Cognizant—HFS Blueprint Report: Software Product ...engineering services market across the value chain for new product development, product sustenance, product ... and adopted the

Proprietary │Page 1© 2018 HFS Research Ltd.

Defining future business operations

HFS Blueprint Report

Software Product Engineering Services

Pareekh Jain, Senior Vice President; Tanmoy Mondal, Senior Research Analyst

August 2018 | Authors:

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Topic Page

What you’ll read

Executive summary

Research methodology

Market data analysis

Service provider grid and profiles

Market direction and recommendations

Key market dynamics

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About the authors and HFS 64

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» The HFS Blueprint Report: Software Product Engineering Services applies the HFS Blueprint methodology to the software product engineering services marketplace. This HFS Blueprint Report reviews the software product engineering services market across the value chain for new product development, product sustenance, product testing, product deployment, product support, and product management services.

» This report includes profiles and assessments of 25 service providers of software product engineering services.

» Unlike other quadrants and matrices, the HFS Blueprint identifies relevant differentials between service providers across a number of facets in two main categories: innovation and execution.

» For this report, HFS has increased the attention paid to innovation criteria in particular, and adopted the new 2018 Blueprint Grid layout to assess service providers. This grid now recognizes up-and-coming service providers (High Potentials) that score higher on innovation criteria than on execution criteria as the providers build these practices. This is in addition to the existing rankings for highest overall performance (Winner’s Circle) and strong combined innovation and execution performance (High Performers).

Introduction to the HFS Blueprint Report: Software Product Engineering Services

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HFS engineering services coverage

Mechanical engineering

Embedded and semiconductor engineering

Software product engineering

Product lifecycle management services

Industry 4.0 and smart manufacturing services

Serv

ice

lin

es

Tele

com

Med

ical

de

vice

s

Au

tom

oti

ve

Aer

osp

ace

Industry verticals

Comprehensive and unvarnished coverage that allows clients to make smart decisions about the rapidly evolving engineering services market

» Repository of 50+ research reports including Blueprints, PoVs, and Market Analyses

» Coverage across 200+ engineering services providers

» Database of 2,000+ (and expanding) engineering engagements» Research methodology driven by tales from the trenches » Experienced team of practitioner analysts

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HFS definition: Software product engineering services value chain

New product development

Product sustenance

Product testing Product deployment

Product support Product management

» Ideation and

conceptualization

» Architecture

» UX design

» Prototyping

» Core development

» Product

reengineering

» Maintenance

» Enhancements

» Change

management

» Localization

» Unit testing

» Functional

testing

» Non-functional

» Build and

release

management

» Customization

» Documentation

» Data migration

» Helpdesk

» Technical

support

» Upgrades

» DevOps

» Developing

product roadmap

» Managing product

user groups

» Customer

relationship

management

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Executive summary

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» Software product engineering transformation by digital technologies: ISVs and internet companies are transforming their product and services portfolio with the emerging digital technologies. Enterprises are also building their own digital platforms. This transformation is shaping the future technology landscape of software product engineering, opening up opportunities, and posing new challenges. Service providers need to build capability to conceptualize these technologies and application of the same in the client business landscape.

The 10 key trends driving the software product engineering services market are as follows:

Key highlights: State of the software product engineering services market

1. Co-investment model-based engagement

2. Consolidation of outsourcing partners

3. Focus on consulting

4. New business model

5. Focus on strategic outsourcing

6. Exploring new geographies

7. Increasing influence of digital technologies

8. Expertise in domain knowledge

9. Exploring enterprise segment

10. IP sustenance deals

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» Different software product engineering approaches by service providers: The 25 service providers we evaluated for this Blueprint approach this market in two ways: (1) the pure-play engineering service providers that primarily cater to the ISV customer segment; (2) service providers with strong IT offerings catering to wider market of ISVs, internet companies, and enterprises.

» Emerging technologies in software product engineering: New technology areas such as DevOps, agile, and other digital technologies are influencing different areas of software product engineering for better business outcomes including less time-to-market, cost reduction, and better customer experience.

» Challenges in software product engineering services: Some of the challenges in software product engineering services are the following:

• Advanced digital technologies are transforming the software product engineering space. The challenge for the service providers is to invest in artificial intelligence, automation, and other technologies to develop a solutions portfolio, build resource capability in these next generation technologies, and create a robust partnership ecosystem.

• Clients are becoming more cost conscious and renegotiating rates with expected quality services as well. The requirement of onshore resources is increasing, in part due to less time-to-market for products and implementation of emerging technologies. This has increased the cost burden of the service providers and started to impact margins.

Key highlights: State of the software product engineering services market

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Research methodology

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» Tales from the trenches: Interviews

with buyers who have evaluated service providers and experienced

their services. Some contacts were

provided by service providers, and others were from interviews

conducted with participants in global

market research studies.

» Sell-side executive briefings:

Structured discussions with service

providers regarding their vision, strategy, capability, and examples of

innovation and execution.

» Publicly available information: Thought leadership, investor analyst

materials, website information,

presentations given by senior executives, industry events, etc.

This report is based on

Blueprint research methodology

Data summary

» Data was collected in Q1 2018 and Q2 2018, covering buyers, providers, and advisors/influencers of software product engineering services.**

» More than 1,000 data points were collected, covering 25 major service providers.» Revenue distribution of industry, value chain, and solutions is estimated by HFS.

Service providers mentioned

**The data for GlobalLogic, Luxoft, and Pactera are estimated by HFS.

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Software Product Engineering Services Blueprint scoring percentage breakdown

Execution 100%

Quality of customers and customer relationships 20%

Solution and delivery capabilities 40%

Geographic spread and scale 20%

Applicability to different segments 20%

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Execution criteria definitions

Execution How well does the service provider execute on its contractual agreement? How well does the provider manage the client-provider relationship?

Quality of customers and customer relationships

How engaged is the executive and management team in defining and managing the delivery of business services? What is the scale of client engagements? How many software product engineering customers have an ACV of $5 million or more? What is the quality of service providers’ clients? How many of the top 10 ISVs, top 100 ISVs, and top 25 internet companies are convinced of the service providers’ capabilities? How strong are the customer relationships? How many clients’ relationships are five years old or older?

Solution and delivery capabilities

What are the clients’ and the market’s overall impression of the quality of service across the value chain from the service provider? How deep and wide is software product engineering solution expertise across value chain and customer segments? Is the delivery capability widespread across the value chain? How are delivery capabilities developed and nurtured?

Geographic spread and scale

How does this service provider use a global delivery footprint to meet clients’ needs? Do service providers have the scale to make investments in delivery? How do their spread and scale compare with the industry?

Applicability to different segments

How deep is the expertise in delivering solutions across different types of segments, such as vertical ISVs, technology ISVs, enterprise platforms, and internet companies? How are the solutions applicable to different geographies? How are the software product engineering solutions applicable to different customer sizes? How does their segment’s mix compare with that of the industry?

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Software Product Engineering Services Blueprint scoring percentage breakdown

Innovation 100%

Strategy, investments, and ecosystem robustness 25%

Technology, tools, patents, and IP business 25%

Code reuse and automation15%

Pricing and business outcomes measurement15%

Emerging areas (DevOps, AI, SaaS, cloud, etc.) 20%

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Innovation criteria definitions

InnovationHow well does the service provider innovate its offering(s) in response to market demand, client requirements, and its own vision for how the software product engineering services market will evolve?

Strategy, investments, and ecosystem robustness

What is the service provider’s vision for the evolution of software product engineering services? Is there a clear strategy for delivering software product engineering services, and are there identifiable investments in place to realize this strategy today? Do customers rate the services as innovative? Are there examples of innovation in engagements shared by customers and serviceproviders? How is the service provider leveraging the external ecosystem? Is the service provider leveraging thought leadership to educate and influence customers and stakeholders?

Technology, tools, patents, and IP business

What is the role of tools and platforms in the service provider’s offering strategy? Are the selected platforms developed in-house, or are they provided by third parties? Is there a demonstrable intent to maintain and enhance the in-house platforms? What is the role of patents and IP solutions in the service provider’s offerings?

Code reuse and automation

What is the "code reuse" strategy of the service provider? Does the service provider implement its strategies at the project level, at the customer level, or at the company level? What are the automation strategies and offerings across the software product engineering value chain?

Pricing and business outcomes measurement

Does the service provider have a clear understanding of what business outcomes exist for software product customers and how the service provider will deliver these business outcomes using collaborative engagements? How flexible and competitive is the service provider when determining the pricing of contracts? How does the service provider’s pricing mix compare with that of the industry?

Emerging areasHow is the service provider looking at emerging areas? Does it have plans to leverage these emerging areas and integrate them into its solutions? Examples include DevOps, agile, SaaS, cloud, AI, IoT, API, and containers.

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Key market dynamics

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Key trends driving the software product engineering services market (1)

» Focus on strategic outsourcing: Customers are adopting a lean approach to run their businesses. In their portfolios, they are segregating their core and non-core products and functions. Non-core functions and products are outsourced for cost savings and operational efficiency, with a long-term and collaborative engagement with the service providers. Service providers are engaging with the clients for joint investment and go-to-market initiatives in this area.

» Consulting gains new importance: Customers are asking for strategic consulting for product roadmaps to achieve the transition from legacy technologies to adoption of new, cutting-edge technologies. This transition demands a product engineering mindset that includes expertise in organization-wide processes and cultural and operational changes. Service providers are increasingly engaging with their clients as a strategic advisor and implementation partner. In some cases, service providers are partnering with big consulting firms to fill the consulting gap.

» New business model: Customers are trying to reduce cost overhead and engage in unique commercial models with their service providers. As the SaaS model is cannibalizing customers’ traditional product license and revenue channels, they are more becoming more inclined toward nonlinear pricing models. Service providers have also mentioned several examples of outcome-based and risk-reward pricing models for both vertical and enterprise ISVs.

» Consolidation of outsourcing partners: As customers optimize their product portfolio by segregating core and complementary products, they are also consolidating their outsourcing partners to build strategic relationships and sharing their vision to help align growth initiatives. In some cases, clients are outsourcing in bits and pieces, requiring very specific capabilities with constant change in the specifications and project requirements, thus a long-term, 360-degree relationship is essential.

» Exploring enterprise segment: Traditional software product engineering service providers are focused on the ISV segment. Now enterprise and internet companies are building their own platforms. This can be a target segment for the service providers as these companies will be interested to outsource some of the project works.

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Key trends driving the software product engineering services market (2)

» Exploring new geographies: Clients seek to maximize the value of their investment by increasing the penetration of the existing product portfolio in new geographies and adjacent markets. This requires product re-engineering, localization, regulatory compliance (like GDPR), value engineering, and other product enhancing services. We have observed several examples of this type of engagement in which service providers are involved from the initial stage to the post deployment support phase.

» Increasing influence of digital technologies: The technology change agents in software product engineering include automation, IoT, cloud, and artificial intelligence. These technologies are instrumental in the overall customer journey, competitive advantage, user experience, and other business outcomes. Service providers need to develop strong expertise in these emerging areas.

» Co-investment model is becoming popular: Using co-investment-led business models to partner for developing next-generation products is becoming popular in the software product engineering space. We are observing an increasing number of initiatives andparticipation by service providers through this investment model. This partial monetization enables customers to share the risk and reduce up front investment.

