Author: Nitish M

Frenemies IBM and Apple Team Up to Shake Up the Enterprise Mobility Space | Sherpas in Blue Shirts

On 15 July, 2014, IBM and Apple announced a sweeping enterprise mobility-focused partnership to create business apps and sell iPhones and iPads to Big Blue’s corporate customers, thereby bringing IBM’s big data and analytics capabilities to the iOS ecosystem. The venture includes more than 100 industry-specific enterprise solutions, including native apps developed for the iPhone and iPad, targeted at the retail, healthcare, banking, travel, telecommunications, and insurance verticals. IBM will leverage its 3,000 mobile experts and industry/domain consultants, to provide cloud services and onsite support for enterprises. The two companies will collaborate on IBM’s MobileFirst for iOS solutions, combining their distinctive strengths – IBM’s big data and analytics capabilities and Apple’s consumer experience and developer platform.

The Rationales Behind the Partnership

The intention of the deal for Apple is to enable its products to become go-to-offers for large enterprises. It also principally underlines the company’s immediate need to expand its presence in the enterprise world, as consumer sales peak and competitive intensity in its core market heightens. Meanwhile, IBM hopes Apple’s mojo can help revitalize its fortunes after nine consecutive quarters of year-on-year revenue decline, as it places its bets on mobility in the workplace. It will also help IBM solve its big data and analytics growth issues (i.e., providing Watson with much needed impetus through enhanced mobile users’ data), forming a pivotal part of a new growth story. (To this point…think back three decades to Apple’s iconic television commercial titled “1984,” when it attacked IBM as an evil Big Brother figure. Talk about a 180-degree turnaround!) iPhones and iPads are already owned by employees in large enterprises but are hard to manage and govern. IBM can leverage its enterprise-wide system management expertise to make a compelling value proposition, complementing its Fiberlink acquisition (a provider of cloud-based enterprise mobile management solutions). Additionally, it will help IBM cement its reputation as a leader in the “mobile first” movement in enterprise solutions.

Implications for Rivals

Microsoft will feel most uneasy about this alliance, as while its products are ubiquitous in corporate PCs, it has been a laggard in serving the mobile workforce. This is a critical whitespace its new chief, Satya Nadella, is determined to fix. Google, Samsung, and the Android bandwagon will also feel threatened, given their recent push in the enterprise market. To allay fears about Android’s security for enterprise use, Samsung has built a system called Knox into its devices. Last month at its developer conference, Google announced that it would embed software elements of Knox in the next version of Android. They will also have to look at alliances with other enterprise-focused vendors to shore up their business case. Also, if IBM becomes the de facto champion for iOS, it will have potential ramifications for other service providers such as Dell, HP, and CompuCom.

Multi-faceted Challenges

Apple has not targeted enterprises with any zeal in the past. Steve Jobs was infamous for his contempt for selling to enterprises, even referring to CIOs as chief information “orifices.” While the Tim Cook era has seen Apple making small but significant progress in courting corporate stakeholders, IBM’s significant experience in the space makes Apple/IBM a very unlikely pairing. Apple and IBM have drastically different people cultures. Any effective partnership will need to account for these differences. They also have very different go-to-market and channel strategies, which will result in friction over the direction the alliance takes. Their sales motions tend to be at odds, with IBM solutioning for a client, while Apple caters to essentially product categories. IBM has defocused severely from the end-user computing space. Does this alliance signal a revival in this regard? The companies’ divergent investment attitudes will make joint investments problematic. To complicate matters further, both have stark but strongly held philosophies about design, customer support, and sales, making collaboration painful. 

The Road Ahead

Partnerships and alliances such as this are notoriously difficult to manage. Both organizations will find it challenging to bring two entirely different culture sets to work cohesively as one. The alliance will need sustained resources, time, and senior leadership investments, along with a steadfast commitment to change management. Given the complicated dynamics sweeping the enterprise market, IBM and Apple have certainly stolen a march over rivals. We will need to keep an eye on the investments both are making into the alliance, the steps they are taking to mitigate the challenges, and the success stories that emerge as a result.

