Indian IT service cos yet to outbid MNCs

MUMBAI: For the past so many years, a different set of moves have been witnessed by multinational (MNC) service providers compared to their Indian counterparts. While Indian companies focused more on their on-site capability to serve clients better, MNCs such as IBM and Accenture have built their offshore capability to reduce costs. But it seems that Indian companies still have a lot to do. And in the current economic scenario, they may have to fight tooth and nail to outbid their MNC peers.

Many clients don’t make any differentiation only because a company is Indian. However, factors like domain expertise, size and skill sets in application development are the ones that are considered, while allocating a contract to service providers.

“Multinational companies have presence in multiple geographies, economies of scale, in-depth understanding of client’s business and a global view for many industries and this is where Indian service providers lack. These factors may work against Indian service providers when bidding for a project in the current scenario,” said Mark Toon, chief executive officer, Equaterra, during an ET round-table panel discussion held on the sideline of India Leadership Forum organised by Nasscom in Mumbai.

From the very beginning, Indian companies have taken up maintenance or secondary application development in most cases. And such a move has resulted in lesser domain knowledge and product development capability. “Indian companies lack experience in green-field application development, which needs very deep domain knowledge,” said Dana Stiffler of AMR Research.

During a time when the western economies are badly hit, many companies from that world would try to set up their footprints in emerging markets such as India and China. And since many of these clients have global operations, they might look up to multinational IT companies and not really Indian IT service providers to reduce their cost through innovative and global best practices.

Even some of the industry experts believe that geo-political factors like terrorist attack in Mumbai and Indo-Pakistan tension plays a crucial factor while awarding contracts to Indian players. “The recent Satyam saga and the fact that 115 independent directors have resigned in the past one month from corporate India are also matters of concern for these clients,” said Dennis McGuire, chairman and founder of TPI.

Though these are some of the negative factors which may act against Indian service providers, these companies are certainly not sitting idle and slowly catching up. “Indian IT firms made a mistake by not investing in people from other countries during initial years.

However, they soon realised that it’s very important to understand cross-cultural issues with their clients and have started hiring aggressively from different geographies. This would help them get closer to their clients and understand them better,” said Som Mittal, president, Nasscom.