integrate and optimise their disparate IT systems across multiple geographies.
The emerging markets in Asia, including China and India, continue to grow in double digits as do markets in Latin America like Brazil and Mexico,��� says a TCS spokesman. TCS has scaled up staff strength from nil to 6,000 in Latin America and to 1,200 in China in the last few years.
Other companies, big and small, are catching up with the innovators as the industry is grappling with a 17% growth rate, half of what it used to be till two quarters ago.
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