One thing is certain. The enterprise IT market is in for some interesting times. For further insight into the enterprise mobility space, check out our recently published viewpoint.

Infosys Appoints Dr. Vishal Sikka as CEO, Making a Brilliant Pilot a Swimming Coach | Sherpas in Blue Shirts

In a landmark move with far-reaching implications, Infosys appointed ex-SAP CTO Dr. Vishal Sikka as its new CEO and managing director, making him the first non-founder at the helm in the firm’s 33-year history. Accompanying this change, the founders are getting out of the new chief’s way. Current CEO and co-founder SD Shibulal will leave by end of July, while NR Narayana Murthy will vacate his role as executive chairman on 14 June, continuing in a non-executive board role until 10 October to ensure a smooth transition.

The fact that Infosys engaged an executive recruiter to look for a successor reflects a dramatic shift in ethos for the firm. It represents the strategic decision to bust up a certain inward-looking culture that has come to represent Infosys. That Infosys reacted to market and customer expectations by bringing in an external technology visionary bodes well for the critical imperative to change to a customer-centric culture, rather than firm-centric. 

What Works 

The Gujarat-born Dr. Sikka holds a Ph.D. in artificial intelligence. He spearheaded the development and marketing of HANA, SAP’s flagship analytics product. His experience in these areas could give Infosys a sizable edge as service providers look to establish credentials in next-generation technology avenues such as big data, analytics, cloud, robotics, and artificial intelligence.

He seems to have been given a wide mandate, per the large-scale changes in senior management that are accompanying his appointment. This will allow him to exercise a free hand as he attempts to reshape the beleaguered company. Infosys’ long-standing strategic imperative to let the founders control the firm has been widely criticized.

He joins a long list of industry outsiders taking charge of IT majors. Louis Gerstner was unanimously credited with turning around IBM’s fortunes when he took over in 1993, after previously leading RJR Nabisco and American Express. Closer to the Indian IT services landscape, Vivek Paul, a GE-alumnus transformed Wipro, fast tracking growth from a US$150 million company in 1999 to over US$1 billion in sales in five years. Last year, Apple announced UK fashion chain Burberry’s CEO as the head of its retail and online business.

Appointing an outsider tends to bring fresh perspective to inherent legacy issues plaguing companies. Free from the baggage and expectations associated with firm veterans, Dr. Sikka can look to usher new life into Infosys. 

What May Not

Since he comes from primarily a products-driven business, it will be interesting to see how he adapts to the IT services industry, which has inherently different business dynamics and challenges. The focus will be on streamlining project management, client delivery, and sales efforts. Dr. Sikka’s experience in driving sales and marketing at SAP will be a crucial asset in this regard. Being a CTO of a products-based company is an entirely different ball game than leading a global services behemoth, as product-driven businesses rely primarily on the strength of intellectual assets, while services businesses are an amalgamation of resource management, delivery, and expectations handling.

In spite of the large-scale management changes, Dr. Sikka has his work cut out as he navigates disgruntled senior management. How he soothes frayed nerves and reassures them will be essential for stability. A cultural shift he will seek to implement will revolve around Infosys’ limited risk appetite for investments. Infosys needs to invest significantly in boosting its expertise in next-generation solutions through alliances and possibly acquisitions. Although it has made some notable acquisitions such as Lodestone, the firm has generally been fairly risk-averse in exercising its significant cash pile.

The role that NRN Murthy assumes will also determine the efficacy of Dr. Sikka’s roadmap for revival. If Murthy remains strictly in a mentorship role overseeing the transition, without overriding Dr. Sikka’s strategic decisions, the sailing should be smooth. However, if those lines blur, it could create a vicious cycle of conflict, decisions embargo, and execution paralysis.

