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Indian IT (information technology) has good reason to be proud of its process excellence (the maximum number of CMM 5 organizations are in India) and its continuous drive to enhance productivity through tools, frameworks, LEAN, Six Sigma, etc. Clients realize and value this endeavour. However, what were key differentiators earlier have become table stakes now. In any case, all such initiatives are viewed as merely re-enforcing “low cost" as the core value proposition from Indian IT.

In the mind of global clients, there is another source of differentiation, which is “high value". Broadly, it is about being uniquely able to deliver outcomes that client organizations cannot achieve on their own. Typically, high-end consulting and business-critical system integration work qualify for this tag.

One of Wipro’s earliest acquisitions was a niche consulting company on the US east coast that had outstanding talent and experience in building trading systems for the financial services industry. For one project to develop a trading system for a top US stock exchange, there was head-to-head competition between Wipro and top global firms. Wipro’s technical depth and the niche consulting firm’s domain expertise and experience helped Wipro compete strongly for this project. After six months of hard slog, Wipro and another global firm made it to the final shortlist and the CIO confirmed that either company could do the multi-million dollar project successfully. Price was not even among the top three decision criteria.

The reason for this relative success was that the competitive play in the highly specialized consulting/system integration market is very limited. There are only about two companies globally (excluding Indian IT firms) that can claim to have the capability, global reach and reputation to do such business-critical work.

Despite full awareness of the opportunity, Indian IT leadership has not been as focused on the build-out of “high value" capability. The prime reason is because such build-out is expensive, time-consuming, accident-­prone, counter-cultural, and demanding of time and emotional commitment from top management.

The change from “low cost" to “high value" needs adaptation at multiple levels for Indian IT services companies. All the way from building consulting, domain expertise, programme management, change management capabilities, to hiring people with different skills across geographies. Equally critically, it will need significant change at the front-end with sales and client engagement.

In a “high value" sale, demand will need to be generated painstakingly over many months by a consultative approach using a multi-functional team (not just sales). The project may look small at the beginning, but could blossom into a big multi-million dollar programme spanning many projects and years.

The time for building-out new capabilities is now. Strategically, it is best to build new capabilities and hire hard-to-get talent during slowdowns because there is an incubation period needed for new capabilities to be built-out, honed and integrated in the rest of the organization. Further, hard-to-find talent is much easier to get during slowdowns.

Also, the build-out can be done in phases, market-by-market, industry segment by industry segment, instead of an all-or-nothing push.

Successful build-out of new “high value" capability has the potential to reinvigorate the sales force, rekindle client interest and renew organizational pride. The new narrative will not just be about revenue growth, but about quality of business and client impact.

Does this mean that Indian IT services companies should stop focusing on their bread-and-butter business of outsourcing/offshoring? Absolutely not. It is the current outsourcing business that provides the customer access, geographic reach, and financial wherewithal to pursue the “high value" business. It is not “either or", but “and".

It is instructive to note from a recent article in The Economist regarding the ambitions of companies from developing countries.

“The new breed of emerging-market firms is packed with smart people who are determined to conquer the globe. Messrs Kumar and Steenkamp asked managers at Midea, a Chinese domestic-appliance maker, to describe their corporate culture. They replied: ‘Never give up, no matter what.’ The West’s great brands should listen to those words and tremble."

Can we expect anything less from leading Indian IT companies?

Girish Paranjpe is a former joint chief executive officer of Wipro Ltd.

This is the last in a two-part analysis.

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