Title:
No time for India Inc to relax
As
the focus of Indian media and the techie world rests on Indian
companies, behind the scenes, the real big guys—IBM, Accenture,
EDS—et al, are making inroads into our marketplace. It is
time for Indian consultancies to roll up their sleeves and
strategise, feels MOHAN BABU
The
‘big three’ of Indian software industry—Wipro, Infosys and
TCS—are all set to cross the billion-dollar a year in revenues
this fiscal year. Is it then time for India Inc to open the
champagne bottles and celebrate? Yes, and maybe no! We have
indeed come a long way and even with the grudging opposition
over outsourcing to India, and protectionist legislation in
the West, the trend is only likely to continue. As the focus
of Indian media and techie world rests on Indian companies,
behind the scenes, the real big guys—IBM, Accenture, EDS—et
al, are making inroads into our marketplace. Is this a bane
or boon? Depends on who you ask, I guess.
Indian
companies are brushing off the entry of these multinationals
into India—at least outwardly to the media—hoping that their
strength built on the ‘secret sauce,’ the Global Delivery
Model (GDM) that each of them have refined is going to see
them through. However, the international consulting firms
did not become multi-billion dollar giants for nothing: They
are known for their brutal business tactics and tenacious
adaptability. And, as far as the secret sauce goes, it is
already up for sale; these multinationals have apparently
given open-ended offers to veterans from Indian consulting
companies who have been there, done it, in the field of outsourcing
and global delivery, and are offering substantial jumps in
pay packages to attract them. In business, there is a price
for everything, and the multinationals are willing to pay
the price of entry into a new market.
As
the global consultants make inroads into the Indian market
and attempt to grow organically, they are going to get a taste
for the high-margin and revenues that can be generated by
adopting the GDM by getting most of the grunt work done offshore
at lower costs. Alongside, they will start realising the need
to curb the distraction of established Indian consultancies
nipping at their heels as they grow. How the Indian and multinational
consultants react to this paradigm shift will take us into
the real of speculation. And as the readers of this column
already know, I am not one to shy away from voicing my opinion
so here it goes—some of the scenarios that could pan out include:
*
Scenario 1. Mergers and Acquisitions
(M
&A): Global consulting companies are adept at the art
of growing by acquiring. Remember how IBM bought PwC when
it wanted to get a grip on Business Consulting, or Lotus when
it wanted groupware? It will be fascinating to see a big consulting
company wooing and trying to acquire a large Indian software
house. Imagine the fireworks it would cause in India where
M&A is relatively unknown, at least in the software arena.
*
Scenario 2. Control by Proxy: Given that most large Indian
software companies are still controlled by their founders
either directly or by proxy, it may be harder for multinationals
to ask the ‘big bosses’ to give up their baby. In that case,
they may realise that the way to grow is to manage a Web of
partnerships and gain control by proxy. GE’s entry into the
Indian software arena is a case-in-point. GE started by sourcing
parts of its work to several vendors in India and even had
the option of acquiring a controlling stake in one of them
before expanding its own development centre in India, bypassing
the old partners.
*
Scenario 3. If you cannot buy them…beat them at their game:
While continuing to make noises about loss of jobs in the
US, UK and elsewhere in the West, the big multinationals will
continue to play the dual-game, one at home and the other
in India. Back ‘home’ in the US, UK, Europe, Australia, etc,
these companies will project a ‘home boy’ image, while throttling
Indian competitors in India by reducing margins and growing
here. Case in point: Though Accenture is registered and incorporated
in Bermuda, the multi-billion dollar consultancy is comfortable
projecting itself as a blue-blooded American company. Similarly,
IBM is able to seamlessly project itself as a ‘local’ in most
Western countries where it operates, though it is quintessentially
an American company. On the flip side, though Indian companies
like TCS have subsidiaries in the US and elsewhere, they find
it extremely hard to shed their ‘low cost Indian techie’ image.
Regardless
of how the scene pans out, one thing is for certain: This
is definitely not the time to kick up the boots and party.
It is time for India Inc to roll up the sleeves and strategise.
How? Well, this is where I as the columnist take a back seat.
You, the business leaders and managers need to strategise!
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