» Domain knowledge is the new differentiation: Deep domain knowledge is the differentiating factor in software product engineering services. This can be related to “Industry context”, experience in enterprise tools and platform development. With the advent of cloud computing, micro services, and mobility, deep knowledge in business processes can be a unique differentiator—not only from the business point of view but also from technology perspective. Vertical knowledge is also a critical piece of the puzzle in addressing the vertical ISV segment.

» IP sustenance deals: ISVs are partnering with service providers in IP sustenance deals in which service providers commit some upfront payment on assured business, take full ownership of IP, and invest on modernization and enhancements. These types of deals have the potential to grow in a revenue sharing model.

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Market data analysis

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Market data analysis* of software product engineering services across eight dimensions

* Based on sample: service providers = 22

Software product engineering

services data analysisSolution

segment

Geography

Servicesofferings

PricingWorkforce experience

Training

Onshore vs offshore

Client relationships

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New product development and product testing are the leading services, accounting for more than 60% of revenue, followed by product sustenance services.

According to service providers, the shares of the product sustenance and product support are increasing in the software product engineering service mix.

Software product engineering services segmentation

Current services revenue spread in software product engineering services across the value chain

Source: HFS Research, 2018; sample: service providers = 22

New product development

42%

Product testing20%

Product sustenance14%

Product deployment9%

Product support8%

Product management7%

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ISVs (including technology and vertical) arethe leading customer segment, with more than 55% of the total revenue.

According to service providers, the share of internet companies and enterprise platforms is increasing in the software product engineering service mix.

Software product engineering services segmentation

Software product engineering services revenue by different types of segments


Technology ISVs 37%

Enterprise platforms29%

Vertical ISVs 19%

Internet companies15%

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About 88% of the software product engineering services headcount is either offshore or onshore. Most of the onshore resources are based in North America; the majority of the nearshore resources are located in Europe.

We have observed that few service providers have strong delivery presence in Latin American countries.

Software product engineering services headcount breakdown by onshore, nearshore, and offshore

Software product engineering services headcount breakdown by onshore, nearshore, and offshore

Offshore70%

Onshore18%

Nearshore12%


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North America is the largest market for software product engineering services, followed by Europe.

According to service providers, Europe and APAC have higher growth potential because of growth in enterprise and internet companies segments.

Software product engineering services geographic segmentation

Software product engineering services revenue breakdown by geography

North America69%

Europe19%

Asia Pacific and ROW12%


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The pricing in software product engineering services is predominantly based on time and material (T&M).

HFS' discussions with buyers and service providers indicated a growing demand for more fixed and non-linear pricing.

Pricing for software product engineering services

Software product engineering services revenue breakdown by pricing models

Time and material60%

Fixed price25%

IP-based pricing and other models

15%


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The overall workforce mix is tilted toward senior professionals.

As more emerging technologies are being used, the workforce mix of professionals with three to eight years of experience is becoming heavier. The percentage of professionals with more than eight years of experience may not increase, but the distribution will shift toward DevOps and agile related assignments.

Workforce experience split in software product engineering services

Current workforce experience split in software product engineering services

3-8 years41%

<3 years30%

>8 years29%


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On average, 9% of software product engineering service provider client accounts have more than $5 million in ACV.

There is large variation (0% to 80%) among service providers in their percentage of clients with $5 million+ ACV.

Clients with $5 million+ ACV

Client relationships: Percentage of clients with $5 million+ ACV

< $5 million ACV88%

$5 million+ ACV12%


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Software product engineering service providers spend an average of 90 hours per FTE each year on software product engineering related training. Assuming an average of 2,000 total work hours per year per FTE, this is about 5% of work hours.

Training hours per FTE

Investment in training hours per FTE


Work hours95%

Training hours5%

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Service provider grid and profiles

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Guide to HFS Blueprint Grid

To distinguish service providers that show competitive differentiation across innovation and execution, HFS awards these providers the “HFS Winner’s Circle” designation.

Category Execution Innovation

HFS Winner’s Circleshow excellence recognized by clients in the Eight Ideals in execution and innovation

Collaborative relationships with clients, services executed with a combination of talent and technology as appropriate, and flexible arrangements.

Articulate vision and a “new way of thinking,” have recognizable investments in future capabilities, strong client feedback, and are driving new insights and models.

High Performersdemonstrate strong capabilities but lack an innovative vision or momentum in execution of the vision

Execute some of the following areas with excellence: worthwhile relationships with clients, services executed with “green lights,” and flexibility when meeting clients’ needs.

Typically, describe a vision and plans to invest in future capabilities and partnerships for As-a-Service, and illustrate an ability to leverage digital technologies or develop new insights with clients.

High Potentialsdemonstrate vision and strategy but have yet to gain momentum in execution of it

Early results and proof points from examples in new service areas or innovative service models, but lack scale, broad impact, and momentum in the capability under review.

Well-plotted strategy and thought leadership, showcased use of newer technologies or roadmap, and talent development plans.

Execution Powerhousesdemonstrate solid, reliable execution but have yet to show significant innovation or vision

Evidence of operational excellence; however, still more of a directive engagement between a service provider and its clients.

Less evident vision and investment in future-oriented capability, such as skills development, “intelligent operations,” or digital technologies.

Strong capabilities or mature offering—presence of offerings in the majority of subcategories, > $ 10 million revenue

Developing capabilities, $1‒$10 million revenue

Yet to develop or minimal, < $1 million revenue

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Cornerstone

SAP SuccessFactors

Infor

UltimateSoftware

KronosRamco

WorkdayOracleUnit 4

INN

OV

ATI

ON

EXECUTION

Excellent at Innovation and ExecutionInvesting in Innovation to Change

Building All Capabilities Execution Is Ahead of Innovation

HFSWINNER’S

CIRCLE

EXECUTIONPOWERHOUSES

HIGHPOTENTIALS

HIGHPERFORMERS

MindtreeWipro

Altran

Cybage

Luxoft

EPAM

HCL

Belatrix

Pactera

Persistent

Tech Mahindra

Infosys

Accenture

ThoughtWorks

HARMAN

TCS

Tieto

ALTEN Calsoft Labs

QuEST Global

CognizantXoriant

ITC Infotech

GlobalLogic

HFS Blueprint Grid: Software Product Engineering Services 2018

Happiest Minds

Mphasis

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AccentureA leading global service provider with strong investment commitment and focus on consulting, implementation, and support for software product engineering services

Blueprint Leading Highlights

• Consulting• Partnership ecosystem• Investment • Geographic spread of business:

Europe, APAC• Quality of clients

Relevant Acquisitions/Partnerships Key Clients Global Operations Centers Proprietary Technologies/Platforms

Acquisitions:

• S3 TV (2015)

• Mortgage Cadence (2013)

Partnerships:

• Salesforce, Microsoft, Adobe, AWS, Google (Suite), Atlassian, AppDynamics, Docker, Tableau, IBM Rationale

Top 10 ISV companies as clients: 6Top 100 ISV companies as clients: 25Top 25 internet companies as clients: 9

Clients include:• American cloud computing company• EU-based telecom service provider• Leading global enterprise ISV• Leading internet software company• US-based consortium of cable companies

Software product engineering services headcount (in-scope): >5,000

Locations: 25+ major software product engineering services delivery center locations including:

• North America: US

• Europe: Poland, Ireland

• APAC: India

Total patents (filed + granted): > 250

Key IP solution:

• myWizard: Enterprise automation platform

• Touchless Testing Platform: Automated and continuous testing through AI & ML

• Omni-Channel Testing Platform: Testing of digital applications across different types of devices

Strengths Challenges

• Consulting-led service delivery: Accenture is leveraging its advisory and strategy consulting services across the software engineering value chain with a specialized focus on connected platform engineering. It enables clients to shift from a product mentality to a platform mentality by leveraging API and ecosystem strategies for end-to-end future-ready platforms. It has worked with a number of clients to define platform strategy, design. and implementation that includes device engineering, platform enablement, and product management.

• Investment in innovation and lab infrastructure: Accenture has invested in labs (applied R&D, incubating and prototyping new concepts), studios (designing and creating digital services), and innovation centers (demonstrating and scaling industry solutions). It has built a new asset, Platform-in-a-Box, that is a preconfigured solution for deploying a platform for clients.

• Partnership focus: Accenture is partnering with leading internet and technology ISVs and startups across the globe in the areas of cloud platforms, development languages, and software tools. It is expanding its solutions portfolio across digital thread, intelligent product operations, agile development, and engineering optimization.

• Strong Europe and APAC presence: Accenture has a significant revenue percentage from Europe and APAC and is one of the very few service providers with a high delivery presence in onshore and nearshore locations.

• Quality of customers: Accenture has a high number of clients in the top 100 ISVs, top 10 ISVs, and also in the top 25 internet companies list, which demonstrates its customer quality.

• Scaling up engagements in technology and enterprise ISVs: Accenture has an opportunity to scale up its product management offerings. Its presence in technology and enterprise ISVs segments is below the industry average. Accenture has already started to focus on two these segments and is making investments to scale up offerings and client engagements.

• Increasing share of few services: Accenture has relatively less business from sustenance and product management in its services mix. These are the areas in which Accenture can scale up its operations.

• Premium pricing: Accenture's pricing is higher than its competitors’. This can be challenging for some customers.

Value Chain

NPD

Sustenance

Testing

Deployment

Support

Product Management

Customer Segments

Vertical ISVs

Technology ISVs

Enterprise Platforms

Internet Companies

Winner’s Circle

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CognizantA digital transformation partner leveraging consulting capability, deep client relationships, and the partnership ecosystem for software product engineering services Blueprint Leading Highlights

• Consulting• Investment in tools and

technologies• Client relationships• Partnerships• Talent management


Acquisitions:• Hedera (2018)• Brilliant Service (2017)• Idea Couture (2016)• KIS Information Services (2016)• Itaas (2014)

Partnerships:

• Amazon, Microsoft, Pivotal Cloud Foundry, IBM, Oracle, MapR, Apigee, SAS, Google, Ab Initio, Appian, Axway, Adobe, Informatica, Teradata, VCE, ReD Associates


Clients include:• American healthcare ISV• German enterprise ISV• Leading financial and tax

preparation ISV• Online fashion retailer• US-based information ISV

Software product engineering services headcount (in-scope): N/A


• North America: Canada, US

• Europe: France, Germany, Ireland, UK

• APAC: India, Philippines, Singapore

Total patents (filed + granted): 100-250

Key IP solution:

• Cog9 VSM: An automated analyzer to determine cloud readiness for apps and products

• HiveCenter: Integrated automation ecosystem

• COSMOS: Development platform for end-to-end microservices design and implementation

• Big Decisions: Platform to set up analytics infrastructure and onboarding of new data sources

• OneDevOps: Solution for accelerating DevOps journey


• Digital transformation partner: Cognizant is a preferred digital transformation partner for its clients. The company is leveraging its advisory and consulting-led delivery approach along with strong digital engineering expertise in providing software product engineering services. It has developed a number of consulting and implementation frameworks, including tools and accelerators in the areas of digital experience management, automation, and cloud.

