DALLAS – Through focused differentiation initiatives, Tier-2 Indian IT service providers can survive the imminent consolidation in the industry, thrive in the current challenging environment and continue playing an important and meaningful role in buyer portfolios, according to a study by Everest Group, an advisory firm on global services. Everest’s report, “Survival of the Differentiated” – The New Mantra of Success for Tier-2 Service Providers, is available free by visiting research.everestgrp.com. A one-hour Webinar will be held November 18, 8:30 a.m. CST, to present study findings and insights.
The study examines the Tier-2 Indian IT service provider landscape and illustrates the distinctive value propositions of five leading Tier-2 IT providers: Headstrong, Microland, MindTree, MphasiS and Sonata Software.
Everest estimates the Indian offshore IT services market at US$27 billion, which commands about 50 percent of the global industry. Tier-2 or mid-sized IT service providers in India with revenues between US$100 million to US$1 billion currently account for approximately 30 percent of India’s offshore IT services market.
“Tier-2 providers have carved out an important role in the market and, when leveraged optimally, can often deliver superior value in comparison to larger providers,” said Eric Simonson, managing partner, Research. “While the value proposition for small and mid-sized buyers is well understood, the success of Tier-2 service providers in serving large buyers is contingent on their ability to demonstrate a differentiated value proposition.”
“Tier-2 providers typically differentiate themselves by specializing along three distinct themes: industry vertical, service offerings and geographic market focus. In select instances, service providers combine two of these themes to create ‘super specialized’ offerings,” said Amneet Singh, vice president, Research.
Jimit Arora, research director, added that the examined five Tier-2 providers recognized the need for differentiation and specialization in an intensely competitive marketplace and are well-positioned to see long-term success.
“‘Generalist’ or sub-scale providers need to re-evaluate their portfolios and select core offerings and focus segments that will drive differentiation in the broader marketplace,” said Arora. “Additionally, providers must build deep vertical-specific expertise to demonstrate differentiation in light of increased buyer emphasis on industry knowledge for ADM (Application Development and Maintenance) services.”
