SWOT_The Evolution Of Indian IT Service Providers Into Business Technology Competitors

Making Leaders Successful Every Day

March 17, 2010

SWOT: The Evolution Of Indian IT Service Providers Into Business Technology Competitorsby Christopher Andrewsfor Vendor Strategy Professionals

www.forrester.com

© 2010, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. To purchase reprints of this document, please email [email protected]. For additional information, go to www.forrester.com.

For Vendor Strategy Professionals

ExECuTIVE SuMMAryDebates over the outlook for the leading Indian IT services providers have taken place for years, and the last year has been no exception. As these companies look to 2010 and beyond, they can be satisfied with their strong progress within key client accounts, even in the face of continuing questions about rupee fluctuations, staffing attrition rates, and the evolution of nonlinear growth models. Receiving less attention in these debates, however, is the long-term strategy of these providers, where questions remain about how they will develop their services offerings in a rapidly commoditizing, and increasingly competitive, IT services marketplace. This document reviews the strengths, weaknesses, opportunities, and threats (SWOT) for Infosys Technologies, Tata Consultancy Services (TCS), and Wipro Technologies, with a focus on the development of their value proposition to business users. Our findings show that while each company is investing in innovative new services, each needs to tie its strong capabilities to improved marketing programs in order to compete with larger rivals.

TABlE OF COnTEnTSThe Creation Of Business Value Will Be A Key Challenge For Indian Players

Forrester’s SWOT Analysis Focuses On Long-Term Business Services Strategy

These Firms Share Several Strengths, Weaknesses, Opportunities, And Threats

Infosys Takes A Conservative Approach, With Excellent Thought leadership

TCS Has Shown Willingness To Invest In long-Term Opportunities

Wipro Is Investing In Its Business Technology Offerings

WHAT IT MEAnS

A Key Challenge For These Companies Rests In Their Approach To Marketing

nOTES & rESOurCESForrester received written responses to a SWOT questionnaire from Infosys, TCS, and Wipro. The written responses were followed up with interviews with each company.

Related Research Documents“SWOT: The Evolution Of IT Service Providers To Business Technology Competitors” June 22, 2009

“Market Overview: The Tech-Enabled Business Services Market Opportunity”January 22, 2009

“The Three Archetypes Of Service Providers”September 5, 2008

March 17, 2010

SWOT: The Evolution Of Indian IT Service Providers Into Business Technology Competitorsby Christopher Andrewswith Pascal Matzke, John McCarthy, and Edward radcliffe

2

4

4

12

mailto:[email protected]

www.forrester.com

www.forrester.com

http://www.forrester.com/go?docid=47073&src=55095pdf





© 2010, Forrester research, Inc. reproduction ProhibitedMarch 17, 2010

SWOT: The Evolution Of Indian IT Service Providers Into Business Technology Competitors For Vendor Strategy Professionals

2

THe CReATIOn OF BuSIneSS VALue WILL Be A Key CHALLenge FOR InDIAn PLAyeRS

Despite the numerous challenges the Indian IT services providers faced in 2009, leaders at Infosys, TCS, and Wipro are not showing any signs of pessimism. Over the past decade, these three companies have emerged as strong competitors in the IT services marketplace, and their reputation for driving process efficiencies and creating bottom-line improvements within key client accounts is growing. Each of these companies has achieved substantial success as providers of low-cost IT services within select vertical markets, and each company has roughly similar levels of penetration in key geographies and industries (see Figure 1).

The challenges facing these companies, however, will grow. Underlying all of the challenge these companies face, however, are fundamental questions about how these organizations will evolve over a five- to-10-year time horizon. In an increasingly competitive and commoditizing IT marketplace, these companies will have to make a transformation from serving as IT services providers into being providers of business services and solutions (see Figure 2).1 Without more business offerings in line-of-business- and executive-level offerings, they will have difficulty competing fully with industry-leading counterparts, companies which are far more aligned with business customers in their strategy, marketing, and sales approach.2

Figure 1 leading Indian Services Providers: revenues By Geography And Industry

Source: Forrester Research, Inc. 55095

Company attribute

Infosys

TCS

Wipro

North America Europe Rest of world*

63.3% 26.3% 10.4%

51.4% 29.5% 19.1%

60.0% 26.0% 14.0%

Companyattribute

Infosys

TCS

Wipro

Banking and financial services

35%

43%

26%

19%

10%

20%

13%

9%

17%

17%

16%

29%

16%

21%

8%

Manufacturing†Retail and

distribution Telecom Others

Source: annual reports*The rest-of-world category varies by company; Infosys lists 1.3% of revenues from India; TCS has 12.6% of revenues in Asia Pacific and 6.5% in other geographies; and Wipro (IT services) lists 3% of revenues from Japan.