• Investment in tools and accelerators: Cognizant is investing in technology specific labs and in-house solutions development for software product engineering. It has established the “Cognizant Digital Collaboratory” to reimagine businesses using new digital technologies. Its global network of digital innovation spaces includes London, New York, Amsterdam, and Melbourne. Client references have also mentioned Cognizant’s innovation willingness that often reflects in the engagement.

• Focus on business outcomes: Cognizant delivers business outcomes through PODs consisting of four to six team members. PODs are high-performing Agile teams that implement extreme programming practices and assure high-quality deliverables and speed-to-market.

• Excellent customer relationships: Cognizant has strong long-term strategic relationships with its software product engineering clients. It seeks to establish long-term relationships that present recurring revenue opportunities by offering a wide array of quality services.

• Partnership ecosystem: Cognizant has a strong partnership ecosystem for its software product engineering services offerings. It has associations with leading internet (Microsoft, Google, Amazon) and enterprise companies (SAP, Oracle, Salesforce). Cognizant leverages its partnership ecosystem to co-develop solutions and joint go-to-market approach in this space.

• Talent strategy: Cognizant has a strong focus on workforce development in software product engineering. It has taken initiatives to reskill itsworkforce through the role-based Cognizant Career Architecture program and digital engineering program. It has launched specialized career tracks on product engineering under Cognizant Career Architecture to nurture full-stack engineers and product engineering managers.

• Increasing client quality mix: Cognizant lags some of its peers in penetration of the top 10 ISVs, top 100 ISVs, and top 25 internet companies. This represents an opportunity for Cognizant to strengthen its client portfolio in software product engineering.

• Growth outside of North America: Cognizant's client portfolio is currently North America centric; thus, it has the opportunity to diversify, especially in the European region.

• Taking relationships to the next level: Cognizant’s average revenue/client ratio is lower than that of the service providers included for this Blueprint. Given its breadth of client relationship, Cognizant has the capability to scale up its engagements.

• Large IP sustenance deals: Cognizant has fewer large IP sustenance deals than its competitors. It can revisit its corporate strategy to increase its annuity business and topline growth.

Value Chain

NPD

Sustenance

Testing

Deployment

Support

Product Management

Customer Segments

Vertical ISVs

Technology ISVs


Internet Companies

Winner’s Circle

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EPAMAn experienced software product engineering service provider with a strong European delivery base, full services portfolio, strong account management, and smart acquisition strategyBlueprint Leading Highlights

• End-to-end software product engineering expertise

• Account management• Long-term contracts• Patents• Acquisitions


Acquisitions:• Continuum Innovation (2018)• Tahzoo.nl (2017)• Infomatix (2016)• Dextrys (2016)• Netsoft (2014)

Partnerships:

• Adobe, SAP, Sitecore, Oracle, Microsoft


Clients (350+) include:• IPREO• Liberty Global• SAP • UBS• Workfusion

Software product engineering services headcount (in-scope): > 5,000


• Europe: Belarus, Russia, Ukraine

• APAC: India

Total patents (filed + granted): N/A

Key IP solutions:

• TelescopeAI: Enables IT projects and people intelligence together in a unified, modular platform to manage projects successfully and drive greater productivity

• InfoNgen: Enables actionable insights for both structured and unstructured data

• Dlab: Toolset for analytics for creating and managing exploratory environments


• End-to-end service portfolio: EPAM has an end-to-end product development services encompassing digital strategy, user experience design, advanced technology, and agile delivery. It focuses on data-driven engineering for digital transformation to provide value from both strategic and operational points of view. EPAM leverages its industry and technology consulting capabilities to define platform and product strategy for its clients. EPAM has provided services to 300+ ISVs since 1993 and it is one of the few service providers with expertise across different types of customer segments.

• Account management: EPAM has strong account management capabilities in software product engineering services. Its average FTE/client and revenue/client ratios are on the higher side relative to its competitors, which reflects positively on the depth and breadth of its engagements. Customer references have also praised EPAM's account management teams.

• Patents and innovation credentials: EPAM has strong innovation credentials in the software product engineering space. It has one of the highest number of patents among the service providers evaluated for this Blueprint. EPAM allocates 3% of its revenue to R&D and innovation. It has a focused IP strategy that includes four directions: free and open source, EPAM platforms, venture, and accelerators (people organization, infrastructure and platforms). EPAM is one of the top 20 contributors to open source projects on GitHub, in terms of the number of employees that actively contributed.

• Capability augmentation via acquisitions: EPAM has acquired more than 10 companies since 2014 in the areas of service design, digital strategy, experience design, and analytics. It has vertical specific acquisitions in healthcare, life science, and financial services. These acquisitions have helped to grow capabilities in some of the niche areas.

• Long-term contracts: The percentage of EPAM's business from long term contracts is one of the highest among the service providers evaluated for this Blueprint.

• IP-led pricing models: EPAM has developed a good number of IP solutions in the software product engineering services space, but its revenue percentage from IP and royalty-based is lower than its competitors'. This could be an area of improvement for EPAM.

• Training: EPAM’s annual software product engineering training hours per FTE is less than the industry average, which is an area of improvement for the company. In discussions with EPAM team, we came to know that it continues to invest in educational and resource development activities that include competency development and focusing on skills. Also, it has developed a "Career Development Program" that enables all employees to increase knowledge in both technical and soft skills. It has established EPAM University, which is a global program focused on IT Education.

• Geographic delivery expansion: Most of EPAM's software product engineering delivery resources are located in Europe. It has a large percentage of revenue earnings from North American clients, so it can increase its delivery footprint in the North American countries.

Value Chain

NPD

Sustenance

Testing

Deployment

Support

Product Management

Customer Segments

Vertical ISVs

Technology ISVs


Internet Companies

Winner’s Circle

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GlobalLogicAn experienced software engineering service provider with global delivery presence, expertise in emerging areas, and a strong partnership ecosystem


• Expertise in vertical ISV segment• Delivery • Capability in emerging areas• Partnerships• Acquisitions


Acquisitions:

• REC Global (2016)

•Method (2011)

• Rofous (2011)

• Cubika (2010)

Partnerships: N/A

Top 10 ISV companies as clients: N/ATop 100 ISV companies as clients: N/ATop 25 internet companies as clients: N/A

Clients include:• American information technology

company• US enterprise ISV• Leading software company




• Europe: Croatia, Israel, Poland, Slovakia, Ukraine

• APAC: India

• ROW: Argentina


Key IP solution:

• Its service offerings cater to product advisory, product deployment, support, and sustenance, localization, and professional services


• Strong expertise in vertical ISV segment: GlobalLogic collaborates with leading vertical ISVs to develop products and services for business outcome, technology enablement, and user experience. For example, it is working with life sciences, pharmaceutical, and medical device companies to build solutions to accelerate innovation, shorten time-to-market, and enable new business models and revenue streams.

• Global delivery presence: GlobalLogic has a good delivery presence in onshore locations. This client proximity has helped GlobalLogic to build strong relationships with clients. It has a good presence in nearshore locations particularly in Europe (Croatia, Poland, Slovakia, Ukraine). GlobalLogic has also presence in innovation hubs California and Israel.

• Expertise in emerging areas: GlobalLogic has expertise in DevOps, IoT, analytics, mobility, and cloud computing areas. It has built in-house tools in this area and is also working with a number clients in these emerging areas.

• Partnership ecosystem: GlobalLogic has a strong partnership ecosystem for its software product engineering services offerings. It leverages the ecosystem to interact with partners’ end customers to understand the need for the products and services.

• Acquisition-led growth strategy: GlobalLogic aspires to be a $1 billion company by 2020 and acquisition is one of its growth strategies. Its initial acquisitions were primarily targeted for geographic expansion and to build a global delivery network. GlobalLogic is actively looking for suitable acquisitions to expand its business.

• Consulting focus: Consulting capability is a critical step for GlobalLogic's positioning as a leading end-to-end service provider in the software product engineering space. It needs to focus more on the business challenges, roadmap definition, and transformation areas for client engagements.

• Talent management to support the growth ambition: GlobalLogic is very ambitious in the software product engineering space. It has achieved good growth over the past few years, and its ambition is to continue the trend in future. GlobalLogic has successfully scaled the software product engineering practice and has the foundation to continue to scale. The challenge would be to create a strong pipeline of technology competent industry-ready talent and capability to support this growth initiative.

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HARMANSamsung Group company with expertise in emerging areas and non-linear pricing client engagements


• Expertise in DevOps, agile• Samsung group heritage• Project management• Pricing and commercial models• Acquisition


Acquisitions:• TowerSec (2016)• Symphony Teleca (2015)• Red Bend Software (2015)• AMX (2014)

Partnerships:

• Microsoft, Adobe, Intel, Google, Mozilla, PTC, Amazon, Samsung


Clients include:• American software company• European telecom service provider• Leading consumer appliance

manufacturer• US-based technology company




• Europe: Finland, Germany, Israel, Poland, Russia, Sweden, UK

• APAC: China, India, Japan, South Korea

• ROW: Morocco


Key IP solution:

• Marimba: Configuration management software

• Media Suite: Video content management solution that can be integrated with Vuforia

• Ignite: Automotive cloud platform

• Health SymMetrics: Reporting, advanced analytics, and decision support solution for healthcare


• Expertise in emerging areas: HARMAN has expertise in DevOps and agile areas. It has built tools in this area: Agile in a Box and DevOps Framework. Agile in a Box includes a ready-to-use set of tools, templates, framework, and guidance for enterprise agile transformation. HARMAN is working with a number clients in these emerging areas. For example, it is engaged with a leading industrial automation player for enterprise agile transformation and DevOps initiatives. Its industry expertise in industrialsolutions, healthcare, and automotive is also an added advantage for these new technology implementations.

• Strong project management: HARMAN is a trusted partner for its clients in software product engineering services. Client references have praised its client relationship management, which reflects positively on the depth and breadth of its engagements, including its project management capabilities.

• IP-led pricing model: HARMAN has a significant percentage of total revenue from IP-led pricing models. Some of its notable IPs include HARMAN Media Suite, Health SymMetrics, HARMAN Ignite, and Marimba. HARMAN is actively involved in cross-licensing IP assets and co-creation of IPs jointly with customers.

• Strong APAC presence: HARMAN has a significant percentage of revenue from the APAC region with a strong delivery presence in APAC countries including China, India, Japan, and South Korea.

• Forward-thinking resource capability development: HARMAN has a strong focus on workforce development in software product engineering. It has one of the highest rates of training hours per FTE among the service providers evaluated for thisBlueprint and developed a systematic learning mechanism that helps employees at various levels for acquiring skills.

• Acquisition: HARMAN has defined M&A strategy to acquire promising small startup companies related to digital technologies. It has acquired four companies over the past few years to bolster its service offerings.

• Onshore delivery presence: The majority of HARMAN’s software product engineering operation’s delivery capability is based in offshore locations. This is a challenge for potential clients that would like to have onshore options for emerging area related projects in North America and Europe regions. In discussions with HARMAN management, we learned that this is on the radar.

• Long term contracts: The percentage of HARMAN's clients that have long-term contracts (5+ years) is lower than the industry average. It can focus on creating long-term relationships with the clients and can be an area of improvement for HARMAN.

• Expand European footprint: HARMAN's revenue mix is tilted toward North America with significant revenue realization from the APAC region. It already has revenue stream from France, Germany, and the UK, which it can increase further.

