Indian IT players need to graduate to high-value R&D work to escape unhealthy competition

The message is loud and clear. It is time for the Indian information technology (IT) and outsourcing companies to transform. With new geographies rising to claim their share of application development and maintenance market at competitive rates, the best way ahead for Indian IT companies is to move up the value chain and target complex and high margin work. The current business model of working on utility projects is not sustainable for the Indian companies in the long run, says Partha Iyengar, Research Vice-President, Gartner. Though utility projects form the bread and butter of IT companies, competition is threatening Indian players. Already, biggies like IBM, EDS and Accenture are competing for low-value high-volume works. However, these come in addition to the advanced engineering work they have been doing. It is time they differentiated between strategic and non- strategic business. Already, HCL is believed to have identified low value projects worth $40 million, which they would not bid for once their contract ends. Probably industry captains have to identify the inflection point and, as Shiv Nadar of HCL puts it, the signals would be weak, the earlier they are picked up, the better, else the opportunity would be gone for ever.
- ANURAG PRASAD
Source:
OutlookBusiness,
5 January,2007