On August 31
2002, Prayag Consulting completed one year of operations.
The first year has been busy and exciting- we have
enrolled clients at the rate of almost one a month across
the breadth of categories- IT products, IT services,
BPO and call centers and VCs who fund technology
companies. We have done a variety of engagements
ranging from diversification to new technology businesses,
growth strategies for mid-sized companies, implementation
of marketing programs and initiatives, and studying
the efficacy of offshore models for specialized
buyers. Prayag's clients have found our pragmatic
and implementation focused approach refreshing.
We are proud that this has resulted in long-term
relationships with most of our clients.
Coinciding with our first anniversary, I am pleased
to unveil the inaugural issue of "Confluence",
Prayag Consulting's bi-monthly newsletter. What
does Confluence hope to achieve? As the name
suggests, Confluence is intended to serve as meeting-point
of ideas of industry thought leaders, a forum for
sharing of best practices, emerging trends and business
models in the high technology industry.
In this issue, we are privileged to carry an interview
with Mr. Kiran Karnik, President of NASSCOM along
with a best practices feature on Wipro Technologies'
program. In the last year, we have closely watched through the eyes
of our clients, the dramatic shift in the dynamics
of the global IT industry. From a demand viewpoint,
the size of the offshoring pie is increasing - larger
deals are flowing offshore, and more companies are
considering this option. We believe that the increase
in volume will compensate for the reduction or stagnation
in prices. While the large deals will be shared
by the Tier I companies, US mid sized companies
would be looking for right-sized partners. Recent
reports indicate that the SMB segment in the US
will lead the recovery of the economy and herein
lies the opportunity for mid-tier IT companies.
Mid sized corporations (the SMB segment) as they
are called, are a great target- many of these may
have never offshored before, and hence a good amount
of education on the concept of offshoring would
be necessary.
The second opportunity we see is from divisions
of Fortune 500 corporations that have never offshored
before, who are now willing to be persuaded. These
divisions are extremely good targets because of
potential for long term relationships, large budgets,
and their reticence to go with larger players as
they need a lot more personalized attention. We
have come across a few situations in recent times,
where larger companies have preferred to evaluate
mid sized offshore partners.
Yet another opportunity is to tie up with mid-sized
local US IT vendors to provide back-end capabilities.
We hear that many of these companies are under pressure
from their customers to lower costs and are tying
up with offshore vendors to achieve this. There
are deals that are in the making of this nature,
and more will follow. This kind of relationship
also has potential to assume more strategic dimensions,
possibly even leading to mergers/acquisitions.
All this implies that IT companies need to invest
more in sales and marketing. Intelligent targeting
of a wider set of prospects will mean some
outlay in specific programs aimed at increasing
the sales pipeline. While companies need to be prepared
for some increased investment in S&M, we also
believe that the time has come for collaborative
joint marketing programs. If 3-4 mid sized companies
with reasonable complementarities of offerings form
a consortium and embark on joint-marketing initiatives,
they can increase their reach while pegging down
costs.
Innovative and creative thinking, matched by relentless
execution, will characterize the companies that emerge
successful through this realignment period.