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HCLA software product engineering leader with a strong innovation-led solutions portfolio, partnership ecosystem, and solid client portfolio


• Solution portfolio• Innovation• Account management• Quality of clients• IP-partnerships


Acquisitions:• Actian Corporation (2018)• Geometric (2016)• Point to Point (2016)• Trygstad (2015)• PowerObjects (2015)

Partnerships:

• IBM, Oracle, Salesforce, SAP, Adobe, Infor, Amazon, Microsoft, Symantec, Dynatrace, Dell EMC/VMWare


Clients (170+) include:• American technology company• Global technology conglomerate• Leading cybersecurity software and

services company• Leading networking hardware and

telecommunications equipment company



• North America: Canada, Mexico, US

• Europe: Finland, Ireland, Italy, Netherlands, Norway, Poland, UK

• APAC: Australia, China, India, Malaysia, Philippines, Singapore

• ROW: Brazil


Key IP solution:

• IPs acquired from IBM

• iSCM: Supply chain solution

• GeometricDFX: Automated tool to predict the manufacturability of models

• PANGEA Analytics framework

• Intelligent Sustenance Engineering (ISE): Advanced engineering analytics solution

• Intelligent Tech Support (ITS): Advanced support analytics framework


• Strong solutions portfolio: HCL has both developed organically and acquired a strong portfolio of product and platform tools and solution frameworks that accelerate customers’ entire offering development lifecycle. The solutions also cover a broad portfolio of offerings across the technology stack and multiple industry verticals.

• Patents and innovation credentials: HCL has solid innovation credentials in the software product engineering space. It has one of the highest number of patents among the service providers evaluated for this Blueprint. HCL has invested over $25 million in over 100 engineering labs in software product engineering and is aligned to monetize innovation in the areas of analytics, artificial intelligence, IoT, and mobility.

• Transformational partnership initiatives: HCL has adopted business model-led transformational partnerships through investments in products and platforms. Over the past 18 months, HCL invested over a billion dollars in multiple co-development, IP partnerships to drive products and platform-led innovations to modernize the roadmap and drive revenue uplift.

• Account management: HCL has strong account management capabilities in this space. Its average FTE/client ratio is on the higher side relative to its competitors, which reflects positively on the depth and breadth of its engagements. Reference clients have also mentioned HCL's flexible and responsive account management capabilities.

• Client quality mix: HCL has one of the highest number of clients among the top 100 ISVs, top 10 ISVs, and the top 25 internet companies, which demonstrates its customer quality.

• Increasing share of vertical ISV segment: HCL has the opportunity to increase its presence in vertical ISV segments. It has already begun targeting specific verticals like fintech, supply chain, and cloud and infrastructure to create vertical-specific solutions.

• Expand European footprint: HCL's revenue mix is tilted toward North America with significant revenue realization from the APAC region. It needs more penetration in the European market and can leverage its strong presence in other service lines in Europe for the same.

• Targeting small customer segments: HCL's client mix is tilted toward large clients and has relatively less presence in the customer segment that has less than $100 million in revenue. This can be a target area for HCL for future growth.

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InfosysAn end-to-end software engineering service provider with strong partnership ecosystem and onshore presence


• End-to-end services portfolio• Partnership ecosystem• Nonlinear pricing • Global delivery presence• Thought leadership


Acquisitions:• WongDoody (2018)• Brilliant Basics (2017)• Lodestone (2012)

Partnerships:

• Amazon, CA, Microsoft, IBM, SAP, Citrix, PTC


Clients (125+) include:• American retail company• European banking organization• Global industrial company • US-based technology company




• Europe: Germany, Ireland, Netherlands, Switzerland, UK

• APAC: Australia, China, Hong Kong, India, Japan, Malaysia, Singapore

• ROW: New Zealand


Key IP solution:

• DevOps Platform: Solution to accelerate implementation and adoption of DevOps

• Cloud Ecosystem Integrator Hub: To build and manage of a unified hybrid cloud environment

• DataGrid: Data as a service platform

• Device Integrator: Device integration framework to enable communication in retail


• End-to-end services portfolio: Infosys has strong service offerings to support complete software product engineering with end-to-end capabilities for new product development, sustenance, testing, product management. Also, it has invested in developing in-house DevOps and agile tools and frameworks. Infosys has built DevOps Platform for customized and adaptable integrated tool chains for various technology stacks.

• Nonlinear commercial model: Infosys' growth strategy includes transaction and IP-based pricing model for its software product engineering engagements. For example, it is working with a leading North American ISV in revenue share model for development of unified communications product family. Infosys is engaged in outcome based model for integration and validation of product stack for a US based technology ISV.

• Partnership ecosystem: Infosys is partnering with leading software companies like Microsoft, CA, Oracle, and IBM and developing joint solutions in the areas of cloud, DevOps, AI, and analytics. It is investing in startups through the Infosys Innovation Fund through direct investment in emerging areas (AI, automation, analytics, cloud, machine learning etc.). Also Infosys is focusing on talent re-skilling at scale partnering with the likes of Udacity on emerging technology skill ramp-up.

• Global delivery presence: Infosys has a very strong presence in APAC and onshore locations. This client proximity has helped Infosys realize a significant percentage of its total revenue from APAC and North American clients. In Europe, it has presence in Ireland, Germany, Netherlands, Switzerland, and UK. Infosys is also increasing its engineering footprint in the Bay area and Israel, and nearshore locations like Mexico, Canada.

• Ability to deliver business outcomes: Infosys has demonstrated with case studies how it has delivered business outcomes for its software product engineering clients. The outcomes are related to overall R&D cost reduction, faster time to market, performance improvement, better experience management, etc. For example, it is working with a leading US-based technology ISV company for a greenfield payment platform development.

• Geographic diversification: Infosys' client portfolio is currently North America-centric with good APAC presence; thus, it has the opportunity to diversify, especially in Europe. Infosys has formed geo-focused dedicated sales teams to tap new opportunities in Europe.

• Increase in high value accounts: Though Infosys' average revenue per client is above the industry average, its number of $5 million+ accounts is less than the competitors of similar size. This can be an area of improvement for Infosys to scale up more strategic accounts and improve these metrics.

• Increasing share of internet customer segment: Infosys has relatively less business from internet customer segment in its services revenue mix. Discussions with Infosys team, we came to know that scaling up the internet segment business is on their radar and they have already started working on a number of engagements. For example, Infosys is engaged with an internet company in the areas of feed migration, migration of video content, and maintenance.

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Persistent SystemsA leading service provider with software-driven transformation growth strategy, solid client relationships, and strong global delivery presence


• Expertise in DevOps, agile• Quality of clients• Client relationships—client

engagement greater than five years

• Nonlinear pricing mix• Strong workforce


Acquisitions:• PARX (2017)• PRM Cloud (2016)• RGen Solutions (2015)• CloudSquads (2014)

Partnerships:

• Amazon, Google, IBM, Microsoft, and other niche or open source developer tools and platforms

• Product takeover partnerships with IBM, Citrix, Intel (Aepona Holdings)

Top 10 ISV companies as clients: >6Top 100 ISV companies as clients: 29Top 25 internet companies as clients: 5

Clients (250+) include:• Empirix• Megapath• Nok Nok Labs• Partners Healthcare




• Europe: France, Germany, Israel, UK

• APAC: Australia, India, Malaysia, Sri Lanka

• ROW: South Africa

Total patents (filed + granted): <10

Key IP solution:

• Buildhub: Agile accelerator platform

• Software 4.0: Framework to build next generation software products

• Cloud Assessment & Migration Tools: Automated approach for migrating and assessment to relocate systems and products to virtual data centers and clouds


• Software-driven transformation: Persistent has adopted an organization wide strategic initiative named Software 4.0. This initiative is for software products and software-driven transformation across industries that resemble the lifecycle of software products. It has built a number of software and enterprise platforms in several verticals including healthcare, lifesciences, banking and financial services, and life sciences. Also, Persistent's software development expertise ranges from methods like agile and DevOps to the design of scalable and interoperable product architectures.

• Global delivery scale: Persistent has a very strong presence in onshore locations. It is one of the very few service providers with delivery centers in Australia, South Africa, and Israel. This client proximity has helped Persistent develop better client relationships. Client references have also appreciated Persistent’s account management capabilities.

• Highly educated workforce: The percentage of postgraduates and PhDs in Persistent’s workforce is one of the highest among the service providers evaluated for this Blueprint. This is a differentiator as buyers and sourcing advisors often use this metric as capability indicator.

• Long term contracts: The percentage of Persistent's clients that have long-term contracts (5+ years) is one of the highest among the service providers included in this Blueprint.

• Pricing mix: Although Persistent has a low number of patents, its pricing mix is balanced and has one of the highest percentage of IP and gainshare, risk, and reward pricing models, which is an encouraging sign. It works with 25+ customers in IP or revenue sharing deals, which is one of the highest numbers among the service providers included in this Blueprint.

• Quality of clients: Persistent has a strong client mix among the service providers included, especially among the marquee clients, and this demonstrates its customer quality and the depth of its expertise.

• Growing share of European market: Persistent's client portfolio is currently North America-centric with good APAC presence; thus, it has the opportunity to diversify, especially in Europe.

• Innovation focus: Given the overall size of Persistent’s software product engineering business, the number of patents filed by Persistent is lower than that of some of its same-sized peers. Patents are a leading innovation indicator and can be used effectively for revenue realization. Persistent may need to rethink its patent strategy.

• Increase in high-value accounts: Persistent's number of $5 million+ accounts is less than some of the peers of a similar size. This suggests an opportunity for Persistent to scale up more strategic accounts and improve this matrix.

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TCSA strong software product engineering service provider with compelling vision, innovation mindset, and good delivery reputation


• Vision• Account management• Delivery capability• Patent portfolio• Geographic presence


Acquisitions:• Computational Research Laboratories

(2012) • Mitsubishi (JV) (2012)

Partnerships:

• Symantec, GE, NetApp, HP, EMC, Xerox, Microsoft, VMware, Nutanix, Cisco, Citrix, SAP, CA, Informatica, Intel, Redhat, Juniper, AWS, Appdynamics (acquired by Cisco), Cloudera, Perfecto, Splunk

Top 10 ISV companies as clients: 8Top 100 ISV companies as clients: 24Top 25 internet companies as clients: N/A

Clients (100+) include:• European telecom equipment vendor• European wireless equipment vendor• Leading hybrid cloud data services and storage

company • Leading software product development company • North American enterprise equipment vendor• North American semiconductor manufacturer




• Europe: Finland, Germany, Hungary, Ireland, UK

• APAC: China, India, Japan


Key IP solution:

• TCS Mastercraft: Suite of intelligent automation products for application development, testing, and delivery

• Ignio: Cognitive automation solution

• Engineering environment as a service

• Microservices development and deployment platform

• AI-based radio network optimization


• Vision: TCS aspires to be the prime partner of choice for TCS customers for all existing and new product initiatives by providing services across the full product life cycle. TCS is leveraging its Business 4.0 framework, with digital technology advancements and location-independent agile delivery to aid it in transforming its customers products and platforms. It is also utilizing technical capabilities, for example intelligence (AI + Analytics), agile, automation, andthe cloud to grow this business. It has trained over 200,000 associates on digital technologies and agile methodologies to cater to its clients.

