Local IT firms lag on branding quotient

2010 was a year when the domestic information technology (IT) services firms rebounded and logged in high growth rates. Curiously, though, the same year saw the brand rating of the three local tech majors - Tata Consultancy Services (TCS), Infosys Technologies and Wipro — fall.  

TCS’ rating dipped from AA+ in 2009 to A last year, Infosys’ from AA- to A and Wipro’s from AA+ to A+.

While underperformance in terms of number of intellectual properties (IPs), R&D spend, customer investment philosophy, ability to drive mindshare and visibility did play a role, brand experts say historically brands of IT vendors never did carry much weight.

This is unlike their overseas counterparts like IBM and Accenture in the developed market, which have rigorously built their brands by pumping in large proportion of their profits into it.

And under-investment in branding has, in some ways, come in the way of Indian tech firms’ customer mining, said Unnikrishnan, country manager of brand valuation firm Brand Finance.

“Our three IT biggies have not differentiated themselves in terms of services they offer or their strengths. They are mere clones of each other. They have to realise that unless they invest in their brand, it will be tough (for them) to survive in the long term,” he said.

Lower spend of local tech firms on branding is reflected in brand value, which is way below their multinational rivals.

As per Brand Finance, the brand value of TCS, Infosys and Wipro was $969.6 million, $399.7 million and $553.3 million, respectively in 2010.  None of them are anywhere close to IBM’s brand value of $86 billion.   

Mary A Garrett, vice-president, marketing and communications for industries, small and medium businesses, IBM, said the company has built its brand equity by putting a disciplined brand system in place over the years. And the US firm has promoted its brand in every market that it operates in.

“A company needs to brand itself locally so that people can connect with it,” she said at an IIM-B function recently.
In fact, when recession hit economies around the world, IBM chose to go ahead with its ‘Smarter Planet’ campaign and results are there for everyone to see.

In 2010 IBM’s brand value surged 30% to $86 billion over 2009. Garrett says the mantra is simple: “recession or no recession invest in brands to gain customer loyalty.”

Indian outsourcing vendors seem to have a different mindset than Garrett’s. In their view, any promotional endeavour on their part would mean they would be commoditising their services.  

“We can’t paste hoardings all over. Our company is not into producing consumer products. We are mainly a B2B (business to business) brand. People in our business are very much aware of our company and its achievements,” said a senior executive of a leading Indian IT company, who did not want to be named.

Brand Finance’s Unnikrishnan said it was this inhibition of local tech vendors to spend on branding that has kept their ratings low.
Largest IT services firm TCS said branding was important to them and they are investing in the right channels to address their audience.

“Fundamentally, TCS is a globally established B2B brand that sells to large organisations. This means the channels we use for brand building are more focused to this audience. We continue to invest and build the brand in the multiple markets we operate in,” said a TCS spokesperson.

Srinivas Prakhya, IIM-B marketing faculty, believes other Indian tech companies also need to push their brand in a similar way to tighten their grip on the market.

“Wipro, TCS and Infosys till now did not have to invest in branding because their experience was their biggest brand. But they can’t sit on past laurels. With Cognizant fast catching up, they have to bring in that something extra. For instance, we all know Bosch is good in auto parts. So Infosys needs to figure out that one thing in which it is ahead of its peers,” said Prakhya.