Indian IT services firms are strengthening consulting practice: Experts

For decades, Indian IT services firms have been seen as not so strong in the consulting space as compared to Accenture, IBM and Capgemini

As new technology services emerge as the area of focus for global IT (information technology) industry, with clients increasingly demanding customised solutions, Indian IT services firms are strengthening their consulting practice.

The role of consultants is crucial in the IT outsourcing industry, as they are the ones who are instrumental in understanding the customer pain points and prescribe best solutions. For decades, Indian IT services firms have been seen as not so strong in the consulting space as compared to their global counterparts like Accenture, IBM and Capgemini among others. However, they are fast catching up by not only hiring external talent but by acquisitions of consulting firms to build up capabilities in this space.

“The idea that Indian IT companies are weak in consulting has to be done away with as that is no longer the case. Since the last recession got over, Indian IT firms have been steadily acquiring skills in consulting and change management areas to augment in-house capabilities,” said Hansa Iyengar, senior analyst at London-based Ovum Research. “Today, all the leading players have well-defined consulting and change management offerings that can cater for demands of digital transformation programmes across verticals.”

Experts say the main reason for the perception that domestic players are weak in consulting area is because of all big players don’t provide revenues from this segment separately. However, recent acquisitions and hiring reflect the aggressive efforts these IT firms are putting in to build the practice.

Infosys has hired former Cognizant executive Mark Livingston as its head of the consulting business. Under chief executive officer (CEO) Salil Parekh, the Bengaluru-headquartered firm has also done two acquisitions last year, which are aimed at building the consulting practice. While in April, the company acquired the US-based ad agency WongDoody for $75 million, followed by $76 million buyout of Fluido, a Salesforce consulting partner in the Nordics region.

“The recent acquisitions that Infosys has made in this (consulting) area are proof of the commitment that the IT firm is making to build a successful consulting business,” said Peter Bendor-Samuel, founder and CEO of global research firm, Everest Group.        

Apart from Infosys, market leader TCS, Wipro and HCL Technologies have done several small acquisitions to build up capabilities in this area. Last year, TCS had acquired the BridgePoint Group to strengthen its presence in financial services segment.

Similarly, Wipro last year had had acquired Australian design consulting firm Syfte. A year before, the Bengaluru-headquartered firm had also acquired business strategy consultancy firm Cooper Software. In March, another IT services player HCL Technologies acquired Strong-Bridge Envision (SBE), a US headquartered digital transformation consulting firm, for $45 million.

While domestic IT services players go aggressive on acquiring small firms in consulting area, some experts say hiring talent with consulting experience will facilitate faster capacity building than acquisition.

“Indian majors need to add more consulting talent and this cannot be achieved simply by retraining their army of project managers. Also, as there are limited opportunities to acquire consulting firms, (hiring talent will be more effective),” said Phil Fersht, CEO of US-based HFS Research.