• Patents and innovation credentials: TCS has strong innovation credentials in the software product engineering space. It has one of the highest number of patents among the service providers evaluated for this Blueprint. TCS has rigorous patent management and IP development processes in place under the Components Engineering Group.

• Quality account management: Clients give high marks to TCS' account managers, who are proactive, structured, and build a good relationships over the engagement period, ensuring seamless operations. In addition, it has one of the highest FTE/client ratios, which depicts the depth of TCS' client engagements.

• Building good delivery reputation: TCS is well known as a service provider that can deliver on its promises. Reference clients have also pointed out that they are satisfied with TCS' performance delivering software product engineering services on time and within budget.

• Geographic delivery mix: TCS has a strong geographic spread with 25+ software product engineering delivery centers covering all major regions, including North America, Europe, and Asia-Pacific. In addition, it has one of the highest percentages of resources in onshore and nearshore locations.

• Marquee ISV client accounts: Though TCS has a strong presence in the top 10 ISV client segment, it lags behind some of its Winner’s Circle peers in penetration in the top 100 ISVs and top 25 internet companies. This represents an opportunity for TCS to strengthen its client portfolio in software product engineering.

• Increasing share of internet customer segment: TCS has relatively less business from the internet customer segment in its services revenue mix. During discussions with TCS team, we came to know that it already has engagements with internet companies in other areas and is trying to collaborate with them in software product engineering space.

• Presence in small sized customer segment: TCS' client mix is tilted toward large and medium sized clients and has relatively less presence in the customer segment that has less than $100 million in revenue. This can be a target area for TCS for future growth.

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Tech MahindraA software product engineering service provider with geographical spread of business, strong partnership with start-up companies, and a good portfolio of transformational engagements


• Expertise across value chain• Transformational IP engagements• Geographic spread of revenue• Pricing and commercial models• Partnership


Acquisitions:• BIO Agency (2016)• Fixstream Networks (2014)

Partnerships:

• VMWare, Amazon, Microsoft, Google, Softlayer, Fixstream, IBM


Clients (30+) include:• American technology company• Global enterprise IT major • Global ISV• Global storage and data management

company• Leading data management major

Software product engineering services headcount (in-scope): 2,000-5,000



• Europe: Israel

• APAC: India


Key IP solution:

• Media Codec Optimization: Optimization of the storage space requirement for voice and coding deployments

• Frameworks for Smart Drives: Frameworks for smart drives in object storage and built accelerator for product validation and automation

• Others: Internally developed frameworks across automation, DevOps, analytics, performance testing, etc.


• End-to-end product engineering expertise: Tech Mahindra has experience with end-to-end product development, with running projects with scaled agile and agile, and with DevOps and test-case automation. It has also strong presence in digital technologies such as AI and machine learning, VR/AR, IoT, and blockchain.

• Transformational IP deals: Tech Mahindra secures a significant revenue from transformational projects with clients. For example, it has secured large transformational deals in software product engineering with a multinational media and entertainment company and and American technology company in the areas of product development, future roadmap, and service delivery support.

• Balanced portfolio revenue mix: Tech Mahindra has a balanced geographic mix of clients and is particularly strong in Asia-Pacific and ROW compared to peers. We believe that the Asia-Pacific market will provide significant growth in the future in this space, and Tech Mahindra is in a sweet spot to leverage this trend.

• Pricing mix: Tech Mahindra's pricing mix is balanced and has one of the highest percentages of revenue from IP and gainshare, risk, and reward pricing models among all the service providers included in this Blueprint, which is an encouraging sign.

• Partnership with start-up companies: Tech Mahindra is collaborating with 20 to 30 startups a year under its program called TechM Next. The startups will primarily lie in the sectors such as networking, communication technology, and virtual reality. The company already has 30 startups working in its network and has plans to expand operations by further investing in them.

• Expanding number of client accounts: Tech Mahindra’s software product engineering revenue mix is concentrated to a few client accounts, mostly US- and Europe-centric, which it has the opportunity to diversify. Its average revenue/client and FTE/client ratios are also on the higher side, indicating it should broaden its client portfolio.

• Invest in more skill development: Tech Mahindra’s number of annual training hours is on the lower side compared to other service providers. Therefore, Tech Mahindra may face challenges in developing the skills of new resources at the same pace.

• Improving the client mix: Most customers of Tech Mahindra are among top 100 ISVs but it has relatively less presence in the customer segment that has less than $1 billion in revenue. This can be an area of improvement for Tech Mahindra as it can target this client segment.

• Challenging clients: Tech Mahindra’s client references pointed out that Tech Mahindra can do better in challenging them and taking new initiatives in the project. It should go beyond the brief and share their views on better alternatives to clients’ recommendations.

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ThoughtWorksA global service provider with good thought leadership presence that is leveraging its digital transformation consulting and emerging technology expertise for software product engineering services


• Consulting• Presence in onshore and

nearshore locations• Client relationship• Strong workforce• Thought leadership


Acquisitions: N/A

Partnerships: N/A

Top 10 ISV companies as clients: N/ATop 100 ISV companies as clients: 2Top 25 internet companies as clients: 1

Clients (200+) include:• European retail organization• Global networking company• Major US airline company• US-based consumer appliance

manufacturer




• Europe: Germany, Italy, Spain, UK

• APAC: Australia, China, India, Singapore, Thailand

• ROW: Brazil, Chile, Ecuador


Key IP solution:

• Gauge: Open source test automation tool

• Mingle: Online project management tool

• Selenium: Open-sourced cross platform and cross browser web-app functional testing

• GoCD: Open source tool to automate the continuous delivery (CD) of software


• Consulting-led delivery approach: ThoughtWorks has a consulting-focused delivery approach in the software product engineering space. It engages with clients for product vision and roadmap as well as manages their product management and engineering arms of business. ThoughtWorks is working on a number of transformation projects with its clients.

• Expertise in emerging areas: ThoughtWorks is an early adopter of agile and in building expertise on agile practices of continuous integration, DevOps, and test automation in the purview of product implementation. It is working with several European and North American clients in agile projects. For example, it is engaged with a leading train ticket retailer in a 200+ people agile project to deliver Web 2.0 solution.

• Excellent customer relationships: ThoughtWorks focuses on high value customers that contribute majority of its revenue. Its revenue/FTE ratio and number of $5 million+ client accounts are among the highest of the services providers included for this Blueprint. Also, a majority of its high value clients have a 5+ year relationship, forging a strong relationship with C-level executives.

• Highly educated workforce: The percentage of postgraduates and PhDs in ThoughtWorks' workforce is one of the highest among the service providers evaluated for this Blueprint. This is a differentiator, as buyers and sourcing advisors often use this metric as a capability indicator. Also, it focuses on resource capability augmentation and has one of the highest number of training hours among the service providers.

• Onshore delivery presence: ThoughtWorks has one of the highest percentages of resources in onshore and nearshore locations among the service providers evaluated for this Blueprint. It is one of the few service providers that have a strong presence in Latin America (Brazil, Chile, Ecuador). Also it has strong delivery presence in European and APAC countries including China.

• Thought leadership initiatives: ThoughtWorks leaders, experts, and SMEs have published a number of articles and 85+ books on software product engineering trends and emerging areas such as agile, API design, and analytics. It has created and contributed to 50+ open source projects and is ranked 8th on a GitHub list that features active contributions to open source projects on GitHub.

• Marquee ISV client accounts: Given the size of its operations, ThoughtWorks lags behind some of its peers in penetration in the top 10 ISVs, top 100 ISVs, and top 25 internet companies. This represents an opportunity for ThoughtWorks to strengthen its client portfolio in software product engineering.

• Competitive pricing: ThoughtWorks charges premium pricing and may be losing out on some of opportunities with price-sensitive customers. It can do better in providing more competitive pricing for the engagements.

• Patents: ThoughtWorks can revisit its patent strategy. In addition to its commitment towards open source initiatives, it can also prioritize patent portfolio development.

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WiproA leading service provider with strong services offerings, a portfolio of high value client accounts, and a corporate venture arm to collaborate with start-up companies


• Service offerings• Accessibility engineering• Delivery• Client relationships—client

engagement > $5 million • Patents• Quality of clients

RelevantAcquisitions/Partnerships

Key Clients Global Operations Centers Proprietary Technologies/Platforms

Acquisitions: N/A

Partnerships: • PTC, Microsoft, Amazon, Google,

Oracle, Siemens, Autodesk, DiManEx, IBM


Clients (280+) include:• American medical device manufacturer• European healthcare company• European software ISV• US-based internet ISV




• Europe: Austria, Finland, France, Germany, Ireland, Poland, Netherlands, Romania, Switzerland, Turkey, UK

• APAC: Australia, India, Japan, Hong Kong, Philippines, Singapore, Taiwan, Thailand


Key IP solution:

• HOLMES: Cognitive automation tool

• DevAssure: Device assurance test automation solution

• AppAssure: Application assurance test automation solution


• Strong services offerings: Wipro has 20+ years of experience of delivering software product engineering services. It has deep domain expertise in the areas of system software, cloud, machine learning, mobility, UI/UX, and other areas of digitization. Wipro is also strong in DevOps and agile methodologies. It has built DevOps platform for rapid implementation and is working with 100+ clients in agile projects.

• Investment in labs, solutions, and innovation: Wipro has one of the highest number of patents among the service providers evaluated for this Blueprint. It has invested in multiple labs and centers of excellence (including domain specific, automation, and artificial intelligence) for building POCs, solutions and frameworks. Wipro is also leveraging its own crowdsourcing platform (Top Coder) to implement innovative design and development challenges in niche technologies.

• Accessibility engineering: Wipro is going beyond profits and has developed accessibility services offerings for digital Inclusion of persons with disabilities. It engages with clients to address the accessibility concerns based on the industry-specific needs and legal requirements.

• High-value client accounts: Wipro has one of the highest number of $5 million+ client accounts among the service providers included for this Blueprint. It has also a good portfolio of clients that have long-term contracts (5+ years) with Wipro.

• Quality of customers: Wipro has one of the highest number of clients in top 100 ISVs, top 10 ISVs, and top 25 internet companies list, which indicates the client quality mix of the service provider.

• Geographic delivery mix: Wipro has a very strong presence in onshore locations. It is one of the very few service providers that have strong delivery centers across Europe. Also it has a significant percentage of revenue from the APAC region, with a strong delivery presence in APAC countries that include India, Philippines, Taiwan, Singapore, and Thailand.

• Partnership with start-up companies: Wipro has established its strategic investment arm, Wipro Ventures ($100 million fund), which invests in promising start-up companies. Some of the startups related to software product engineering services Wipro has invested are Avaamo, ImanisData, and Vicarious.

• Expansion of existing client engagements: Though Wipro's revenue/client ratio is in line with the industry average, its average FTE/client ratio is lower than that of the service providers included for this Blueprint. Given its breadth of technology expertise and the number of marquee ISV accounts, Wipro has the capability to scale up its engagements.

• Resource capability augmentation: Wipro’s annual software product engineering training hours per FTE is less than the industry average, which is an area of improvement for the company. In discussions with the Wipro team, we came to know that it has built an internal platform to connect its employees to communities, enterprise blogs, etc. for continuous learning.