Another important but often ignored challenge of such senior-level changes is the risk of culture mismatches outweighing the business positives. Echoing Peter Drucker’s “Culture eats strategy for breakfast,” bringing in a rank outsider can have controversial implications. For example, John Sculley joined Apple from PepsiCo, and during his time had long-standing disagreements with Steve Jobs due to divergent management styles and priorities, ultimately resulting in Jobs’ exit in 1985. The entry of a new top-level entrant is not easily accepted by the old guard, leaving open the possibility of wilful sabotage. Dr. Sikka will need to build bridges with senior stakeholders to avoid stepping on toes.

Swimming in Choppy Waters Ahead 

Essentially, whether or not Dr. Sikka manages to snap the once industry bellwether out of its funk will depend on his ability to make the transition from a technology visionary to an empathetic business leader combining technical expertise, client management, and people development, while maintaining the focus on innovation and thought leadership. He will try to take Infosys out its comfort zone, bridge service gaps with more nimble rivals, and ultimately reassure clients that their business is in sound hands. He needs to show that a brilliant pilot can be a swimming coach as well.

Wipro and HCL Deals Signal the Arrival of a Life Sciences Infrastructure Surge | Sherpas in Blue Shirts

On 19 May, Wipro signed a US$400 million+, multi-year strategic alliance deal with Japan’s largest pharmaceutical firm, Takeda Pharmaceutical. Wipro will provide infrastructure management services across Takeda’s global operations, thereby creating a unified platform across the company. Less than a week earlier, HCL announced a landmark infrastructure deal with pharmaceutical major Novartis. Per the terms of the deal, HCL will provide remote infrastructure management services for Novartis across its entire data center landscape, covering more than 70 countries across six continents.

The Life Sciences Infrastructure Bandwagon 

These deals are indicative of a sharp inflection point for IT infrastructure services in the life sciences industry. Until now, service providers have been largely focused on delivering application outsourcing services such as ADM, testing, ERP, and package implementation. Demand for infrastructure services was largely linear and predictable. However, the winds of change sweeping the overall healthcare landscape have brought about strong momentum to infrastructure uptake.

These winds include regulatory reform, consumerization, market consolidation, and the emergence of next-generation digital avenues. The volume, variety, and velocity of incoming data are fundamentally impacting how life sciences organizations view their infrastructure needs. Exponential growth in data, coupled with evolving engagement and drug development models, has resulted in a significant need for analytics. Dimensions such as real-time reporting, proliferation of mobile devices, and automation are providing additional impetus.

Healthcare infrastructure services tailwinds

The Opportunity At Hand

Among the various sub-segments of life sciences IT outsourcing, we see infrastructure poised to assume the lion’s share of growth in the coming years. While applications and SI/consulting are likely to grow at a healthy rate, the infrastructure opportunity in life sciences could triple in value over 2014-2020. This is likely to be fueled by increasing traction in cloud delivery and storage models, data warehousing efforts, consolidation of information systems, and the move to obtain a unified view of customer data to enable actionable business outcomes.

Global life sciences ITO market

Life sciences has traditionally been a mature IT market. Across medical device manufacturers, pharmaceutical firms, biotech companies, life science firms spend more on IT than typical buyers. Life science companies have innovative R&D efforts at the core of their operating model. Given the rise in personalized medicines, there will be a surge in data storage/processing requirements and, consequently, infrastructure needs. These themes impact life sciences IT infrastructure requirements to give rise to various technology imperatives across the ecosystem.

Life sciences infrastructure imperatives

Buyers in the life sciences space need to evaluate their infrastructure services roadmap on a business impact versus investment paradigm. They need to establish meaningful relationships with strategic partners in order to enable the true synergistic benefits of a comprehensive and relevant infrastructure services roadmap.

At the same time, services providers need to expand their infrastructure footprint to partner with enterprises in this transformative journey. They need to adopt a holistic mix of traditional tenets (co-location models, data warehousing, BI, hosting, and network services) along with next-generation services such as multi-tenancy solutions, cloud delivery and storage, and BYOD.

What are you experiencing in infrastructure services? Our readers are eager to hear!