†Wipro includes healthcare in manufacturing services and includes media and technology in its telecomcategory. Its “others” category is energy and utilities.Note: Category definitions may vary by company.

© 2010, Forrester research, Inc. reproduction Prohibited March 17, 2010


3

Figure 2 Forrester’s Business And IT Services Taxonomy

Although the concept of moving upstream through the provision of strategic, rather than supportive, services has been on the agenda of the Indian players for years, their modest progress in this transition highlights the depth of the challenges these companies will face. Each company boasts increasingly strong vertical market expertise, and some transformational capabilities based on years of experience with a select number of key accounts. Still, internal cultures and client perceptions are slow to change — making it all the more important for these companies to be planning for, and investing in, their business services evolution today. Without greater investments in marketing and a stronger go-to-market approach that resonates with a business audience, these companies will continue to face difficulty in moving beyond their low-cost, process-focused value proposition.


Executive management

Corporate strategy consulting

Corporate strategy implementation and transformation services

Business process design and transformation services

Business process management

Risk managem

ent and com

pliance services

Security services

Enterprise architecture design and transformation services

Systems integration services

StandardBPO

Appsdevelopment

Apps testing services

Apps integration

Apps management

Apps hosting

Workplace services

IT architecture design and transformation services

IT infrastructure management

Network services

Tax advisory and auditing services

Business intelligence and performance management

Operational process consulting

IT strategy consulting

Client stakeholders

Line of business

IT organization

BT provider

Corporate strategy services

Business services

IT services

Vendor archetypes

Solutions provider

IT provider

Consult and plan Architect and develop

Implement and integrate

Run and manage



4

FORReSTeR’S SWOT AnALySIS FOCuSeS On LOng-TeRM BuSIneSS SeRVICeS STRATegy

To analyze the evolution of the leading Indian services providers, Forrester has prepared a SWOT analysis for each company. Because we view the capabilities of a solutions provider to be about more than just service-line offerings, we explore factors related to each company’s strategy, solutions, and go-to-market approach.3

THeSe FIRMS SHARe SeVeRAL STRengTHS, WeAKneSSeS, OPPORTunITIeS, AnD THReATS

Although Forrester expects the differences between these companies to grow, their similarities are more immediately obvious than their differences. Each company claims to be taking on a range of strategic initiatives, including expanding vertical and geographic markets, moving toward fixed-price contracts, leveraging solution accelerators, moving away from linear revenue models, investing in emerging technologies, and developing their role as strategic business services partners (see Figure 3). A collective SWOT for these leading players therefore highlights:

· Their strengths in process expertise and their reputation for reliability. These firms have established themselves as leaders in the IT services outsourcing market with strong process expertise, a low-cost value proposition, and an intense focus on customer needs. Over the past decade, they have developed India-centric delivery backbones, forcing some of their larger counterparts to scramble to adapt to their rapidly expanding market presence, and they now compete on an equal level with these larger counterparts in many IT service areas. Their intense focus on serving vertical markets will help them develop greater business process expertise over time.

· Weaknesses that relate to internal barriers that limit expansion. With the exception of application work and business process outsourcing (BPO) services, these companies’ strategic business services capabilities are still developing. Although they are investing in consulting offerings, business innovation services, business intelligence, and analytics, these efforts still have a tight focus on technical implementation (as opposed to transformational strategy), and they trail behind competitors like IBM and Accenture in this regard.4 Most notably, they lack the investment in marketing and sales of their larger counterparts. At the same time, their intense focus on vertical markets creates risks creating operational silos and a disconnected approach to innovation.

· Opportunities that relate to market expansion and evolution. Although these leaders have experienced similar business challenges as their larger counterparts, they see a significant opportunity for their low-cost value proposition as more IT departments seek to drive efficiencies and bottom-line improvements, even in the wake of the financial collapse.5 In the long term, however, market expansion strategies will be risky without the evolution of service portfolios. Since each company has a history of moving into client accounts with a low-cost



5

value proposition and gradually expanding strategic relationships, the prospects for this evolution are becoming more apparent than they were just a few years ago.

