FOR ESP: The Changing Landscape of Business ConsultingBy Michael Vizard | Posted 2008-06-25 Email Print
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As outsourcing firms make their way into the U.S. market, local solution providers will have partnering opportunities.
The channel, by and large, has a love-hate relationship with business consulting firms that typically enjoy relationships at the highest echelons of their customers.
On the positive side, companies such as Accenture and IBM Global Services usually take the lead in creating or transforming some business process within a large corporate entity. This usually creates a trickle-down effect for solution providers that typically wind up delivering some part of that overall solution as a subcontractor.
But on the negative side, many solution providers find that business consulting firms have clubby relationships with select solution provider partners that may have a lot more to do with whom they play golf with than the actual capabilities and talents of the solution provider. This creates a challenge for a lot of solution providers who feel discriminated against when it comes to Global 2000 accounts.
That's why it's interesting to watch the dynamics between traditional business consulting firms, such as Accenture and IGS, and rising stars in the business consulting space that historically have been seen only as outsourcers. For example, Syntel, an outsourcing company with operations in the United States and Europe, expects business consulting to become a big growth driver for the company through the rest of this decade.
Syntel CEO Bharat Desai recognizes the simple fact that managed technology services are going to be subjected to the same margin pressures as any other product. And while Syntel may be in a better position to manage those costs down given its ready access to Indian labor, he also recognizes there is a lot more upside to pursuing business consulting opportunities. Companies such as Accenture and IGS charge a very high premium for their services, creating opportunities for potential rivals to offer similar services at a much lower cost.
Roughly 2,000 of Syntel's 13,000 employees are already in the United States and Europe. As the Internet continues to evolve, it will become much easier for these employees to leverage their proximity to the customer to create a global network of business consulting and technology services that can interact in real-time with customers.
It stands to reason that none of this is lost on other large Indian-outsourcing companies such as Tata Sons, Infosys Technologies, Satyam Computer Services, Sify Technologies and Wipro. It also stands to reason that some day in the not-too-distant future, companies based in China will pursue the same global opportunities.
This leaves local solution providers basically two options. They can bemoan the fact that large global organizations will be moving into the managed services space at their expense or they can see an opportunity. There's no way large global organizations based in India and China can deliver all the services their customers need any better than Accenture or IBM could. Even with a substantially lower cost of labor, these companies will need to partner with a large network of local solution providers.
Moreover, more players in the business consulting space should translate into more activity across the board as the sheer number of technology-savvy business consultants in the overall market increases.
Most of the international outsourcing companies coming to the United States are still trying to feel their way through the U.S. market. That means we won't see any of them launching formal channel programs anytime soon. But if local providers wait for that to happen, they might miss out on the bigger opportunity because the solution providers that reach out to these companies now are going to probably benefit from the lion's share of the work tomorrow.
Michael Vizard is Strategic Content Expert for Ziff Davis Enterprise. He can be reached at email@example.com.