Genpact Pharmalink Acquisition Echoes Other Providers’ Efforts to Deepen Life Sciences Expertise | Sherpas in Blue Shirts

On April 23, Genpact announced it had signed an agreement to acquire Pharmalink Consulting, a global provider of regulatory services to the life sciences industry. The move brings Genpact valuable expertise in supporting life sciences research and development functions including regulatory strategy, filing submissions, complex compliance services, and post-licensing activities management. And it well complements Genpact’s traditional stronghold in FAO BPO for major pharma clients.

This strategic play is in line with a wider move by generalist IT-BPO service providers to compete with life sciences technology and process majors such as Accenture and Cognizant. These generalists are ramping up their capabilities in domain-specific areas including drug safety, regulatory services, pharmacovigilance, and clinical data management, to enable more broad-based engagement with pharma customers.

Life Sciences Regulatory Imperatives

Life Sciences Regulatory Imperatives

The already complex life sciences regulatory landscape is further compounded by stringent quality measures, new drug approval regulations, restricted sales force access to physicians, increasing scrutiny of manufacturing processes, improving collaboration among regulatory agencies, and enhanced pharmacovigilance legislation. We estimate that compliance-related IT spending amounts to nearly 15 percent of the total IT budget of life sciences firms, with three to five percent annual increment.

Recent European data protection regulations call for greater control of personal data. Newer provisions include use of health data for only “absolutely necessary” purposes, as well as an additional onus on data controllers to formulate methodologies to adhere to “data minimization” practices. Pharmacovigilance, drug safety, and clinical data management have become key imperatives in this scenario. New technologies and systems can enable organizations to tackle the regulatory puzzle. 

The Inorganic Route to Enabling Domain Expertise

Inorganic Route to Enabling Domain Expertise

In a significant change and recognition of new market realities, nearly all IT majors have separate business verticals specifically targeting clinical data management and pharmacovigilance. In 2011, Accenture even tied up with the Institute of Clinical Research in India (ICRI) to jointly develop a pharmacovigilance and clinical research program for the Indian market.

And in the last couple of years, there has been an increasing impetus on behalf of service providers to look at M&As to acquire these specific areas of expertise in the life sciences domain. For example, the Accenture/Octagon deal in 2012 signalled an important shift in focus as Accenture attempted to combine its life sciences offerings by adding elements of regulatory management and SI/consulting to have a more integrated portfolio with a cross-functional view. This is based on the belief that the marriage of functional expertise in conventional process-oriented outsourcing services with industry expertise across regulatory, drug safety and clinical trials, make for a very compelling business case. Additionally, regulatory work has been largely project-based, and typically short-term. The enhanced value players bring to the table can translate into longer and more meaningful IT-BPO engagements.

The moves by Accenture and Genpact herald the transformation of life sciences customers’ expectations for greater consolidation and efficiency in the aspects of regulatory activities management, bringing together different tenets such as clinical data management and pharmacovigilance. Service providers that seek to explore, leverage, and consolidate adjacencies in current scope of work, and assume a consolidated and integrated approach to IT-BPO services, will end up with a greater share of the life sciences pie.

Novartis and GSK Restructure to Adjust to the New Normal | Sherpas in Blue Shirts

Novartis on April 22, 2014, announced a succession of deals in a sweeping restructuring. It agreed to buy GlaxoSmithKline’s (GSK) oncology products unit for US$14.5 billion, plus another US$1.5 billion subject to certain milestones. In turn, it divested its vaccines business to GSK for US$7.1 billion, plus royalties. The two companies also announced the creation of a new consumer healthcare business through a joint venture, in effect combining Novartis’ OTC drug business with GSK’s consumer business, with nearly US$10 billion in annual sales. In a separate deal, it hived off its animal health business to Eli Lilly for US$5.4 billion.