· Threats that relate to global competition and technology market convergence. As IT sourcing professionals continue to multisource to eliminate global risk, Indian companies are no longer the only low-cost alternatives to Western firms. Moreover, in the face of pending disruptions like the emergence of cloud-based service offerings, which have the potential to significantly disrupt infrastructure and application services, only the more flexible and adaptable companies will survive. The evolution of the cloud-based offerings and strategic services that these companies develop will be a key trend to watch in 2010 and beyond.

Figure 3 SWOT Analysis: The Overall Players


Strengths:• They aggressively compete for leadership positions

in overall cost/value proposition for IT services.• They have invested heavily in delivery processes.• Strong metric-driven management teams focus

on ensuring predictable growth and earnings.• India leads many offshore competitors in cultural

alignment with West.• Intense focus on vertical market strategies will

position the companies for deeper penetration with line-of-business leaders.

• They have platform BPO and other nonlinear solutions.

Weaknesses:• They have difficulty articulating clear long-term

strategic objectives without reverting to generalities.• Strategic marketing capabilities could be improved.• Metric-driven approach leads to a risk-averse

corporate culture.• They rely heavily on North American financial

services, manufacturing, and retail but lack expertisein emerging hot verticals like government and healthcare.

• Strategic consulting, transformation, and innovation capabilities still do not match Western counterparts.

• Despite stated goals at geographic diversification, expansion in regions like Europe has been slow.

Opportunities:• They are strongly positioned in wake of financial

turmoil to capitalize on cost/value concerns of IT departments.

• They are well positioned for expansion in emerging geographic markets, particularly home turf India.

• They can steadily move into large IT/business services market within existing accounts — areas still dominated by Western firms.

• Strong financial positions will help these companies expand through acquisition in the wake of global financial market turmoil — if they choose to seize the opportunity.

Threats:• The intense focus on verticals in strategy and

go-to-market approach will create some inefficiencies — and may lead to the development of organizational silos.

• Without strategic evolution into higher-margin services, growth models will continue to be stressed.

• Shift to highly standardized cloud- and SaaS- based services will likely expose product marketing shortcomings.



6

Infosys Takes A Conservative Approach, With excellent Thought Leadership

Based in Bangalore, India, the NASDAQ-listed Infosys was famously started with about $250 in capital investment by N.R. Narayana Murthy (who now serves as the company’s chairman and chief mentor). The company grew revenue to $4.6 billion in fiscal year (FY) 2009 and currently holds about $2.8 billion in cash.6 S. (Kris) Gopalakrishan, chief executive officer (CEO) and managing director, has been with the company since its inception. Despite Infosys’ stated goals in geographic diversification, the company still has 65% of total revenues in North America and 25% in Europe (see Figure 4).7

An analysis of Infosys’ focus and capabilities shows that the company:

· Works its business focus into many aspects of its IT services. The company’s approach to business services is built around its consulting capabilities, its vertical market approach to application development and integration (after a significant restructuring in 2007), and the business process services that it provides through its BPO subsidiaries. The largest of these subsidiaries, Infosys BPO, had about $280 million in revenue in FY 2009.8

· Has seen mixed results from its consulting subsidiary. Infosys Consulting provides management consulting, innovation, process transformation, and IT strategy services that link clients to Infosys’ global delivery capabilities. The consulting organization was launched as a subsidiary to create more downstream value from higher-margin consulting project work.9 Despite the subsidiary’s decent revenue growth, it has had a relatively minor impact on the company’s overall strategy and value proposition, and the organization has required sporadic investment from its parent to keep it in operation.10 Although Infosys Consulting is still significantly ahead of its rival consulting organizations, the company still needs to clearly prove that it can tie these disparate organizations together into complete solutions for clients.

· Has been conservative in business services acquisitions. For years, Infosys has stated its intentions to move “upstream” through acquisition, but it has made relatively few acquisitions, compared with TCS and Wipro.11 Although this low-risk strategy (with an intense focus on predictable earnings) has suited the company’s conservative culture, its lack of acquisition history raises some questions about its ability to quickly acquire and integrate business process capabilities in a rapidly changing IT marketplace. The company’s November 2009 announcement that it will acquire US-based BPO provider McCamish Systems may signal a changing strategy and a sign of future direction.

