Slowdown: IT's survival mantras

The prolonged slump in global technology services spending is turning out to be like a boring five-day test match than a T20 encounter.

While the green shoots hold out hope for changes in the macro environment, it’s still some time for the big deals to return to the Indian IT players, who had started getting used to them 12-18 months ago. Since the good old days of 24% annual growth, technology services export growth has dived to 4-7 %.

Despite the setback, the smarter companies haven’t buried their heads in the sand, like the proverbial Ostrich. They are working overtime, identifying niches, markets, creating new systems to get the bucks in this tough environment and prepare for better times.

Sample the action: Infosys Technologies is strengthening the front end and will hire 150 people in France and Germany as it sees these markets open up. Its Bangalore-based rival Wipro Technologies is betting on seven new focus areas, which it sees as the big businesses of tomorrow.

Similarly, Cognizant has tripled its team of consultants to 1,800 and is betting on new geographies like Japan, Australia and India. The largest services player, TCS, is increasing more work offshore and strengthening its combined ITBPO offering. And even a small company like the 5,000-people Mumbai-based Hexaware Technologies has strengthened its innovation team to develop time saving solutions for customers.

Says Suresh Vaswani, joint CEO, Wipro Technologies, “Tough times haven’t gone. We have identified seven themes which will be dominant plays in future.” These `seven wonders’ of Wipro are cloud computing, green IT, collaboration software, social computing, information management, mobility and open source.

Some of these could potentially be billion-dollar business opportunities, but Vaswani hesitates to divulge more. “Even IT, consumer care, lighting were small businesses for Wipro a decade back. Today, they are big. We see similar growth in at least some of the new areas and are consciously studying, building capability on them and making investments in these areas. For Wipro, these will be significant game changers.”

Wipro has taken a long-term view with bets on new areas that could be big businesses of tomorrow. The second largest IT company, Infosys, sees an immediate opportunity in Europe, outside the UK, which has been largely conservative in offshoring work till now.

Says Infosys CFO V Balakrishnan, “From a micro level there’s no significant change in business. Companies are struggling with spending. There are indications of things turning around by December. We are strengthening the sales front end as we see new growth coming out of France and Germany markets, where companies want to offshore to cut costs and improve systems. We are hiring here to strengthen the front end.”

The 150 people that it hires locally will be addition to the 700 people it already has in the global sales and marketing team. Besides bolstering the front end, Infosys is not ignoring the back-end either. It wants to hire more domain experts who can help create combined IT-BPO solutions for HR, as there is more demand for combined solutions rather than just IT or BPO.

Ditto for TCS, which has launched a combined IT-BPO platform in areas like life and pensions processing, HR outsourcing and is now developing platform-based offering for finance and accounting and procurement.

US-headquartered Cognizant sees an uptake in areas like healthcare, retail, logistics, media and entertainment and is integrating consulting capabilities with its global delivery of services.

Says R Chandrasekaran, president & MD, global delivery, Cognizant, “We realised early on that providing great offshore capabilities was not enough and we needed high-level business expertise combined with deep technical experience to properly serve the demands of our client base. Hence, our top-end consultants team has grown from 600 to 1,800 in over a year. We are also focusing on emerging markets like Japan, Australia, India and Middle East. Last year, our business outside the US, Europe grew 65% and we are likely to have more growth from the new markets.’’

While large companies have invested in new manpower, strengthening front end, smaller players like 5,000-people Hexaware Technologies is extracting more out of its bench and focusing on innovation. Says its executive chairman Atul Nishar, “Innovation team strength has gone up from 10 to 50 and the employee use has jumped to 75% from about 63-64 % last year. In recent months, we have developed new solutions which have helped reduce software testing time by up to 40%.”

Companies that constantly innovate, looking for those niche growth areas are likely to ride the tough time more easily. Says Partha Iyengar, regional research director, Gartner India; “If you see the recent results, HCL and Cognizant bucked the trend precisely because of agility on sales and marketing fronts. The Indian offshore model has never been more relevant for global customers than it is now. It is up to the vendors to identify the opportunity, innovate and bag the business.”
Source: indiatimes