One of my partners recently returned from a conference remarking that he could randomly put any service provider’s logo on any of the collateral being distributed and nobody would notice. Everyone’s message was essentially the same as their competitors. It is difficult to differentiate among the Indian heritage providers. Or at least it has been. Recently, three of the Tier 1 firms have emerged with highly divergent and (to date) successful differences at the strategic intent level.
Before we look at what these three firms are doing, let’s look at how the maturation of the global services industry is manifesting itself:
- Clients are becoming progressively thoughtful about which providers they want in their portfolio, and are actively working through portfolio rationalization to achieve that mix
- New logos are increasingly hard to come by and expensive to acquire; as a result, providers are focusing their efforts on growing business within existing clients – wallet share is king
- The difference between ITO and BPO providers is blurring, and clients are increasingly looking for a provider that can deliver services across a wide range of areas
- As client firms mature in their use of labor arbitrage, they are increasingly delegating decision making, giving rise to the purchasing function as a more influential player; this is starting to commoditize the offshore services market and is putting pressure on price
- Simultaneous to the delegation of decision making, senior client firm executives are increasingly wondering and questioning what they should do next, specifically beyond arbitrage, to increase value.
These dynamics are challenging the Indian heritage Tier 1 providers to evolve their strategies and tactics in order to retain and grow their client bases, as well as secure new deals with a next generation flavor.
So how are three of the biggest addressing these issues per their strategic intent?
TCS’s strategic intent is “flawless execution.” TCS’s clients and the market are increasingly viewing TCS as a superb operator with a well-polished and effective talent management model. Many view TCS as the leading example of how to deliver consistently high quality work at attractive prices. It invests significantly in becoming its clients’ strategic delivery partner, including focused initiatives to build relevant IP. TCS has been very thoughtful in segmenting the market and organizing its business by vertical industries. The multinational provider it is most similar to is IBM. Both have a large client base, are very deliberate in their strategies, are highly intentional in their investments, are very focused on deep and broad client relationships, and work consistently to identify and nurture them.
Infosys’ strategic intent is being a “transformation partner.”Infosys has invested considerably in building a large and impactful consulting organization in order to combine consulting with delivery to achieve transformation for its clients. That objective is being bolstered by its 3.0 co-creation strategy, which is a move further down the line of transformation. It is achieving many successes, and is considered a formidable player. The ongoing transition of senior leadership at Infosys seems to be well along its path with clear succession planning underway and significant investment to develop the next generation of management. Yet, Infosys is taking a challenging strategic intent route as it is squarely emulating Accenture’s strategy. The transformation hill is steep to climb because of the difficulties involved in combining consulting with delivery. Accenture has done well, but others have struggled to succeed along this path. Infosys’ ability to resolve the key conflicts between consulting and delivery will determine its long-term success.
Cognizant’s strategic intent is superb “client engagement.”Cognizant is simply the best at working with clients on business issues. Its secret sauce is an ability to engage with clients on problems and pull through consulting and delivery services. This is different than Accenture’s and Infosys’ transformation model in that Cognizant focuses on the client relationship and client engagement by working through the suite of problems currently on the client’s plate, as compared to game-changing transformation. Cognizant invests significantly in highly empowered onsite teams, and its delivery and consulting organizations are tuned to be responsive to the client engagement team. This overall model and strategy is quite different than any other Indian or multinational firm, and is achieving significant growth and profitability returns.
Each of these strategic intent approaches appear successful to date, and has moved each of these three firms to a superior level of performance. Indeed, as clients increasingly recognize the clear difference among these players, and other providers follow their lead to secure true differentiation, we will see a new Tier 1 emerge in the Indian heritage provider space.