· Has built very strong marketing based on thought leadership. Infosys has developed a strong marketing program based on its thought leadership. In addition to investing in the development of new IP and products, the company is still doing well with its “win in the flat world” marketing message — a timely and well-devised play to build on the popular book by Thomas Friedman.12 But that campaign will need updating in coming years as concerns about globalization fade and other topics become relevant. The company’s Web site is rich with timely



7

articles, white papers, blogs, and research that discuss the evolution of IT, which helps establish Infosys as a leading brand name and thought leader among the Indian players.

Figure 4 Infosys SWOT Analysis


Company attribute Strength Weakness

Corporate/portfolio strategy

The company claims to be driving deeperinto existing accounts, expanding its global presence, investing in infrastructure and solutions, moving deeper into industry knowledge, enhancing the brand, and pursuing acquisitions.

Despite stated goals of geographic diversification and acquisitions, the company has not made strategic acquisitions, except related to deals, and geographic revenues have not changed significantly.

Solution alignment • Approach to business services is holistic, consisting of the company’s consulting subsidiary, vertical market business solutions, and BPO capabilities.

• SETLabs, the company’s center for research and engineering, supports solutions with research into new technology areas.

Consulting subsidiary has seen mixed results, leading to questions about Infosys’ transition into higher-margin consulting services.

Sales and go-to-market strategy

• Company goes to market with a mix of industry business units and horizontal business units.

• Strong marketing is based on excellent “world is flat” thought-leadershipcampaign.

Delivery and execution strategy

The company’s emphasis on pursuing opportunities with predictable earnings has provided some stability in a difficult economic climate.

• Revenue and net income growth slowed substantially in 2009 economic climate, though profit margins remain strong.

• Conservative expansion strategy, particularly related to acquisitions, may hurt in a rapidly consolidating and converging marketplace.

Sustainability and viability

• Like competitors, Infosys has strong, stable management teams with rich experience within the company.

• It has significant cash, compared with second-tier multinational corporations.

Market attribute Opportunity Threat

Despite market challenges, the company claims to be preparing for expansion in 2010 with 18,000 new employees.

Market dynamics

Competitive position

The company sees opportunity to expand into new technology services like product development (related to emerging technologies) and verticals such as public service, healthcare, media.

Despite the fact that the company identifies many growth opportunities, the conservative culture indicates that immediate growth will be in traditional outsourcing.

Client perception and adoption

In the environment for Indian offshore services, Infosys and its competitor TCS hold leading positions and have strong brand recognition.

Like its Indian counterparts, it will still struggle to differentiate itself as anything other than a low-cost IT outsourcer and will still compete primarily with TCS as offshore brand name.



8

TCS Has Shown Willingness To Invest In Long-Term Opportunities

Based in Mumbai, India, TCS is a subsidiary of the India-based conglomerate Tata. Of the companies profiled in this document, TCS has the largest services offering, with overall revenues of $5.7 billion.13 Although more than half of TCS’s revenues come from the North American marketplace, it is more geographically diverse than the other companies in this document, with almost 30% of revenues from Europe and more than 12% from India and Asia Pacific (see Figure 5).14 The company:

· Has been aggressive in pursuing business process acquisitions. Consistent with Tata’s history as a conglomerate, TCS has shown few reservations about acquiring new capabilities. Since 2005, the company has made several acquisitions in BPO, the most significant of which was the 2008 acquisition of Citigroup Global Services for $505 million. The varied scale and scope of TCS’s acquisitions over the past decade shows that the company is willing to opportunistically pursue acquisitions as they arise.

· Markets itself as an innovation leader. TCS distinguishes its market approach through a multifaceted approach to innovation. Notable is the company’s Co-Innovation Network, which centers on the organization’s alliances with academia, research departments, and venture capital (VC) firms. The company also weaves other aspects of its innovation — whether these aspects are its Innovation Labs, its collaborative innovation approach, or its innovation thought leadership — into its marketing approach. In the future, TCS will need to continue to tie key components of its strategy, marketing, and sales approach to the innovation theme.

· Is building a consulting model that is still closely linked to IT process expertise. TCS’s Global Consulting practice focuses on business process management, change management, and program management and is closely linked to its IT capabilities. Consulting is only 2.6% of revenues, down from 3.4% in 2008. The consulting practice is a reasonable extension of TCS’s core offerings, focused primarily on IT strategy and governance engagements.15

· Is reorienting its go-to-market approach toward relationship-driven selling. Recently, TCS has placed greater focus on long-term business relationships within client accounts. The company claims that it is evolving from a “run the business” mentality to a “change the business” mentality — a sign that shows the company understands the need for transformational challenges ahead.16 The company’s primary marketing tag line, “Experience certainty,” is currently too focused on process expertise and reliability — there needs to be more communication on how the company can contribute to the long-term business objectives of clients.