• Geographic diversification: The majority of Wipro's revenue is North America-centric, with significant revenue from the APAC region; it has the opportunity to diversify, especially in Europe. Wipro can look into this area for future growth.

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AltranA global engineering services company developing its software engineering capabilities via acquisitions


• Solutions portfolio• Outcome-based pricing • Acquisition• Customer portfolio—mid-sized

customers• Customer relationship


Acquisitions:

• Aricent (2018)

• Lohika (2016)

Partnerships:

• HP, Microsoft, Amazon, Cloudera, Hortonworks, CA, Flutura, Cloudthat


Clients (250+) include:• European retail company• Global technology company• Leading internet organization• US-based banking company

Software product engineering services headcount (in-scope): < 2,000


• Europe: France, Ukraine

• APAC: India


Key IP solution:

• Self Optimizing Carrier Cloud (SOC2): Framework for closed-loop automation and feedback mechanism

• Lifecycle Service Orchestration (LSO): Unified orchestration framework

• Test Analytics Framework: Product testing and certification related framework


• Strong solutions offerings: Altran aspires to be a key player in software product engineering space. It is building competency in complete ownership of product roadmaps (including end-of-life products), development, test, and deployment support. Altran also strongly monitors business outcomes of the engagements for maximum value realization.

• Business outcome-based pricing model: Altran has one of the highest percentage of total revenue from outcome-based pricing models among the service providers included in this Blueprint. It is working with a number of large enterprise software vendors in shared revenues and IP based pricing models for software product transformation projects. This outcome-based pricing is one of the growth strategic initiative for Altran. It is also leveraging innovative engagement models in particular for legacy products.

• Capability augmentation through M&A: Altran is focused on strategic M&A to build its capabilities. In 2017, Altran acquired Aricent, a provider of design and engineering services; it has large footprint in software and internet vertical, good portfolio of assets, and significant presence in North American market. Its acquisition of Lohika enables it to develop high-end software engineering capabilities through strong delivery capabilities in Eastern Europe. It also has a good client portfolio for customers with less than $100 million in revenue because of the Lohika acquisition.

• Collaboration with startups: Altran collaborates with promising startups to build cutting edge solutions for its customers in the emerging areas such as cloud, artificial intelligence, etc.

• Client relationship management: Altran has prioritized an engagement model that includes both client proximity and project management with high-end offshore capabilities. This has enabled Altran to deepen the customer relationship and increase its delivery presence in new geographical hubs, resulting in pricing maturity.

• Expand European delivery footprint: Though Altran has a strong European footprint, its software product engineering share in Europe is smaller. It has the opportunity to leverage acquired expertise to grow in Europe.

• Scaling up a few accounts: Though Altran has a few deep engagements, its average revenue/client ratio is lower than that of the service providers included for this Blueprint. Given its breadth of technology expertise, Altran has the capability to scale up its engagements. It can also focus on increasing the number accounts that have more than $5 million in value and have relationships 5 years old or older.

• Integration of Aricent and Lohika: There is a strong synergy between Altran and its recent acquisitions, such as Aricent and Lohika. But like in all acquisitions, integration is always a challenge and a risk. As both the acquired entities have different expertise and culture, Altran needs right plans and approach for a successful integration.

Value Chain

NPD

Sustenance

Testing

Deployment

Support

Product Management

Customer Segments

Vertical ISVs

Technology ISVs


Internet Companies

High Performer

09jb8eed


ALTEN Calsoft LabsA focused product engineering service provider with high growth, strong workforce, and expertise in agile and cloud implementation


• Expertise in agile, cloud• Customer relationship—mid-sized

ISVs• Quality of workforce• Marquee ISV accounts• Growth


Acquisitions:

• Premier Logic (2017)

• ASM Enterprises (2016)

• PVR Technologies (2016)

• cPrime (2014)

Partnerships:

• Microsoft, Amazon, NetSuite, Atlassian, Thunderhead, Blue Prism, PTC, Eurotech, QASymphony


Clients (115+) include:• European media company• European telecom service provider• Leading American population health

management company• Leading US retailer• US-based top 50 healthcare informatics

company




• Europe: Romania, Sweden

• APAC: India


Key IP solution:

• RAGE: Agile governance framework

• vFirewall: A reusable high performance DPDK optimized security solution

• GoShoppy: Retail solution to bring wholesalers and retailers to ecommerce business

• Others include frameworks related to medical device integration, mobile device management and security, FHIR enabled apps to quickly build digital health apps


• Expertise in agile and cloud services: ALTEN Calsoft Labs has strong expertise in agile and integrates product engineering and digital capabilities in agile projects. Also it offers “chip to cloud” product engineering services to enterprise ISV and internet companies. It has also invested $500,000 in enterprise and product engineering capabilities to enable digital transformation and innovation for customers.

• Marquee ISV accounts: ALTEN Calsoft Labs has a high number of clients in the top 100 ISVs, top 10 ISVs, and top 25 internet companies lists, which demonstrates its customer quality. Also, it is targeting tier-1 client accounts in certain verticals (healthcare, telecom, high-tech, retail) to increase market share.

• Client relationship with mid-sized ISVs: ALTEN Calsoft Labs has solution offerings suited for mid-sized ISVs. It has a good footprint among clients with less than $100 million in revenue.

• Presence in Silicon Valley: ALTEN Calsoft Labs has development centers with approximately 15% of its delivery resources in Silicon Valley, which is increasingly becoming a source of differentiation for customers.

• Fast growth: ALTEN Calsoft Labs has achieved one of the fastest growth rates in the last few years on the revenue front among the service providers included in this Blueprint. This growth can be attributed to its acquisition of Premier Logic, ASM Enterprises, and PVR Technologies.

• Highly educated and experienced workforce: The percentage of workforce in ALTEN Calsoft Labs having postgraduate degrees and PhDs is higher than the majority of the service providers evaluated for this Blueprint. Also its percentage of resources with 3+ years of experience is above the average.

• Expanding NPD and testing services: ALTEN Calsoft Labs has relatively less business from new product development and testing in its services mix. Through discussions with ALTEN Calsoft Labs team, we came to know that it is one of their priority areas and ALTEN has already started to work on a number of new product development related projects with a strong pipeline ahead.

• Scaling up client engagements: ALTEN Calsoft Labs' revenue/client ratio is on the lower side compared to its competitors evaluated for this Blueprint, which provides both a challenge and an opportunity as it has potential to scale up its existing accounts for the growth.

• Increase in high value accounts: ALTEN Calsoft Labs' number of $5 million+ accounts is less than its competitors of similar size. This can be an area of improvement for ALTEN Calsoft Labs to scale up by adding more strategic accounts given its client quality mix, expertise in emerging areas, and strong workforce.

• Increasing share of T&M contracts: ALTEN Calsoft Labs has a high percentage of revenue from the time and material (T&M) pricing model. It needs to increase the revenue percentage from nonlinear pricing models that include transaction and IP-based pricing.

Value Chain

NPD

Sustenance

Testing

Deployment

Support

Product Management

Customer Segments

Vertical ISVs

Technology ISVs


Internet Companies

High Performer

09jb8eed


CybageA mid-sized service provider with comprehensive solution offerings, strong customer relationships, and business outcome focus


• Solution offerings• Business outcome focus• Customer relationships• Experienced workforce• Organic growth


Acquisitions: N/A

Partnerships:

• Microsoft, ServiceNow, AWS, Salesforce, Adobe, Sitecore, Magento, Hybris, SAP, Oracle, Drupal, Acquia, Metalogix, VMWare, Highjump, Yellowfin, Cloudera


Clients (210+) include:• GroupM (WPP Group)• Tech Data• Transics International (WABCO)• TravelClick• US Autoparts




• Europe: Germany, UK

• APAC: Australia, India, Singapore


Key IP solution:

• DecisionMines: Business intelligence driven IT system for delivery excellence

• iCommerce: Framework for ecommerce industry

• FUSION: Integrated multi-layer test automation framework


• Breadth and depth of capabilities: Cybage has expertise in product engineering services architectural design concepts like microservices, API, mobile, and cloud applied for enterprises. In particular, it has shown strong case studies related to integration of agile development with digital engineering, maturity for transparency, compliance, and control (Agile, DevOps, etc.) at all stages of the product development lifecycle. It is applying this expertise across the verticals by developing framework and tools. Cybagehas built data-driven IT system called DecisionMines for digital excellence. DecisionMines is a dashboard-driven system that enables enterprises to make intelligent decisions based on data and trends.

• Ability to deliver business outcomes: Cybage has demonstrated with case studies how it has delivered business outcomes for its clients in areas such as microservices, new product development (UX design), and product deployment (documentation, data migration). For example, Cybage worked with a USA-based retailer customer to design microservices architecture with RESTful services.

• Strong workforce experience: The percentage of workforce having more than three years of experience of Cybage is high in comparison to the majority of the service providers evaluated for this Blueprint. This is a differentiator for the customers as a capability indicator.

• Deep customer relationship: Cybage has a high percentage of clients with long-term contracts (5+ years). Also, it has a good number of customers given the size of its operations.

• Competitive pricing: Cybage has competitive pricing in software product engineering services. Reference clients gave high marks to Cybage’s pricing rates.

• High organic growth: Cybage has achieved high organic growth over the past few years, which is an encouraging sign. This fact demonstrates the depth of Cybage’s solution offerings and strong account management.

• Increase onshore presence: Cybage's delivery mix is dominated by offshore locations. Its onshore and nearshore presence is less than the industry average. Many customers prefer client proximity for software product engineering services. In discussions with Cybage, we came to know that it is in the process of augmenting its presence in onshore locations.

• Innovation focus: Cybage has filed fewer than 10 patents, which is much lower than the industry average. In discussions with Cybage, we realized that it is now focusing on developing IPs in the software product engineering space.

• Scaling up a few accounts: Though Cybage has a few deep engagements, its average revenue-client ratio is lower than that of the service providers included for this Blueprint. Given its breadth of technology expertise and the number of marquee ISV accounts, Cybage has the capability to scale up its engagements.

• Investment in workforce capability: Cybage’s annual software product engineering training hours per FTE is less than the industry average, which is an area of improvement for the company.

Value Chain

NPD

Sustenance

Testing

Deployment

Support

Product Management

Customer Segments

Vertical ISVs

Technology ISVs


Internet Companies

High Performer

09jb8eed


ITC InfotechA hyper-growing engineering services company with focused growth strategy, good onshore presence, and solid customer portfolio


• Growth strategy• Geographic spread of business• Quality of customers• Thought leadership• Delivery-high onshore presence• Growth


Acquisitions: N/A

Partnerships:

• Microsoft, IBM, SAP, PTC, Oracle


Clients (20+) include:• American cable, satellite, and broadcast television network• Global e-commerce corporation• Leading information and technology-enabled health

services business• Swedish networking and telecommunications company• US-based provider of higher education programs


Locations: <5 major software product engineering services delivery center locations including:


• Europe: UK

• APAC: India


Key IP solution:

• Cloud Ocular: Application cloud journey solution for managed services

• SLAT: Stealth application log analysis tool

• ZICOS: Enterprise class DevOps platform covering entire SDLC including deep insights from delivery to deployment

• ZEAS: End-to-end integrated solution for big data processing and analytics management


• Focused growth strategy: ITC Infotech is focused on expanding its software product engineering business. It is building platform capabilities aligned with digital transformation roadmaps and collaborating with its key technology partners. Also it is developing capabilities in cloud engineering, big data, machine learning, DevOps, and other areas.

