Cost arbitrage is no longer enough to win deals

After over 9 years with EMC, Manoj Chugh joined Mahindra Satyam as global head, business development. He speaks exclusively to Dataquest about his experience so far and what he looks forward to as a leader

What are the trends you see in the IT services industry and what changes India can expect?

In my opinion, the Indian IT services companies are on an unbeaten path of success, embracing transformation and innovation in their stride. Some models that have worked wonders include:

Automation: Where leading service providers are leveraging their technological competency to automate back office operations

Evolution of new business models: ‘Paas and BPaas caters to dynamic needs of buyers and play a significant role in future. There has been a clear shift in customers' demands. Cost arbitrage is not compelling enough. Customers are looking for flexible offerings and managed services. This is a win-win for both the customer and the solution provider. The principles of contract might be the same but the philosophies involve co-innovation.

Do you feel there is a need to focus on the domestic market as the Indian IT industry is dependent almost completely on other countries?

Technology spend in the country is definitely on an uptick, and we certainly need to focus on the domestic market in order to achieve desired growth. The government sector has been showing promise through increased IT spend. ICT can be leveraged to improve lives of millions through better healthcare, education, and by enabling efficient usage of our infrastructure across diverse sectors. The Indian IT industry has showcased amazing performance in exports and has the potential to double its contribution to the GDP.

India is losing out on its cost-arbitrage advantage. What are the other strengths we should focus on?

 

Cost arbitrage is no longer enough to win deals and sustain relationships with the existing customers. Customers today are looking for flexible and complete set of offerings which provide them end-to-end solutions. Innovation has been and shall always be the key differentiating factor and we need to shift focus to innovation, which is what we as an industry are endeavoring to do. If we do not innovate, we will miss the bus. Outcome based pricing models have been gaining momentum. When we convert Capex to Opex, along with outcome based models, we help customers significantly. Transformation is a dramatic game changer helping reduce risk, delighting customers, and introducing new capabilities. Other strategies for growth include:

• Intellectual property so that companies can monetize their portfolio
• Cloud computing to use flexibility, scalability, and cost benefits made available through the ‘as-a-service' paradigm
• Platform BPOs to use a common business platform for multiple clients and services
• Delivery accelerators to deploy reusable tools across multiple customers accelerating set up time and attaining efficiency
• Mergers and acquisitions as a mean to acquire new ideas, clients, service extension, patents, and enter new markets.

Everything today is being offered ‘as-a-service'. What impact does it have on the industry?

Cloud computing is the greatest disruptive technology the industry has ever witnessed in the recent times. It is like the evolution of the internet. Through cloud, ‘as-a-service' becomes the norm from computing to business processes to personal interactions. Managed services have a definite impact on the industry and particularly in the value chain. A power shift is occuring. IT consumerization is driving the behavior of GenY. The past few years have seen smartphones and tablets replacing the humble desktops.