9

Figure 5 TCS SWOT Analysis




Goal is to have best-in-class competencies from strategy to execution; TCS consistently articulates its vision to act as a business partner to clients.

While TCS has a strong overall vision for its evolution, its offerings are still IT-focused, creating some potential for disconnects between vision and execution. It is still very technology-centric and needs to continue to invest to engage senior-level business buyers.

Solution alignment Company identifies global reach, industry focus, process excellence, and technology expertise as critical strengths.

The company’s ability to translate its strong end-to-end IT capabilities into business value is still emerging. Many of its IP leadership efforts suffer from visible, integrated marketing efforts.


It is reorienting its market approach to develop long-term relationships and iscurrently focused on the “business advisory selling” program.


It has been most aggressive in pursuing business process acquisitions, which will help the company diversify outside of core competencies. The Co-Innovation Network (COIN) represents a unique way to develop intellectual property, thought leadership, and differentiation.

The company’s consulting capabilities, particularly related to innovation andtransformation offerings, are not visible enough to gain traction outside of core accounts.


The company has strong depth and stability in its management team, links to Tata, and financial fundamentals.


Company is well positioned to take advantage of broad range of trends, particularly opportunities in Europe, and plans to add around 20,000 employees in 2010.

Market dynamics


It clearly identifies opportunities in IT services, infrastructure, and new service models.


Company has a strong reputation among the Indian outsourcers and has strong references from leading Fortune 500 companies.

Like its counterparts, moving beyond the “low cost” mantle will continue to be a challenge that will take time and committedeffort.



10

Wipro Is Investing In Its Business Technology Offerings

Although Wipro’s history goes back to 1947, its roots in technology start in the late 1970s when it became one of India’s first computer makers. Through this history, the company maintains a strong reputation for research and development (R&D).17 The company has co-CEOs, Girish Paranjpe and Suresh Vaswani, who are both long-time veterans of the company.

An analysis of Wipro’s focus and capabilities shows that the company (see Figure 6):

· Is focused on building on its technical services expertise. Wipro’s strategy primarily focuses on the company’s more traditional strengths in process expertise, and low-cost labor services, with growing capabilities in systems integration. The company has developed some strong business process capabilities in the banking, telecom, and retail verticals. BPO represents 9% of current revenues, and consulting represents about 2%.18 The company’s “string of pearls” acquisition strategy — including the acquisition of Infocrossing in 2007 and Citi Technology Services in 2008 — has focused more on filling strategic gaps and technology competence than on building business process capabilities.

· Has a solution framework that includes some transformational solutions. The company has outlined its goals to develop “productized” business technology solutions, with improved efforts in outcome-based service offerings, a solutions focus, and efforts in innovation services. The company’s solutions framework — which it uses to create more services products — is becoming more robust, with developing offerings in business process transformation services in banking, telco, and retail. The company’s primary challenge will be pushing these solutions to customers while still retaining a customization- and relationship-driven model.

· Is developing its business consulting offering. Wipro does not create a separate consulting organization, because it sees the consulting services it can provide as inseparable from its implantation capabilities. The consulting practice, which has several new leaders, is going to be a critical component of the company’s business evolution. This organization is going to be very interesting to watch in coming years, but will need a high level of support from senior management to be effective.

· Is driving thought leadership through its green focus. Wipro’s marketing has recently focused on its capabilities as an enabler of business technology initiatives, with an updated marketing campaign. With clients, the company highlights its localization capabilities as a distinguishing capability. In the future, the company can do more to define and highlight these capabilities to the market and integrate examples of where they have delivered on transformational business value into sales and marketing campaigns.



11

Figure 6 Wipro SWOT Analysis




Strategy is based on market expansion, continued development of global delivery model, emphasis on cost cutting and efficiencies, and customer account penetration.

Wipro’s strategy is the most focused on traditional IT capabilities related to cost reduction and efficiency.

Solution alignment It has differentiated strengths based on its strong engineering focus. And strengths lead to a more diverse focus: Company is least reliant on the financial services.


Company has been at the forefront of marketing around a green theme, which links to its efficiency-focused solutions; company has recently added domain expertise and consulting services.


