The Hindu Business Line : IT vendors need to rework biz strategy for local market

Indian IT vendors need to rework their business strategy to cater to the domestic market even as a major wave of IT investments has begun across sectors, and India is increasingly becoming a hot bed for large deals.

Enterprises that lagged in IT infrastructure are making investments, and many are matured to the extent of consolidating their IT infrastructure using components such as virtualisation, service-oriented architecture and application integration.

However, vendors would have to find levers to beat the price consciousness of clients.

Shared services

“It is possible to make decent margins in India by redefining the cost structure (by questioning what is core and non-core in delivery), applying shared services and linking pricing to transactions and outcomes,” analysts at Edelweiss Securities said in a note.

Since Indian customers are less concerned with exclusivity of resources, the shared services model is suitable for the domestic markets, analysts said. Referring to Wipro’s shared services offering, they said the same resources can be used across multiple projects simultaneously with client approval.

It is also necessary to have an externally oriented programme management office that manages work flow. The analysts said Wipro sub-contracts portions of the overall assignment to smaller vendors. Thus, it does not have to manage bench, which leads to a savings of almost 7-8 percentage points in cost. A strong programme management office would help put this process in place.

Also, vendors could use India as a testing ground to measure the success of outcome-based pricing efforts, unique commercial structuring and drive non-linearity through India-specific turnkey frameworks, they added. This could also pave the way for addressing the small and medium business segment in future in the overseas market.

Dedicated team

Companies should also have dedicated delivery and technical staff for its India business unit. Analysts said Wipro has a dedicated team of 15,000 professionals catering to the emerging markets, unlike some vendors that borrow resources from the global business units.

Another important aspect is to maintain alliances and channel partnerships, not only for implementation of go-to-market but also for delivery.

“As international players heighten their focus on India and other emerging markets, they will look at partners and local country affiliates to help them in their go-to-market strategy in various areas such as networking, storage, platform development and enterprise solutions,” analysts added.

They said that IT services are a $12-billion opportunity in India.