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India IT Industry: Tech Bubbles & Pebbles: The Indian IT enterprise of 2011
and beyond; charting the changing future
Introduction: We believe the model of the “Indian IT enterprise of tomorrow”
cannot be aspirational; it will have to be a reality as Indian IT plays a much more
enhanced role in the times to come. In our view, a company that delays or
bypasses some of the most essential elements of the model that we discuss in this
report runs the risk of being overtaken by peers willing to invest in making the
transition to broad-based differentiation. The key elements of our model that chart
the changing future include:
• Optimization at every point of the value chain followed by integration.
• Irrelevance of location to competitive advantage; localize to globalize.
• Strengthening the core while still breaking new ground.
• Playing high-potential overarching themes (vertical and horizontal); several
themes come to the fore today such as analytics, devices, mobility, digitization,
healthcare (e.g. conversion to ICD 10, integrating the hitherto absent provider
segment into the payer equation). Indian IT firms are identifying such themes
and crafting consultative agendas around them. Combined with pursuit of
tactical opportunities, this opens up new or strengthens old relationships.
• Sharper customer segmentation practices; emerging business models entail
smarter segmentation – e.g. TCS' go-to-market strategy for its SMB offering.
• A much greater degree of co-operation and working flexibility in working with
partners in the ecosystem. Co-creation becomes the new norm. Indian IT
companies are tech-savvy, but are much less alliance-/partnership-savvy.
• Necessary marriage between domain & technology to drive stickiness of
relationships – we think Cognizant does this the best and HCLT could do better.
• Organizational flexibility to manage a hybrid of business models (e.g.,
nonlinearity, solutions) and multiple growth agendas. Overburdening
management, in the name of empowerment, has its drawbacks as we see in the
case of Infosys. Cognizant/TCS seem to have gotten this right.
• A sales model that significantly incorporates high-end partners and alliance
specialists. Indian IT might feel hindered in opening up the purse-strings in
effecting this; we believe it is a mindset to overcome than ability.
• Greater branding of specific offerings within an overall umbrella as opposed to
undifferentiated, generic branding. Infosys now re-brands itself.
Conclusion: It’s an improving picture among the larger companies.
According to our analysis, TCS leads on most dimensions highlighted above.
TCS leads in integration and market presence. It is also executing well on the One
TCS positioning and leads in its versatility. Cognizant (covered by our US analyst
Tien-tsin Huang) is ahead in perfecting a sales and marketing engine that improves
customer experience/intimacy. Cognizant also stands out in strengthening the core
while investing for the future. Infosys leads in customer segmentation and displays
maximum finesse on this aspect. Wipro closes the gap in its organization structure
adopting a more customer-centric view - in line with peers. We are optimistic
that the Indian IT enterprise of 2011 and beyond will strengthen its calling as
the “IT services enterprise of tomorrow”.
Investment view: We remain OW on TCS, Wipro and HCL Technologies. TCS
and Wipro are our key picks in the sector. We remain Neutral on Infosys
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India IT Industry: Tech Bubbles & Pebbles: The Indian IT enterprise of 2011
and beyond; charting the changing future
Introduction: We believe the model of the “Indian IT enterprise of tomorrow”
cannot be aspirational; it will have to be a reality as Indian IT plays a much more
enhanced role in the times to come. In our view, a company that delays or
bypasses some of the most essential elements of the model that we discuss in this
report runs the risk of being overtaken by peers willing to invest in making the
transition to broad-based differentiation. The key elements of our model that chart
the changing future include:
• Optimization at every point of the value chain followed by integration.
• Irrelevance of location to competitive advantage; localize to globalize.
• Strengthening the core while still breaking new ground.
• Playing high-potential overarching themes (vertical and horizontal); several
themes come to the fore today such as analytics, devices, mobility, digitization,
healthcare (e.g. conversion to ICD 10, integrating the hitherto absent provider
segment into the payer equation). Indian IT firms are identifying such themes
and crafting consultative agendas around them. Combined with pursuit of
tactical opportunities, this opens up new or strengthens old relationships.
• Sharper customer segmentation practices; emerging business models entail
smarter segmentation – e.g. TCS' go-to-market strategy for its SMB offering.
• A much greater degree of co-operation and working flexibility in working with
partners in the ecosystem. Co-creation becomes the new norm. Indian IT
companies are tech-savvy, but are much less alliance-/partnership-savvy.
• Necessary marriage between domain & technology to drive stickiness of
relationships – we think Cognizant does this the best and HCLT could do better.
• Organizational flexibility to manage a hybrid of business models (e.g.,
nonlinearity, solutions) and multiple growth agendas. Overburdening
management, in the name of empowerment, has its drawbacks as we see in the
case of Infosys. Cognizant/TCS seem to have gotten this right.
• A sales model that significantly incorporates high-end partners and alliance
specialists. Indian IT might feel hindered in opening up the purse-strings in
effecting this; we believe it is a mindset to overcome than ability.
• Greater branding of specific offerings within an overall umbrella as opposed to
undifferentiated, generic branding. Infosys now re-brands itself.
Conclusion: It’s an improving picture among the larger companies.
According to our analysis, TCS leads on most dimensions highlighted above.
TCS leads in integration and market presence. It is also executing well on the One
TCS positioning and leads in its versatility. Cognizant (covered by our US analyst
Tien-tsin Huang) is ahead in perfecting a sales and marketing engine that improves
customer experience/intimacy. Cognizant also stands out in strengthening the core
while investing for the future. Infosys leads in customer segmentation and displays
maximum finesse on this aspect. Wipro closes the gap in its organization structure
adopting a more customer-centric view - in line with peers. We are optimistic
that the Indian IT enterprise of 2011 and beyond will strengthen its calling as
the “IT services enterprise of tomorrow”.
Investment view: We remain OW on TCS, Wipro and HCL Technologies. TCS
and Wipro are our key picks in the sector. We remain Neutral on Infosys
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