The company’s acquisition strategy is aimed at aimed at filling up strategic gaps, enhancing domain and technology competence, expanding service line portfolio and moving to new geographies.


Like competitors, Wipro has a strong management team with years of history with the company.


It is strongly positioned to take advantage of emerging technology trends based on engineering capabilities; it sees opportunity in application rationalization and virtualization as well as BI analytics, SaaS, and managed services.

Market dynamics


Continue to leverage R&D and testing strengths to add competencies in new offerings, while also differentiating from competition.

Wipro does not have the same level of brand recognition as TCS and Infosys but remains strong in its core markets. Product engineering business will see increased competition from TCS and Infosys as well as IBM and Accenture.


Though brand recognition is weaker than its larger counterparts, Wipro is carving out a differentiated offering based on the ability to reduce costs and improve productivity in R&D-intensive industries.

Cost reduction strategy may work in the near term. As companies differentiate, however, and companies start spending money, this focus on cost reduction represents a risk of commoditization.

It is behind peers in sales and marketing upgrades.

Benefits of a joint CEO system remain to be proven, and life after Premji ‘s leadership is not clear.



12

W H A T I T M E A n S

A Key CHALLenge FOR THeSe COMPAnIeS ReSTS In THeIR APPROACH TO MARKeTIng

Although the past decade served as a period of market expansion and growth for the Indian providers, the next five years will test their ability to evolve a need for more business offerings. Each company has the capabilities to make this transition, but they will face some significant challenges related to changing client perceptions of them as low-cost IT providers. This is largely a problem of marketing — and one that will need to be addressed in coming years. In particular, executives at these companies will need to:

· Simplify the story of their strategic evolution. As market leaders, these companies have far too much difficulty articulating their long-term growth strategies and core value proposition. Although each company has shared its goals to build more business-focused capabilities at the front end of the services value chain, these priorities are too often mixed with a broad range of other — sometimes conflicting — messages. Simplifying the vision and strategy for the provision of strategic business services will go a long way toward helping the market, clients, partners, and internal employees understand what to expect from these companies in the next five years. These simplified messages will also go a long way toward streamlining the go-to-market approach that competitors like IBM’s Smarter Planet and Accenture’s High Performance campaigns have had for years.

· Build on existing competencies to drive greater differentiation. In Western markets, where all Indian outsourcers are grouped together, it’s well past the time for these providers to communicate greater levels of differentiation from each other. Although TCS is carving out a strong innovation focus and Wipro has developed a reputation for strong r&D capabilities, these points of differentiation need far more visibility. In the future, greater differentiation around business offerings will serve as a hook for customers willing to spend more with these well-trusted service providers. But before they buy, they need to be educated on vendor capabilities beyond low-cost IT outsourcing services.

· Prove the end-to-end capabilities. Although many technology service providers say that they provide end-to-end solutions (linking consulting to integration to delivery capabilities), fewer are delivering on this promise. A growing concern for the Indian providers is that their rapid growth and organizational silos (caused in part by their intense focus on verticals) are making it more difficult to execute on the end-to-end promise. These companies need to do more to highlight how the business services they have sold to key accounts have contributed to the end-to-end value proposition — and use these examples to highlight the market opportunity ahead.



13

enDnOTeS1 In recent research, Forrester has written about patterns of convergence and the evolution of tech-enabled

business services. See the September 5, 2008, “The Three Archetypes Of Service Providers” report and see the January 22, 2009, “Market Overview: The Tech-Enabled Business Services Market Opportunity” report.

2 These market leaders recognize that the market for traditional IT services will change dramatically over the next five years as more vendors realize the benefits of aligning their technology solutions with the needs of business customers, and they are investing accordingly. See the June 22, 2009, “SWOT: The Evolution Of IT Service Providers To Business Technology Competitors” report.

3 As we have noted in the preliminary document in this series, this analysis is intended to be a qualitative review of general capabilities and differentiation in the IT services marketplace, rather than a directly comparative determination of which vendor is best — and it differs significantly from other Forrester methodologies like the Forrester Wave™ in this regard. It places focus on each vendor’s unique characteristics, which we hope will lead to a more informed understanding of how leading vendors are expanding their relevance with line-of-business customers.

4 They have difficulty articulating their strategy and revert to generalities — “gaining market share,” “expanding geographically,” “penetrating deeper into existing accounts,” and “being more customer-focused” (among others) are too often stitched together and called a strategy. Our fear is that for years we have heard these companies talking the talk about moving upstream — however, they seem somewhat less adept at walking the walk.

