Moving up the value chain has been an aspiration for Indian IT brands for quite sometime now. Now it may well be deemed an unavoidable necessity!
Anyway, talent is no more a geographically-focussed phenomenon. There is an increasing need to have a globalised talent pool to be able to service the needs of clients; more so as Indian companies move to more diverse markets. A spokesperson from Infosys told 4Ps B&M, “We have hired a fair number in the US for this quarter and we believe that the overall mood of overseas hiring is on the positive side. Moreover, most of our global delivery centers recruit local talent because of their familiarity in their linguistic and cultural skills. For instance, our Brazil and Mexico development centers have more of local talent to cater to the needs of clients in and around Latin America.” Salaries are naturally moving up in tandem with this phenomenon. Also an emerging trend like cloud computing threatens to further erode the arbitrage (as explained in box) and has to be viewed in the right perspective.
HOW DO WE MOVE UP?
Before the 21st century dawned upon us, Indian IT players were quite comfortable managing coding and software development. Post the Y2K and the IT bubble, there was an increasing focus on accountability and delivery systems. As there was evolution globally in the realm of IT infrastructure and converged hardware became a trend, Indian players started occupying larger and larger shares in their focus areas and became low cost vendors (for they lacked the depth of capabilities that the leaders had; and therefore, they could not hike prices). So the first leg of moving up the value chain is based on filling these capability gaps. One area is engineering solutions, where we have seen Indian interests growing, with the HCL-Airbus deal and the Cognizant-Invensys partnership. Admittedly, delivery models of Indian IT companies are already up there in terms of global benchmarks, an instance being Cognizant’s C2.O. The only issue there, according to Sahni of IDC Asia Pacific, is that the “the investment made by Indian ITSPs into their custom delivery tools and processes needs to be assessed from a ROI perspective, which very few companies have visibility into.” Cognizant, for instance, has 350 agents working on that tool. Even at an average compensation of $10 per hour, the annual cost goes rather high; plus the hardware, software et al involved.
Secondly, the business component of IT is growing, and this is where Indian IT companies have a lot to account for. Though companies are touting their consulting skills, analysts in general are quick to point out that this is a very small portion of their revenues, and isn’t growing significantly fast enough either. As Apte says, “Ask Indian IT players what their fastest growing lines are, and they will say testing, infrastructure, BPO. No one says that my fastest growing line is consulting/high end systems in consulting space. India as a location is about volume, industrialization and delivering something via methodology and those things suit for testing, application maintenance and infrastructure services.” He wonders where Indian companies are moving up, when the shift has really happened only from a $70-80K annual salary level job to $60,000 infrastructure management or a $45,000 tester or a $35,000 a year accounting clerk profile.
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