The deals – given their scale and impact – principally reshape Novartis, which has been evaluating its businesses since last year. The move reflects a strategic imperative to focus on higher margin products, such as cancer drugs, and let go of low margin ones, which rely on scale and volume. This signals a momentous shift for the firm, which under its previous chief executive transformed into an expansive healthcare behemoth, fueled primarily by M&As. The deals have substantial implications for GSK as well, reorienting its business across respiratory, HIV, vaccines, and consumer health products – together accounting for nearly roughly 70 percent of its sales. It also consolidates its position as the leading global vaccine player.

These changes reflect an important inflection point for the pharmaceutical industry. The industry is coming to terms with multi-faceted challenges arising out of patent cliff implications, middling R&D productivity, and rising consolidation, leading to a rethink of business models.

Life sciences M&A bandwagon

Life Sciences Mergers and Acquisition Bandwagon

Bigger is not always better

Consolidation has been a standard practice adopted by Big Pharma to tide over industry challenges, maintain growth momentum, diversify into emerging geographical and product markets, beef up R&D efforts, and boost sagging drug pipelines.

However, with middling R&D productivity, patent cliff losses, and expansion into newer product/service lines, pharma companies are reconsidering the conventional paradigm to factor in these multi-pronged challenges. Incessant consolidation has had a detrimental impact on many companies with decreasing post-merger productivity, culture mismatch, integration challenges, and declining agility.

That has resulted in firms such as Novartis refocusing their priorities to focus on core competencies instead of having its fingers in too many pies. These restructuring efforts call for a carefully thought-out technology strategy that encompasses organization-specific challenges and hurdles. The roadmap for pharmaceutical firms must be evaluated on a profitability-productivity matrix to test for efficacy. The imperatives brought by wholesale value chain digitization in the pharmaceutical industry entail a re-examination of the organizational structure and resource allocation/rationalization required for driving top line and bottom line growth. Technology will serve as a key enabler to free up resources and ensure optimal utilization levels.

The profitability-productivity matrix of pharmaceutical firms

Profitability-productivity Matrix of Pharmaceutical Firms

Big Pharma will continue to take the acquisitions route as new drug development becomes more expensive and exhibits declining productivity. But companies need to take a more balanced and individualized approach as they assess their unique value proposition and go-to-market strategies in order to thrive in the new world order.

Why Healthcare IT Security Must Be at the Forefront of the CIO Agenda | Sherpas in Blue Shirts

Considering the nature of regulations and the sensitivity of personal information, one would assume that IT security is a top priority in the healthcare space. However, an estimated 29 million+ patient health records have been compromised, (classified as HIPAA data breaches,) since 2009. The number of health records breached in 2013 jumped a whopping 138% over 2012. Serious security flaws have even been detected in Obamacare’s much-touted flagship health insurance exchange website, HealthCare.gov, including severe lapses spanning JSON injection, unsanitized URL redirection, user profile disclosures, cookie theft, and unprotected APIs.

An Afterthought

Healthcare IT security challenges

The pace at which IT is changing the healthcare landscape makes it a prime target for malicious activity. Industry headwinds such as big data, payer-provider convergence, BYOD, HIX, EHR/EMR, and the Internet of Things (IoT) are adding to the healthcare information security conundrum. Patient records have become increasingly common in the fraud marketplace. When combined with other data sources such as insurance and medical data, the problem assumes more alarming proportions.

And it’s not a case of absence of punitive measures. Under the new HIPAA Omnibus Rule (effective from September 2013), firms face fines of up to US$1.5 million in the event of a violation (“willful neglect that was not timely corrected”). Europe has enacted several data security measures. Even before the latest regulatory rulings, insurer WellPoint was fined US$1.7 million after its online application database exposed information concerning more than 600,000 patients.

Feeding the problem

Although CIOs often list security as a priority imperative, it just doesn’t translate into actual spending. This discrepancy can be attributed to a confluence of reasons. The problem originates in a lax culture regarding IT security. The majority of information security breaches are highly avoidable, and most lapses can be traced back to sloppy system administrator password practices, careless sharing of sensitive information, failure to change default login credentials, among others. Healthcare information security is still not a top execution priority for most personnel, and most security programs are hampered by lack of relevant expertise and attention. Regulatory inconsistencies compounds the issue, i.e., multiple agencies are involved (FTC, FDA, FCC, to name a few), and their often divergent mandates contribute to the travails of healthcare IT security stakeholders.