• Geographic spread of business: ITC Infotech’s software product engineering business is geographically diversified across all regions. The company has a balanced portfolio of clients in North America and Europe. In addition, it has significant revenue percentage from the APAC region.

• Marquee client accounts: In spite of its small size, ITC Infotech has a good number of clients in the top 100 ISVs, top 10 ISVs, and top 25 internet companies list, which suggests a promising future for the service provider.

• Fast growth: Though the scale of ITC Infotech's software product engineering practice is small, it has almost doubled its revenue in past two years, achieving one of the fastest revenue growth rates among the service providers included in this Blueprint.

• Strong onshore presence: ITC Infotech has a percentage of resources located near customer locations in North American and European countries. Its client proximity enables better client engagements particularly for full ownership projects.

• Thought leadership: ITC Infotech leaders, experts, and SMEs have published a number of articles on software product engineering trends, emerging technologies, industry trends, and best practices, particularly in DevOps, microservices, and certifications.

• Scaling up software product engineering practice: The overall scale of ITC Infotech's software product engineering practice is small compared to its competitors we evaluated for this Blueprint. Its recent fast growth and focused growth strategy can be a game changer for the company in long term.

• Patents: ITC Infotech's patent portfolio is lower than the industry average. In discussions with ITC Infotech, we realized that it has prioritized some areas for innovation including cloud computing, data engineering, and DevOps.

• Skill Variety: Though the workforce experience mix of ITC Infotech is in line with the industry average, the percentage of its workforce that has a master’s degree or higher is lower than that of its competitors. As ITC Infotech is looking forward to increase its capabilities and patent portfolio, it needs to improve this workforce education mix.

• Improving client mix: ITC Infotech has a good presence among large customers but needs to increase penetration among the customers that have revenue below $1 billion.

Value Chain

NPD

Sustenance

Testing

Deployment

Support

Product Management

Customer Segments

Vertical ISVs

Technology ISVs


Internet Companies

High Performer

09jb8eed


LuxoftA European engineering service provider with strong nearshore presence, good consulting capability, and business outcome focus


• Consulting• Expertise in DevOps, cloud• Onshore delivery presence• Outcome-based pricing


Acquisitions:

• Excelian (2015)

• Radius (2014)

Partnerships:

• HP, IBM, Appian, Amazon


Clients include:• American enterprise technology ISV• European telecom ISV• UK-based payment company• US-based utility ISV




• Europe: Poland, Romania, Russia, Ukraine, UK

• APAC: India


Key IP solution:

• DMFusion: Demand management automation platform for smart grid

• iStockTrack: End-to-end UI framework for mobile banking technology

• Horizon: Customizable visualization framework for decision making


• Consulting-focused delivery approach: Luxoft has adopted a consulting-focused delivery approach for its software product engineering services. It involves clients from the ideation stage to the implementation phase for end-to-end digital transformation that includes product development, defining a roadmap, and product management. Luxoft leverages its industry expertise to help clients define overall product strategy and software processes.

• Expertise in emerging areas: Luxoft has built capabilities in advanced digital technologies that include DevOps, cloud computing, user experience, front-end technologies, and blockchain. It is already working with a number of European and North American clients in these emerging areas.

• Onshore delivery presence: Luxoft has one of the highest percentages of resources in onshore and nearshore locations among the service providers evaluated for this Blueprint. It has strong delivery presence in nearshore locations particularly in European countries that include Poland, Russia, Ukraine, and Romania.

• Ability to deliver business outcomes: Luxoft has demonstrated with case studies how it has delivered business outcomes for its software product engineering clients. The outcomes are related to overall R&D cost reduction, faster time to market, performance improvement, better experience management etc. For example, it is working with a private and premium banking clients to implement feature-rich mobile banking technologies.

• Expand partnership ecosystem: Luxoft needs to focus on building a robust ecosystem for emerging digital technologies for software product engineering services. The partner ecosystem will enable Luxoft to develop more industry and technology specific solutions including joint value propositions around its overall software product engineering solutions portfolio.

• Innovation focus: Given the overall size of Luxoft’s software product engineering business, Luxoftneeds to focus more on innovation. Luxoft can broaden its patent portfolio to improve in this space. Patents are a leading innovation indicator and can be used effectively for revenue realization.

• Thought leadership: Luxoft lags behind some of its peers in developing thought leadership and bringing out its engineering story in the software product engineering space. Luxoft has expertise in the emerging areas such as DevOps, cloud computing, analytics etc. and with the marketing team it can improve in this area.

High Performer

Value Chain

NPD

Sustenance

Testing

Deployment

Support

Product Management

Customer Segments

Vertical ISVs

Technology ISVs


Internet Companies

09jb8eed


MindtreeEmpowering software product engineering services across the ISV segments with strong offerings and flexible pricing model


• Offerings across customer segments

• Account management• Pricing flexibility• Training• Pricing—balanced mix


Acquisitions: N/A

Partnerships:

• Microsoft, IBM, Amazon, Salesforce


Clients (30+) include:• American technology ISV• Leading networking company• North American semiconductor

organization• US-based data management

company




• Europe: Germany, UK

• APAC: India


Key IP solution:

• MIST: Integrated scriptless test automation

• CAPE: Composable automation platform for enterprises

• Dynamic Test Engineering Platform: Fulfils E2E testing needs, which bundles SaaS and service adoption


• Strong offerings across different customer segments: Mindtree has very solid offerings in the areas of automation platforms, DevOps toolkit, analytics, and machine learning. It has developed a number of in-house tools and has shown strong case studies in these areas with significant business outcomes in terms of cost, time, quality, customer experience and others. In overall, Mindtree invests 8% of revenues into R&D for creating solutions that benefit its product engineering customers.

• Account management: Mindtree has strong account management capabilities in software product engineering services. Its average revenue/client ratio is one of the highest among the service providers included in this Blueprint, which reflects positively on the depth and breadth of its engagements, including its project management capabilities. Clients described Mindtree’s account teams as highly cooperative, with everyone willing to go the extra mile from the top down.

• Pricing flexibility: Reference clients have praised Mindtree’s pricing flexibility and competitiveness. According to them, Mindtree is the best value for money in terms of project management, resource capability, and delivery execution.

• Balanced pricing mix: Although Mindtree has a low number of patents, its pricing mix is balanced and has a good mix of IP and gainshare, risk, and reward pricing models, which is an encouraging sign. For example, it is working with a US-based data management company in revenue share model for complete ownership of EOL product. Mindtree is also engaged with a leading network equipment manufacturer in output based pricing for testing, sustenance, and support for network switches.

• Investment in developing workforce capability: Mindtree has one of the highest rates of training hours per FTE among the service providers evaluated for this Blueprint. This ensures that Mindtree has the relevant skills especially when the supported technologies are changing so fast.

• Geographic diversification: Mindtree' client portfolio is currently North America-centric; thus, it has the opportunity to diversify, especially in Europe. Mindtree team has confirmed that expansion in other geographies is on the radar.

• Patents: The number of patents filed by Mindtree is lower than the industry average. In discussions with Mindtree, we came to know that it predominantly operates on “Work for Hire” model in which most of the patents filed by Mindtree associates become part of client’s IPs. Mindtree is also focusing on developing indigenous IPs in the software product engineering space and has filed close to 25 patents including five granted US patents.

• Finding new clients: Mindtree has one of the highest number of FTE/client ratios among the service providers included in this Blueprint. It needs to look for new clients more than grow its share of existing clients.

Value Chain

NPD

Sustenance

Testing

Deployment

Support

Product Management

Customer Segments

Vertical ISVs

Technology ISVs


Internet Companies

High Performer

09jb8eed


MphasisBuilding software product engineering expertise with a strong focus on in-house tools development, business outcome, and client relationships


• Technology—in-house tools• Partnerships• Client relationships• Delivery capability• Business outcome focus• Long-term contracts


Acquisitions:• Kshema Technologies (2004)

Partnerships:

• Mendix, Pivotal, Microsoft, AWS, Kovair, Verifaya


Clients (5+) include:• American technology company• Leading mass spectrometry

manufacturer • Leading technology enterprise• Semiconductor and system solutions

provider

Software product engineering services headcount (in-scope): <2,000



• Europe: UK

• APAC: India


Key IP solution:

• Connected Lifestyle Framework for Home Automation: Prototype for home automation and home gateways

• Laboratory Resource Management System: Web-based tool functioning as a lab management system

• Automation of Smoke Tests: Automation of identifying latest build of application, images, etc.


• In-house tools and technology development: Mphasis has a strong focus on developing technology, tools, and platforms in the areas of omnichannel retail solution, cognitive automation platform, and intelligent infrastructure automation platform. These in-house solutions help its clients to better customer experience, actionable data insights, new business models and others. Mphasis leverages domain knowledge of healthcare, telecom, and technology space in software product engineering. Also it engages with selected startups to help them understand the demands of large enterprises and partners with them to develop new solutions.

• Excellent client relationship: Mphasis has strong account management capabilities in this market. Its average FTE/client and revenue/client ratios are on the higher side relative to its competitors, which reflects positively on the depth and breadth of its engagements.

• Service delivery execution: Mphasis has demonstrated with case studies how it has delivered business outcomes for its software product engineering clients. It has achieved a double-digit productivity benefit for its several clients in projects related to new product development, sustenance, and testing. Mphasis is also working in outcome-based pricing models with its clients. For example, it is implementing an agile scrum model in a large banking client, where it will be paid based on the productivity of the scrum team.

• Long term contracts: The percentage of Mphasis' business from ODC via long term contracts is one of the highest among the service providers evaluated for this Blueprint.

• Scaling up software product engineering practice: The scale of Mphasis' software product engineering practice is small compared to its competitors evaluated for this Blueprint. Also its number of clients in this space is on the lower side. Mphasis has a number of organizational initiatives in place to build this practice, including specific technology and re-engineering capability development and partnership building.

• Bringing IP-led solutions to the client engagements: Mphasis' revenue from nonlinear pricing models is lower than the industry average. It needs to develop a good number of IP solutions in the software product engineering space to increase the IP-based revenue.

• Onshore delivery: The majority of Mphasis' software product engineering delivery capability is based in India and North America; it has a much smaller presence in Europe. As it has a significant percentage of revenue from European clients, so more delivery proximity of clients will be beneficial.

• Training: Mphasis' annual training hours per FTE is lower than the industry average, which is an area of improvement for Mphasis. Discussions with Mphasis team we came to know that the company is encouraging its employees to get trained on diverse topics through Instructor Led Trainings (ILT), Virtual ILTs, and eLearning.

• Marketing and thought leadership: Mphasis' capabilities as a software product engineering service provider is not widely known in the ecosystem. Mphasis needs to step up its marketing and thought leadership in this space.

