Integrated consulting leads the way for IT firms

Information technology (IT) consulting is finally coming of age in India with domestic IT companies reporting significant increase in consulting revenues.

Indian IT companies today offer the complete spectrum of consulting services from diagnostics up to implementation of solutions.

Satyam Computer's consulting arm, for example, has reported a 100 fold increase over the last five years from its consulting business.

Infosys' revenues from consulting has increased to Rs 109 crore in 2002 from Rs 14 crore in 2000. As a percentage of the topline, it works out to 4.2 per cent in 2002 from 1.6 per cent in 2000.

G B Prabhat, director, Satyam Consulting and Enterprise Solutions division, Satyam Computer Services, said, "From around Rs 2.5 crore in revenues from the consulting business in 1998, we have grown 100 fold today."

Wipro Infotech, claims that its consulting services offering has matured to a level where the line dividing the likes of Wipro with pure play consultants such as Ernst & Young is losing relevance.

Wipro Infotech's head of consulting services division Dr Anurag Srivastava says, "We are looking at doubling our consulting revenues during the current fiscal."

According to Srivastava, the consulting component in the total solution including hardware and implementation is around five to seven per cent of the total cost.

"This five to seven per cent is more or less an universally applicable number and is not just specific to Wipro."

Cognizant though does not share details for revenue from business segments said, the company uses consulting as a entry point to 'mine' for big business.

R Chandrasekaran, senior vice-president, Cognizant, said, "For us, consulting is a well-integrated, entry strategy into large customers. Typically, this strategy results in a 10x or more revenue in the form of application development, application maintenance and e-business."

He added that consulting at Cognizant includes both business-technology consulting and high-end technology consulting.

Business-technology consulting refers to solving customers' business problems leveraging technology.

High-end technology consulting refers to thorough understanding of the entire technology investments that a customer has made and providing an IT roadmap or technology blueprint.

Jan Desmet, head of International Business Consulting Services at Infosys Technologies, said, "Our success in consulting is also our expertise and experience in the Global Delivery Model (GDM)."

GDM is a process, which is a at CMM Level 5 and is continuously honed, improved and simplified over the years.

Desmet said that Infosys' business model, allows the company to generate a 30 per cent operating margin, even when the offshore rates may be 50 per cent lower than onsite rates.

He added that there has also been a significant shift in the onsite-offsite ratio. Revenue wise, onsite was 54.1 per cent for the quarter ended September 30, 2003 compared with 56.2 per cent for the previous.

"Our offshore revenues have gone up to 45.9 per cent for quarter ended September 30, compared with 43.8 per cent for the quarter ended June 30," he said.

Prabhat, however, said that India needs to gear up on churning out more good quality management students to maintain the momentum in attracting consulting business into the country.

"While our strength on the IT front is obvious, we churn out less than a sixth or seventh of the number of management professionals that the US does."

Prabhat said that Indian consulting firms are yet to be a serious threat to international consulting firms, but the fact that Indian firms are picking momentum in the international arena is something difficult to ignore.