Cognizant adding consulting offering, can they deliver where others have failed ?
DATE: March 15th, 2010
Came across an article on Cognizant looking to go ‘three in a box’. Adding consulting services to their suite of offerings. Their currently trademarked (hmm..) ‘two in a box’ model talks about two areas of focus – customer and delivery. Cognizant which has been solely focused on offering IT Services has benefited from their focus and grown at a higher pace relative to their peers. They have in the past tried to add BPO business line but never really succeeded. Past year Cognizant did make a serious foray into BPO services and IT infrastructure services by acquiring UBS Captive in India. The CEO of Cognizant has reiterated in their earnings call that they are looking at BPO and IT infrastructure as a growth engine and will be focused on these services. Their sales team are realizing that getting deeper within existing clients is easier with newer offerings than acquiring new clients and these additional services give them those tools. Their 2009 performance was better than their peers and they are looking at ways to leverage the improving market conditions to offer additional services.
As part of their growth strategy, Cognizant is also looking to get into a service offering which has so far alluded Indian vendors who continue to build strong delivery capabilities. Infosys was the first one to get into it and it is almost there for the last so many years, Other likes Satyam bought expertise by acquisiitons while still other like TCS and Wipro have been shuffling management to build it organically. Yes, you got it right , it is the CONSULTING business. A seat at the table in the C-Suite besides the CIO. Onshore higher billing rate where customers get business transformation advice and not just low cost , commoditized offshoring option. A number of BPO firms such as Genpact, WNS, pure play BPO players and who have access to the CFO organizations more than the CIO organization have been trying the transformation, six sigma, process improvement consulting route.
Last 18 months, with the market crisis though number of vendors retreating back into their core base of cost saving offerings and building consulting businesses was on the backburner. The industry consultant like Accenture, Deloitte, IBM suffered a loss in consulting businesses as their outsourcing businesses were steady.
The reality with consulting services for India based vendors is that overall it still gets a poor grade when compared to the other offshore delivery based businesses they have been able to build over the past years.
On the other hand a number of the consulting organizations have been able to build delivery capabilities in par or better than the Indian vendors and have been able to extend their model from consulting to global delivery.
Why have Indian vendors failed to building consulting businesses ?
Here are some possible reasons why:
- Building customer centric relationship, branding and winning mind share is harder to do relative to building delivery capabilities. Not to undermine the effort required to build a solid delivery capability organization. That is essential part of the execution. A number of the Indian vendors have been very focused on building delivery organizations.
- Indian firms want it but not willing to let go. Indian firms are still very centralized organization operating from India. Vendors have been un easy to let go of the centralized control within India to a more decentralized model and change their customer interaction model to be truely effective.
- Once a low cost vendor always a low cost vendor. Initial perceptions are hard to change within organization. If a vendor has sold themselves as the best low cost provider, hard to sell the same up the chain now as a business transformation expert. Firms which have hired outside help to do so find that integrating that is a harder task than buying expertise. If you walk like a duck, sound like a duck you are duck. You can wear a suit but now you are still a duck in a suit!
- Limited influence of Technology as business transformation leader. Despite all the progress in ‘CIO bill of rights’ within organization to move up the value chain, there is still a lack of influence technology organizations have in the overall company business decisioning process. So a CIO who may love his vendor and their delivery and ready to recommend it to the board has a tough time convincing the senior leadership that the vendor or their own organization can provide business transformation expertise (Is the CIO still considered running a cost center ? Capgemini has an interesting take on this in one of their recent CIO studies).
Will Cognizant be more successful in doing so ? It will be interesting to see how that works out. What Cognizant has been able to do better than their peers is building a more solid customer focused organization along with building their delivery capabilities. The go to model for Cognizant on how they balance their client partners which are owners of relationship with their customers and introducing Consulting Services which are primarily client facing and primarily onsite delivery teams have to be balanced to meet the customer needs. Given that Cognizant has typically worked with the CIO organizations, moving into other services such as BPO, consulting will require access and close interaction with CFO, COOs across the organization.
Picture Source: The Hindu
Cognizant has hired Mark Livingstone an ex-AT Kearney consultant, to take the initiative forward and reading what he is saying about how to make this work , looks like Cognizant is committed to make this work and ready to provide sponsorship. Their timing might not be bad too with the recovery slowly taking shape. If they can they deliver and continue their higher level of customer experience they have been able to provide with their existing model and keep that experience going they have a good shot at being the last to enter but first to make it work.
Question
If you are a company doing offshoring today would you consider using your offshore vendor to provide you business consulting services ? Reply to msharma@corrystone.com
Mohit Sharma is the CEO of Corrystone Global Partners. Corrystone is a specialized globalization firm providing advisory, education and staffing services to firms in US and India. We work with firms in the US which are exploring low cost options for IT, Business Process work and looking at ways to further optimize cost and manage operational risk. For firms based in India we help with marketing presence , M&A & client management services in the US. Contact us at info@corrystone.com to learn more about how we could help you.
SOURCE: EconomicTimes
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