Indian consultancies are increasing their pursuit of their Western competitors, and are experiencing similar outsourcing issues.
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While market share and strong revenue numbers continue to propel North America--headquartered consultants, Asian providers like Infosys Technologies, Tata Consulting Services (TCS), and Wipro Technologies continue to make inroads into the CRM market as recent merger and acquisition activity, North American hiring sprees, and market reports continue to underscore their growing market presence.
The Gartner Magic Quadrant for CRM Service Providers in North America, released in April, highlights this trend. While the leaders quadrant was populated with the usual suspects, such as Accenture, Capgemini, Deloitte, and IBM Global Services, the challengers quadrant was predominately led by Southeast Asian service providers: Infosys, Tata, and Wipro. In addition, many of these offshore pure-play service providers continue to grow their CRM service revenue at rates exceeding the market average, albeit from smaller revenue bases, according to the report.
This growth comes as a result of a deepening focus on vertical expertise, cost savings, and CRM domain know-how, all of which are producing a greater value proposition to end users. "It's the confluence of a lot of hard work," says Matthew Goldman, Gartner research vice president and author of the report. "These service providers have been improving domain expertise for years--now it's starting to pay off."
Specifically, partnerships with CRM vendors such as Oracle and Salesforce.com have allowed these service providers to develop and offer software solutions and implementation services at a lower cost than many American service providers could have, thanks to the advantages associated with offshoring. In addition, these Asian providers are expanding their vertical expertise. In May, Tata launched a new business unit called TCS Financial Solutions to further consolidate its comprehensive suite of financial products and services into what the company calls a single, market-facing business unit. "They're starting to blend their domain expertise and vertical know-how into packaged services just like the big consultancies," says Bill Band, principal analyst at Forrester Research. "And they're gaining market share because of it."
This turn of events is somewhat ironic, given the recent trend by companies to consider nearshoring to mitigate the long distances, time-zone changes, and energy-draining jet lag associated with offshoring.
But Wipro and others are bucking the trend by expanding beyond India's borders. In June, Wipro partnered with U.S.-based IDeaS to tap consulting opportunities in the hospitality industry by offering loyalty management, customer experience, and Sarbanes-Oxley compliance, and began scouting U.S. locations and employees for two big software writing centers. Tata's new Financial Solutions unit will have offices in Beijing, London, New York, and Zurich, among others. "They're moving more of their resources onshore into the U.S. and parts of Latin and South America," Goldman says. "It's offshoring, but in reverse, so to speak."
This tactic is playing out well in the market, since CRM solution implementation services are usually the most expensive component of a CRM initiative. To help mitigate these costs, buyers continue to leverage global delivery models when shopping and purchasing consulting services, blending onsite, nearshore, and offshore capabilities, the report says. A recent Gartner study of 149 CRM initiatives in North America revealed that 46 percent of projects involve the use of offshore resources, up from 33 percent from a similar study in 2006. "They're playing their cards right," Goldman says, referring to the foreign firms. "And having a proven track record doesn't hurt either. The more at-bats you have, the bigger the customer you'll attract."
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