According to the Everest Group, Indian IT outsourcing suppliers continue to invest in consulting capabilities — in spite of the fact that this strategy has yielded minimal returns globally.
Although IT consulting services often lead client companies toward outsourcing, Everest Group’s study found no evidence to suggest that outsourcing suppliers with consulting practices perform better than suppliers without consulting units. But the study did find that the Indian suppliers have been acquiring or building consulting practices. It estimated at least nine acquisitions targeted at obtaining consulting capabilities during the years 2007 and 2008. These were carried out by Indian outsourcing suppliers like HCL and Patni.
The study, which has categorised the IT consulting market in terms of size, segments and models, has analysed the link between drivers of IT consulting and IT outsourcing. Through the study, Everest has estimated that the total IT consulting market is U.S. $116 billion with package implementations driving nearly 40 percent of engagements.
IT outsourcing suppliers are establishing consulting practices or acquiring consulting companies, according to the study. The research group found that while some U.S. multinational suppliers are implementing this strategy, Indian outsourcing suppliers have been more active over the past five years — and are projected to continue building or enhancing consulting capabilities.
Acquiring a consulting practice does not always ensure an outsourcing deal
However it was also found that providing IT consulting and supplying outsourcing practices did not necessarily translate in to a win-win situation. Not all enterprises opted for the outsourcing supplier who also offered their consulting services. Everest found that the ‘disconnect’ is because suppliers with consulting practices have not been able to grow their outsourcing revenues to go beyond their competitor’s suppliers that have not invested in consulting services. Another reason behind the disconnect is the lack of trust and conflict of interest between the buyer and supplier.
There are benefits — if handledcorrectly
However, buyers and suppliers can benefit from the combined consulting and outsourcing models if a set of rules are followed — the consulting and outsourcing engagements should be treated as separate relationships. Each engagement should have its own strategy and suppliers must separate its two services within the organisation so as to maintain integrity on client projects.
Source:http://www.cxotoday.com/India/Market_Scan/Indian_IT_Outsourcing_Players_Invest_in_Consulting/551-108699-1009.html