Healthcare IT security roadmap

Stakeholders – both buyers’ internal IT teams and third-party service partners –face an increasingly complex technology conundrum. Any mitigation strategy should incorporate leading practices utilized in similar initiatives:

  • Conduct a thorough risk-assessment to proactively identify and secure vulnerabilities
  • Establish clear level-driven permission policies (on a need-to-access basis) applicable to data, applications, and devices (keeping in mind expanding BYOD policies)
  • Institute appropriate staffing practices to make sure personnel with relevant skills are given charge of security tasks
  • Ensure adequate personnel training and sensitization toward information security
  • Implement best-in-class encryption standards
  • Collaborate with business associates (held to the same standards as HIPAA-covered entities) to establish processes and enforce standards
  • Evaluate the security strategy along a security versus accessibility paradigm
  • Drive synergy between the business and IT vision to avoid incoherent implementation resulting from disparate imperatives

Ultimately, any healthcare IT security policy has to encapsulate the individual needs and challenges of various stakeholders – patients, providers, payers, and third parties – to ensure equitable access and health information exchange for coordinated care. The unenviable task of securing healthcare information in the onslaught of exploding devices and touch points calls for a carefully thought-out and implemented approach. But first, healthcare IT security must make a monumental shift from being an afterthought to being a primary strategic imperative in any plan design.

Accenture Takes Over from CGI to Salvage HealthCare.gov | Sherpas in Blue Shirts

Obamacare’s “My Bad” moment

You could hardly be surprised when news came out earlier this month that the Obama administration was considering replacing the incumbent HealthCare.gov vendor – CGI Group – with Accenture. By now, the rollout of Obamacare’s (or the Affordable Care Act) much-touted flagship health insurance exchange website, HealthCare.gov, has entrenched itself as a case study in how NOT to implement a large-scale IT system.

With costs incurred inching northwards of US$400 million (at last count) and multi-faceted complications resulting from the ambitious launch across 36 states, the harsh media and public spotlight has laid bare various problems beset the program. Despite having an array of veritable IT service partners (including the likes of Booz Allen Hamilton, CGI Group, and, later on, UnitedHealth Group), the website was plagued by frequent crashes, error messages, delays, and other glitches, frustrating consumers who looked to sign up for a health insurance policy.

Live and learn

Now that the initial hyperventilation and brouhaha over the episode has settled, it is time to evaluate the lessons for service providers and buyers alike. As is the case for any major IT engagement, one can never hold a single stakeholder to take the fall when things go south. Here, there were a wide range of missteps, including disagreements over project leadership, lack of communication between vendors and administration, inadequate testing, underestimation of web traffic, divergence of political ambitions regarding IT imperatives, murky ownership, and an absence of a clear problem-mitigation strategy, which in totality led to the mess the administration finds itself.

As one would expect in a scenario like this, there is no one-size-fits-all strategy. However, to distill the key learning for a large-scale IT project involving various stakeholders with divergent viewpoints, it is essential to:

  • Establish a clear roadmap by aligning technology imperatives with business needs
  • Include clear performance-linked incentives/penalties in SLAs to ensure compliance
  • Institute qualified management with relevant skills to tackle issues at hand (in this instance, Centers for Medicare and Medicaid Services was responsible for the program despite lacking any technical know-how)
  • Ensure convergence between technology and sales stakeholders to maintain cohesion
  • Embrace incremental milestone approaches including betas and testing, which are necessary to tackle niggling implementation issues before rollout

There is an overarching necessity to identify the operational challenges beforehand in order to mitigate post-implementation complexities. With federal IT spending expected to increase, it is essential that service providers and buyers gear up to inculcate predictive thought leadership as the silver bullet to avoid messy reactive measures.

