The Hindu : Karnataka News : Size does matter: Bangalore’s BPO godzillas prove IT Business sense

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Karnataka

Karnataka

Size does matter: Bangalore’s BPO godzillas prove IT Business sense

The heavy weights have IT all sewn up. The top three Indian players in the business of providing off-shore Information Technology services for outsourcing companies, have cornered almost half the total business — 46.6 per cent to be pricise. All three — TCS, Infosys and Wipro — have a major presence in Bangalore.

The “Next Three” — Cognizant, HCL and Satyam — manage to weather it, because each has at least one core strength, be it enterprise applications, infrastructure and R&D or insurance/healthcare verticals.

But for the rest, spreading their talent too thin across multiple business specialities means their operating margin for each service line is too small for them to plough back money into the business.

These are the findings of a study that analysts Forrester shared with the media here last week. It is based on the just-published annual balance sheets of dozens of Indian IT services players. “Offshore clients increasingly ignore tier-3 players except in small pockets,” said Sudin Apte, Forrester’s senior analyst for sourcing and vendor management. The successful ones are those such as Tech Mahindra, who specialise in one vertical like telecom. Having clients “all over the map” will be a bad strategy for smaller players. While every one’s revenue-per-person is under pressure, the biggies can weather it, but for others, the revenue will soon be unviable, Mr. Apte suggested. It has been fashionable for some time now to stress the huge opportunity that global business process outsourcing (BPO) offers to Indian companies. Such rosy scenarios have made much of the so-called march to two or three-tier cities.

The Forrester study comes as a dash of cold water whose cold logic seems to say: Sorry guys, Darwin had it right, only the fittest survive in the BPO jungle. And as the catchline to the film “Godzilla” said, Size does matter.

End of a spice-y affair

The buyout by Idea Cellular of the Modi stake of nearly 41 per cent in Spice Communications, means the sad end for yet another of India’s pioneering mobile phone service brands. It is an end that will have special impact in Karnataka, because the State was the crown jewel in the Spice telecom business: The only other geography served by Spice was Punjab.

Interestingly, Spice customers in this State said they were well satisfied with the service. A survey by IDC in 2006 showed that only one Indian service provider could attain the satisfaction index of 95 per cent set by the Telecom Regulatory Authority of India. That “King of the Ring” as IDC called it, was Spice.

In Barcelona, earlier this year, Spice made a huge splash at the Mobile World Congress, launching worldwide, some of the most innovative handsets — like the first-ever phone with a Braille keypad and another called the MoviePhone which stores nearly four hours of on-the-move filmi entertainment.

Spice Chairman B.K. Modi never seems to take his hat off even indoors, welcomed his most high profile visitor to the Spice stand at the exhibition — the leader of the rave hip hop music group Black Eyed Peas who writes his name as will.i.am and prefers to keep his head covered.

Even after the sell-out of the Spice service, the phone manufacturing business remains with the Modi group so the Spice name, so familiar to Karnataka cellular users, may yet live on.

ANAND PARTHASARATHY

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