The Indians Wrestle with Business Consulting

Steve Hamm

The earnings reports turned in by the top Indian tech outsourcing companies over the past couple of weeks are mighty impressive. While demand growth is slowing for outsourcing services in general, the top Indian firms are actually accelerating their revenue growth. There are a bunch of reasons for this: they keep broadening their portfolios of services, they get additional jobs with customers they’re already working for, and they keep climbing up the value chain. The Indians have been doing classic systems integration work for years—mostly installing big complex software packages from the likes of Oracle and SAP. But, to gain the kind of sway with customers that the best of the Western tech services outfits enjoy, they have to build up their consulting capabilities and handle more transformational engagements. This has proved to be a serious challenge.

When it comes to business or solutions consulting, Infosys seems to be the farthest along—though not in the way it originally expected. Three years ago it set up a separate business consulting organization, Infosys Consulting—formed around a cluster of veteran consultants from Deloitte and other Western outfits. But, building a business consulting capability has come slower than the company’s leaders hoped. When they established their consulting unit in early 2004, they planned on ramping up fast and quickly becoming a full-service outfit like Accenture.

But, demand for that style of service offering was weaker than expected. Revenues remain small and the unit is still operating at a loss. So, instead, the company has settled on a different model—and that one seems to be working pretty well. Today, while there are fewer than 300 business consultants in the consulting operation, Infosys has built up strong vertical IT practice units addressing different industries—and it has about 7000 process and technology consultants in these organizations. They work closely with the business consultants on engagements were clients are transforming the way they do business.

Steve Pratt, chief executive of Infosys Consulting, explains that the traditional business consulting approach clashed with Infosys’ model and value proposition. “At Deloitte, a good day was to get a client to pay more. We’d high-five each other. But at Infosys a good day is when we can figure out how to charge the client less. And we’d high-five each other for that,” he says. The basic rule at Infosys Consulting became to not have high-priced consultants on-site at customers’ office if that work could be done just as well by business-solutions specialists operating out of India.

This model helps Infosys get contracts that call for a combination of on-site consulting and offshore business-process transformation and IT work. Example: Equifax, the Atlanta-based financial-services company, six months ago hired Infosys to help overhaul its sales organization. This job included installing Siebel Systems customer-relationship management software, retooling the company’s sales processes, and strategic consulting. “They’re racing to the top into the business process and consulting areas,” says Rob Webb, chief technology officer at Equifax. “They have the industry expertise and the software expertise and the scale to do this on a global basis.”

One of the major challenges of Infosys’ new chief executive, Kris Gopalakrishnan (who takes over from Nandan Nilekani in June), will be to infuse the consulting mentality ever deeper into the company. When I visited with him in Bangalore late last year, he told me that Infosys’ big opportunity is to help its clients make the transition to being truly global. “Offshore outsourcing is only one part of the puzzle,” he said. “If you want to take full advantage of outsourcing and take advantage of globalization, you have to help organizations make the transition.” He said Infosys is on the way to being a very different organization, but he has to hire differently and retrain the entire sales force to be more business-solutions orients. He said only about 15% of the company’s work had made the switch-over.

It will be a long time before Infosys completes the transition and becomes a truly consultative organization, but at least it’s on the way.

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