5 Offshoring of IT jobs from Europe shows signs of slow growth as firms try to cut costs. While the percentage of IT services that go offshore — especially from the non-UK market — is very small, Forrester’s Enterprise IT Services Survey, North America And Europe, Q2 2009, shows an improvement in adoption of global delivery. See the October 28, 2009, “European Offshoring Shows Moderate Growth” report.

6 Source: Infosys’ annual reports, 2008 to 2009 (http://www.infosys.com/investors/reports-filings/annual-report/Pages/index.aspx).



9 Source: “Infosys Consulting to break even in FY09,” Business Standard, April 16, 2008 (http://www.business-standard.com/india/news/infosys-consulting-to-break-even-in-fy09/320229/).

10 The company invested $20 million in Infosys Consulting in 2008, bringing the total investment to $45 million. Source: Infosys company filings.

11 Although the company’s statements to Forrester that it “will not make acquisitions for the sake of making acquisitions” is based on sound logic, with billions of cash in the bank and plenty of expansion goals, the company is not short on opportunities to put this cash to work. The proposed acquisition of AXON in 2008








14

was at least partially about expanding the company’s European presence and moving the company into higher-margin consulting work, but the deal fell through when HCL outbid Infosys in the deal.

12 Source: Thomas Friedman, The World Is Flat, Farrar, Straus and Giroux, 2005. (http://www.thomaslfriedman.com/bookshelf/the-world-is-flat).

13 Source: “Agility in a Dynamic Environment,” TCS annual report, 2008 to 2009 (http://www.tcs.com/investors/Documents/Annual%20Reports/TCS_Annual_Report_2008-2009.PDF).

14 Source: “Agility in a Dynamic Environment,” TCS annual report, 2008 to 2009 (http://www.tcs.com/investors/Documents/Annual%20Reports/TCS_Annual_Report_2008-2009.PDF).

15 The 2006 acquisition of the relatively small TCS Management bolstered consulting efforts (the company claims 1,000 employees globally).

16 Source: Abid Ali Neemuchwala, “Evolving IT from ‘Running the Business’ to ‘Changing the Business,’” TCS white paper (http://www.tcs.com/SiteCollectionDocuments/White%20Papers/DEWP_05.pdf).

17 Despite the reputation, product engineering is only 6% of total revenues. Source: “Transforming to a new paradigm,” Wipro annual report, 2008 to 2009 (http://www.wipro.com/corporate/investors/pdf-files/annual-report/AR2008_09_highlights.pdf).

18 Source: “Transforming to a new paradigm,” Wipro annual report, 2008 to 2009 (http://www.wipro.com/corporate/investors/pdf-files/annual-report/AR2008_09_highlights.pdf).

Forrester Research, Inc. (Nasdaq: FORR)

is an independent research company

that provides pragmatic and forward-

thinking advice to global leaders in

business and technology. Forrester

works with professionals in 20 key roles

at major companies providing

proprietary research, customer insight,

consulting, events, and peer-to-peer

executive programs. For more than 26

years, Forrester has been making IT,

marketing, and technology industry

leaders successful every day. For more

information, visit www.forrester.com.

Headquarters

Forrester Research, Inc.

400 Technology Square

Cambridge, MA 02139 USA

Tel: +1 617.613.6000

Fax: +1 617.613.5000

Email: [email protected]

Nasdaq symbol: FORR

www.forrester.com

M a k i n g l e a d e r s S u c c e s s f u l E v e r y D a y

55095

For information on hard-copy or electronic reprints, please contact Client Support

at +1 866.367.7378, +1 617.613.5730, or [email protected].

We offer quantity discounts and special pricing for academic and nonprofit institutions.

For a complete list of worldwide locationsvisit www.forrester.com/about.

Research and Sales Offices

Forrester has research centers and sales offices in more than 27 cities

internationally, including Amsterdam; Cambridge, Mass.; Dallas; Dubai;

Foster City, Calif.; Frankfurt; London; Madrid; Sydney; Tel Aviv; and Toronto.

www.forrester.com

mailto:[email protected]

SWOT_The Evolution Of Indian IT Service Providers Into Business Technology Competitors

Documents

Transcript of SWOT_The Evolution Of Indian IT Service Providers Into Business Technology Competitors