What’s Reinvigorating EPAM, Syntel and Virtusa? | Sherpas in Blue Shirts

Posted On October 11, 2013

Over the last five years the story of growth in the global services industry has been one of the rich getting richer. In fact, the larger tier-one firms, especially Cognizant and TCS, are growing faster than the marketplace. But I think it’s more notable, at this time when markets are maturing and growth is difficult to achieve, that some of the tier-two providers, such as EPAM, Syntel and Virtusa also outperform the market.

A few years ago the global services industry basically wrote off most of the tier-two providers, relegating them to a fate of consolidation. But like the still-alive man being carted away mistakenly in the British comedy film, “Monty Python and the Holy Grail,” they’re not dead yet. Just the opposite — these three tier-twos are enjoying increased profit and earnings. This is not the case for all smaller providers, so what’s their formula for success?

Market challengers 

They follow a simple but long-proven formula. EPAM, Syntel and Virtusa offer a differentiated alternative to their competitors and thus become market challengers that stand out to buyers.

In some cases they provide a challenge on price. In others they bring a differentiated source of deep industry and functional expertise. In the case of EPAM, the alternative challenge is a delivery model with a source of highly technical talent from Eastern Europe.

Perhaps the most piercing challenge they have ushered into the marketplace is attention. In some of the more mature spaces in the services market the providers have become complacent. Clients are frustrated because they don’t get the level of attention they used to enjoy. The challengers are delivering intense attention to existing and potential clients’ needs.

The tier-two providers bear watching. History demonstrates that shake-ups result on any battlefield where challengers successfully deliver levers that break down barriers.

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