Dec 26, 2003|
Software: Success follows those who…
In talks about Indian software companies moving up the value chain, one generally ends up concentrating only on the fact that this move would bear fruit when companies would be able to offer services (like IT consulting and package implementation) to their clients that would be at the higher end of the spectrum. However, what one fails to notice is the fact that, to really make a dent in the global marketplace, apart from moving up the software value chain, Indian companies need to become more proactive in defining problems for their clients and proposing solutions rather than only being reactive to their problems by offering solutions.
This is like moving from saying, ”Hey, you have this problem? I have this technology solution for you,” to saying, “I believe I understand your business. These are not your core competencies and these are the problems you might face in the future. Now, I have the competence and technology solutions that might be of help to you!” In saying this, not only would the company present itself as one that has the requisite domain expertise but also a knowledge about the clients’ business. While a few Indian software majors (Infosys, Wipro and i-flex, for example) have long realised this fact, most are still to do this before they start losing outsourcing opportunities to other competitive destinations like the Philippines, Ireland, the Czech Republic and China.
Due to the fact that Indian software companies, in these times of pricing pressure, would continue to focus their efforts in growing on the volumes front, garnering large-size contracts would be the key. And the rationale for Indian companies moving up the software value chain would be justified when these large contracts involve high-end mission-critical jobs, and more of the same. In recent times, there have been very few large-size outsourcing contracts that have flown the Indian way (see the table below).
The (few) deals that came…
||Size (US$ m)
||Infosys, HCL Tech
Now, apart from understanding the client’s business and his technology requirements, companies like Infosys and Wipro have built up strong execution capabilities. They are in the process of refurbishing their global delivery model and are scaling up their capacities, both human (people) and physical (development centres and marketing and distribution infrastructure). The rationale for these companies scaling up their operations is that going forward, as more and more corporates look towards India for outsourcing their IT requirements, they would be in a much better position to cater to this demand. The ability to retain key personnel would also play a vital role in this regard. After all, as the Indian software sector moves on from cost arbitrage towards domain expertise, success would follow those who are able to attract and retain key employees, who possess world-class execution capabilities and who understand clients’ business in and out. Only then, would the sector continue to get a premium rating on the indices.
More Views on News
Aug 2, 2017
A better than expected turnaround in performance results in a change in view.
Jul 27, 2017
Digital services drive growth for Wipro in 1QFY18.
Jul 14, 2017
Infosys starts FY18 on an encouraging note with a stable performance.
Aug 5, 2017
How to get exclusive insider recommendations from Ankit Shah.
Jul 14, 2017
TCS starts FY18 decently despite an adverse currency impact.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 4, 2017
The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407