The road ahead

Accenture would seem like the ideal fit for a project of such magnitude, given its proven expertise in the domain – it led the construction of California’s state health insurance exchange, which received positive feedback from stakeholders. Also, this type of a large-scale systems integration engagement is right up its alley, and plays to its strengths. This is reflected in Accenture‘s positioning as a leader across Everest Group’s PEAK matrix for healthcare and life sciences ITO. That said, the company will be under increased scrutiny and immense pressure to deliver given the attention the project has garnered.

Healthcare Life Sciences ITO PEAK Matrix

For more perspective on ITO trends, buyer imperatives, and market opportunities in each of the payer, provider, and life sciences market segments, read Everest Group’s complimentary report on State of the Healthcare & Life Sciences ITO Market: 2014. The report also looks at how the Healthcare and Life Sciences ITO opportunity will pan out in 2014, and provides projections on its growth and market size going into 2020.

Indian IT Companies Look for Start-ups to Drive Competitiveness | Sherpas in Blue Shirts

“At times, Indian IT service providers fall behind expectations in new and exciting technology areas that extend beyond the traditional outsourcing paradigm.”A large MNC buyer of IT outsourcing services

With traditional models of IT outsourcing facing increasing competitive pressures, Indian service providers are looking at a multitude of solutions to drive success and retain competitive advantage. Chief among these are emerging technology solutions from start-up firms. Service providers have realized that to compete and stay relevant in the changing paradigm they have to focus on developing niche and specialized products, boost efficiency, and develop IP. Primary traction themes include data analytics, big data, cloud computing, and enterprise mobility. Niche start-ups with innovative technology solutions help providers augment their existing service offerings.

Increasing Traction

This echoes the strategy often adopted by multinational technology firms including Cisco, Microsoft, Yahoo!, Intel, and SAP, which back a plethora of emerging firms. Indian providers are now looking to invest and form alliances with ventures in niche domain areas. This is a dramatic shift in the status quo, as Indian IT providers have historically paid minimal attention to start-ups due to their own lack of a proper ecosystem to facilitate such transactions and a fairly low-risk appetite. Yet, of late, they have increasingly set up funds and accelerators dedicated to tech start-up initiatives.

Company

Mandate

Notable Involvement in Start-ups

Infosys

Has set up a US$100 million fund to invest in start-ups, besides spotting and funding internal innovation

OnMobile, Yantra Corp

Tech Mahindra

Has established a US$50 million fund exclusively for investments in global technology start-ups

Launched an initiative – i5 Startnet – to scout for firms in cloud, mobility, networking, and vertical-specific technologies

MindTree

Created a team led by the Chief Strategy Officer to look for start-ups and next generation solutions

7Srata

Wipro

Actively picking up stakes in cloud and big data firms

Opera Solutions, Axeda

TCS

Formed its Innovation Labs and Co-Innovation Network (COIN) to bring together academic institutions, start-ups, venture funds, strategic alliance partners, multilateral organizations, and clients

iKen Solutions, Perfecto Mobile, Computational Research Laboratories

Cognizant

Set up an emerging business accelerator

Incubated 20 ideas over the past 18 months

 

Changing Ecosystem

Slowly, but steadily, the ecosystem is developing to encourage such start-ups. For instance, in June 2013, NASSCOM announced a program to fund and incubate 25 start-ups to be established by young Indian entrepreneurs. Additionally, it held an event that brought together promising technology start-ups and IT service providers including Infosys, TCS, Cognizant, Wipro, and MindTree. The gathering was an effort to provide young start-ups a platform to showcase their capabilities, connect with leading service providers, and generate investor interest.

Quid Pro Quo

Increasing competitive pressures and changing market dynamics have made Indian service providers truly value innovation, viewing it not just as a buzzword but rather a core operating lever to drive growth. Partnering with start-ups is an effective method of achieving innovative solutions without the allocation of time and resources they can ill-afford. And the mutually beneficial relationship between the two segments can lead to sustainable ecosystem in the long haul.

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