Mid-size IT firms stay ahead on niche focus

The IT firms are focusing on growth of digital technology services by creating platforms

Mid-size information technology (IT) services firms have started pushing for digital technology services to remain competitive and achieve higher revenue growth. 

Mumbai-based $500-million Hexaware Technologies claims it has a dedicated strategy to beat large peers in winning deals using digital service expertise such as customer experience transformation, migration of business operations to cloud, and marketing and sales-force transformation initiatives. 

“Hexaware’s Shrink IT strategy is centered around taking market share away from larger, legacy players in the industry. We announce at least two deals every quarter, where we have won customers either from top-three legacy players, or against several top-five legacy players,” said R Srikrishna, chief executive officer, Hexaware Technologies. 

Large IT services players such as Wipro, Infosys, TCS, HCL Technologies, and Tech Mahindra still have digital technology services making up to 17 per cent to 22 per cent of the total revenues. Not all of their efforts to turn services digital faster have paid off yet. 

Some of them claim while they are focusing on growth of digital technology services by creating platforms, many legacy software maintenance services have also been automated using digital technologies such as artificial intelligence and machine learning. So, digital technology growth also means adding a layer of new-age technology to some of the traditional practices. 

For $340-million Pune-based Persistent Systems, digital technology and IP-based services together account for about half of the revenue; while it gets about 30 per cent from IP-based service offerings.

“Through our digital services, we help customers in their digital journey to become a software-driven business, from building data and API (application programming interface)-based platforms, that are the foundation of a digital business, to navigating new transformative technology waves such as internet of things or blockchain.

Our engagements with USAA and Partners HealthCare are proof points of how we are able to co-create and innovate together with industry leaders using non-traditional engagement models,” said Sudhir Kulkarni, president, digital, Persistent Systems.

Persistent said it competes with larger IT rivals on digital technology offerings. 

IT services through digital technologies such as cloud are “more of a consumption business and not a capital expenditure business” and, hence, it ensures faster turnaround for mid-size and small IT firms, said Sanchit Vir Gogia, chief executive officer and founder, Greyhound Research. 

“Companies such as Persistent and Hexaware are right-sized and do not have large legacy services. Therefore, it is easy for them to transform. Large IT players have created perceptions among customers as traditional long-term software services providers and it will take time to break such perceptions. However, mid-tier firms have always had speciality areas and changed themselves faster,” added Gogia. 

CSS Corp said a significant portion of its investments this year has been “focused on building technology solutions using artificial intelligence (natural language processing infused chatbots, voice-based interfaces, etc), analytics, automation, cloud and digital, and these are opening up new revenue streams for the company”.

“The good part about new-age digital technologies is that it puts most providers on an even keel. There are several examples where our customers chose to work with us in the presence of larger IT peers because of the overall value proposition, innovation and flexibility we brought to the table,” said Nishikant Nigam, chief delivery officer, CSS Corp. 

The company manages digital marketing operations of a global fast-moving consumer goods company.

Competitive

• Mid-tier IT firms beat many large peers with niche digital tech 
• Persistent Systems, one of the mid-tier IT firms, earns 50 per cent revenue from digital
• Small size helps such firms in fast implementation, say analysts