Twitter
Advertisement

In IT consulting, Indian firms lag global peers

Latest News
article-main
FacebookTwitterWhatsappLinkedin

The prolonged global economic slowdown is now affecting Indian software firms’ IT consulting business, not just outsourcing, their mainstay, according to JP Morgan.

But globally, consulting business, which contributes around 10% to the overall IT services market, has been growing faster than traditional IT services, according to technology research firm Gartner.

Sanjay Dhawan, leader of the technology practice at consulting firm PwC, said, “While consulting has not stopped growing, it has definitely slowed down.”
Consulting, he said, is largely a part of discretionary spends. In the current global scenario, companies are selecting only consulting providers with a proven track record. So, instead of an Infosys, an Accenture may be preferred.

“Projects are fewer, and hence, consulting needs are fewer. Since Indian IT players have traditionally viewed consulting as a value add-on to their IT offerings rather than a separate business,  they do not have expertise in consulting like, say, Accenture,” said Dhawan.

In a note on Monday, Viju K George and Amit Sharma of JP Morgan, said that in the domestic setting, consultants tend to be “tightly integrated” into an organisation, which may also be a disadvantage, especially considering that organisations today may not necessarily choose the same firm for consulting as well as outsourcing.

Cognizant seems to be an exception to its Indian IT peers: its consulting business, staffed by 3,500 consultants, has been growing robustly, contributing some 7% of revenues. This may well be because the business is domain-specific, small in size, typically in emerging sub-segments like process, operations, risk, regulation and newer technology architectures like cloud, said the JP Morgan duo.

“Wallet share of consulting has gone down, so more and more of this work is being done offshore or outside India, even in the BPO (business process outsourcing) space. In tough times, domain experts catering to specific client needs are needed, and Indian IT firms haven’t yet reached there. The next one-and-a-half to two years will continue to be a struggle till the economic hurdles in the US and Europe bottom out, and consulting will continue to be adversely impacted,” said Samiron Ghoshal, partner and IT advisory practices leader at Ernst&Young.

However, considering the single-digit contribution of consulting to software firms’ revenues, the slowing demand may not impact them much.

Find your daily dose of news & explainers in your WhatsApp. Stay updated, Stay informed-  Follow DNA on WhatsApp.
Advertisement

Live tv

Advertisement
Advertisement