Value Chain

NPD

Sustenance

Testing

Deployment

Support

Product Management

Customer Segments

Vertical ISVs

Technology ISVs


Internet Companies

High Performer

09jb8eed


QuEST GlobalA mid-sized engineering service provider with acquisition-led growth strategy, solid collaborative client engagements, and strong partnership with educational institutions


• Innovation• Geographic spread of business• Collaborative models of

engagement• Partnership• Acquisition


Acquisitions:• Mobiliya (2018)• Exilant (2018)• IT Six (2017)• DeTech (2017)• EDF (2015)• NeST Software (2014)

Partnerships:

• Vufori, GE, iBoT, Axeda, Microsoft, Dell, Intel, NXP, PTC, Amazon, MongoDB, Datastax, Nvidia, Siemens


Clients (60+) include:• European aircraft OEM• Japanese medical device company • Leading European transport company• Leading global sports brand




• Europe: Germany, Romania, Spain, UK

• APAC: China, India, Japan, Singapore, South Korea


Key IP solution:

• ICE AutoMate: Cluster tool control and automation software for semiconductor OEMs

• CIVIM: Test automation framework

• EAGLE: Real-time monitoring and engineering analytics for energy industry

• iTap: Integrated test automation platform


• Innovation focus: Despite its start as a mechanical engineering services and solutions provider, QuEST has developed a strong focus on building patents and IP solutions in the software product engineering space. In addition, it has started to monetize its existing IP portfolio and follows nonlinear pricing models for some of its engagements. Client references have praised QuEST Global’s innovation mindset and have mentioned its proposed innovative ideas in the engagements.

• Collaborative engagement: QuEST Global's clients are appreciative of the collaborative nature of the engagement, proactive feedback, and suggestions from QuEST Global. It has one of the highest number of long (5+ years) and strategic client engagements that reflect the high level of client satisfaction.

• Geographic spread of business: QuEST Global’s software product engineering business is geographically diversified across all regions. The company has a very balanced portfolio of clients in North America and Europe. In addition, it has significant revenue percentage from the APAC region including good delivery presence in the APAC countries.

• Acquisition-led growth strategy: QuEST Global aspires to be a strong software product engineering service provider and a strong player in mechanical engineering. It has adopted both technology and industry specific acquisitions strategy to increase its business in this space.

• Partnership with educational institutions: QuEST Global is focused on academy outreach programs to collaborate with top engineering institutions through learning interventions, internships, academic projects on industry-grade problems, and research collaborations, bridging the industry-academia gap. QuEST Global has a strong culture of academy outreach and training programs such as Software Academy, Web Academy, and other initiatives.

• Account expansion: QuEST Global's revenue/client ratio is on the lower side relative to its competitors, which is an area of improvement for the company. We see significant opportunities for cross selling through acquired entities to improve this ratio.

• Marquee client accounts: QuEST Global comparatively has lower penetration in the top 10 ISVs, top 100 ISVs, and top 25 internet companies. This represents an opportunity for QuEST Global to strengthen its client quality mix.

• Talent strategy: QuEST Global's annual training hours per FTE is lower than the industry average, which is an area of improvement for the company. It has already started to focus on capability development and multi-skilling of employees, based on the QuEST Competency Framework, and leverages e-learning platforms, classroom trainings, and industry certifications for the same.

• Integration challenges: QuEST Global acquired more than five companies since 2014. It needs to integrate its acquired entities to build a cohesive software product engineering unit.

• Branding and thought leadership: QuEST Global is known for its mechanical engineering expertise, but its capabilities as a software product engineering service provider is not widely known in the ecosystem. QuEST Global needs to build its branding and thought leadership in this space.

Value Chain

NPD

Sustenance

Testing

Deployment

Support

Product Management

Customer Segments

Vertical ISVs

Technology ISVs


Internet Companies

High Performer

09jb8eed


XoriantAn emerging software product engineering service provider with high growth, good technical capability, and flexible pricing model


• Expertise in agile and platform development

• Quality of clients• Pricing• Long term contracts• Growth


Acquisitions: N/A

Partnerships: • Oracle, Microsoft, Splunk, Informatica,

Cray, Deep Identity


Clients (40+) include:• Enterprise software provider• Global financial organization• Leading professional services company• Mobile internet optimization solution

provider




• APAC: India


Key IP solution:

• PRISM: Big data analytics platform

• Xoriant Test Automation Framework (XTAF): Framework for platform and application independent testing

• Xoriant Continuous Delivery Accelerator (XCDA): DevOps enabled continous service delivery

• NLPro: Framework to transform unstructured text into usable insights


• Capabilities in agile, enterprise platforms: Xoriant has pre-developed frameworks built on standard technologies that optimize solution development for enterprises to increase in performance and develop richer functionalities through faster deployment. It has also adopted the agile methodologies and has implemented the same for a number of customers. Xoriant has packaged a “product modernization” offering (across the value chain) that is targeted towards companies $50 million–$1 billion and divisions of larger product companies.

• Quality of clients: Xoriant has a number of big enterprises as clients among top 10 ISVs and top 100 ISVs, despite its overall small scale of software product engineering operations. This signals a promising future if these clients have found value already in the service provider.

• Pricing flexibility: Reference clients have praised Xoriant’s pricing flexibility. According to them, Xoriant is the good value for money for strong delivery and resource capability.

• Long term contracts: The percentage of Xoriant's clients that have long-term contracts (5+ years) is one of the highest among the service providers included in this Blueprint.

• Fast growth: Xoriant has clocked one of the highest growth rates in the last couple of years on the software product engineering revenue front though on a small base. Some of its growth can be attribute to partnership with several large consulting companies and BPO companies to help them develop technology solutions that they can take to their clients. This area expanded significantly in 2017 and is growing in 2018 as well with new marquee client addition.

• Geographic diversification: Xoriant’s client portfolio is currently North America-centric with very little presence in Europe; thus, it has the opportunity to diversify and expand more in Europe and Asia-Pacific.

• Delivery center expansion: Xoriant's majority delivery centers for software product engineering are located in the US and India. For the global delivery requirements, Xoriant needs to expand its delivery centers in other countries.

• Patents: Xoriant has filed very few patents (fewer than 5) which is much lower than the industry average. In discussions with Xoriant, we realized that it has already built several IP solutions and is focusing to increase the IP portfolio in the areas of cloud, security, and machine learning.

• Increasing share of internet customer segment: Xoriant has relatively less business from the internet customer segment in its services revenue mix. This can be a future growth area for Xoriant.

• Talent strategy: Xoriant's annual training hours per FTE are on the low side in comparison to some of its peers which may be something to address given the rapid pace of change and evolution in this market. Discussions with Xoriant team, we came to know that it has built XorAcademy for planned training, reskilling, and upskilling of employees.

Value Chain

NPD

Sustenance

Testing

Deployment

Support

Product Management

Customer Segments

Vertical ISVs

Technology ISVs


Internet Companies

High Performer

09jb8eed


TietoA mid-sized European software product engineering partner with strong customer focus, capabilities in selected niche areas, an educated workforce, and partnership ecosystem


• Customer centricity• Onshore presence• Partnership• Strong workforce• Nonlinear pricing mix


Acquisitions:• Siemens Convergence Creator

(2014)

Partnerships: • Intel, HERE Technologies, Atlassian,

Bluetooth SIG, Thread Group, Apple, ARM, Microsoft, Oracle, VMware


Clients (80+) include:• Global semiconductor vendor• Leading consumer and automotive

OEM and supplier• Tier-1 telecom equipment

manufacturer

Software product engineering services headcount (in-scope): <2000



• Europe: Czech Republic, Denmark, Finland, Poland, Sweden

• APAC: China


Key IP solution:

• Tieto DevOps Space(TDS): Self-service for DevOps tooling containing general project, tools, and environments

• Android Test automation tool: Android application test automation tool

• Trace Navigator: Visualization and analytics tools for IT systems

• T3F: Test automation framework to test end-to-end cellular enabled devices


• Customer centric value proposition: Tieto’s customers are moving away from their few large customers to a very long tail of smaller customers. Tieto has built a "Solution Center Model" to support business scaling, combining its customer’s technology and solutions with customized service offerings (development, porting, integration, testing, sustenance, training, and licensing) to scale the market reach. It is also active in DevOps space with a number of engagements with clients.

• Strong expertise in selected niche areas: Tieto has built strong expertise in few selected niche areas and leverages its software development expertise from different industries such as consumer electronics (speed of development, technology adoption, costefficiency and high volume), telecom (reliability, scale, full stack capabilities), and automotive (safety, complexity management, wide competence areas) to the digital services market.

• Delivery presence outside offshore locations: Tieto has a significant percentages of resources in onshore and nearshore locations for software product engineering services. It has strong presence in nearshore locations (Czech Republic and Poland) as well as in the Nordic region (Sweden).

• Highly educated workforce: The percentage of postgraduates and PhDs in Tieto’s workforce is one of the highest (nearly 60%) among the service providers evaluated for this Blueprint. This is a differentiator as buyers and sourcing advisors often use this metric as capability indicator.

• Strong partnership ecosystem: Tieto has a strong partnership ecosystem for its software product engineering offerings. The company has collaborations with leading technology enterprises (Microsoft, Apple, etc.). In addition, Tieto is a regular participant of several industry events.

• Business outcome based commercial model: Tieto has a significant percentage of total revenue from outcome-based pricing models. For example, it is working with a tier-1 semiconductor vendor in outcome-based pricing model for full product software outsourcing managing the end-to-end development cycle.

• Quality of customers: Given the size of its operations, Tieto comparatively has less number of penetration in the top 10 ISVs, top 100 ISVs, and top 25 internet companies. This represents an opportunity for Tieto to strengthen its client quality mix.

• Offshore opportunity: Tieto's offshore resource mix is less than that of its competitors. This can be an opportunity for Tieto from overall cost perspective. It has delivery centers in low cost countries including Czech Republic and Poland (nearshore) and China (offshore). Thus Tieto needs to leverage these centers for more cost optimization.

• Account expansion: Tieto's average revenue/client ratio is on the lower side relative to competitors, which is an area of improvement for the company. Given its strong service offerings and client portfolio, Tieto can improve this matrix.

• Thought leadership: Tieto lags behind some of its peers in developing thought leadership in bringing out its engineering story in the software product engineering space. This is one area in which Tieto can improve.

Value Chain

NPD

Sustenance

Testing

Deployment

Support

Product Management

Customer Segments

Vertical ISVs

Technology ISVs


Internet Companies

High Performer

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PacteraA China-based engineering service provider with expertise in the vertical ISV segment and a good client portfolio


• Expertise in vertical ISV segment• Delivery presence in China• Business outcome focus• Competitive pricing• Customer quality


Acquisitions: N/A

Partnerships:

• Hortonworks, Amazon


Clients include:• American enterprise ISV• Chinese internet company• Japanese consumer ISV




• Europe: Hungary, Spain, Switzerland

• APAC: Australia, China, India, Japan, Malaysia, Singapore


Key IP solution:

• Innoveo skye: Multi-channel web-based software for insurance companies

• Pactforma: Web-based platform of intelligent AI data project tools


• Experience in working with vertical ISVs: Pactera leverages its domain knowledge to offer customized industry solutions tailored to best fit based on business and technology needs. It follows a digital transformation approach to engage with clients with the scope of implementing emerging digital technologies. Pactera also has several engagements with internet companies.

• Delivery presence in China: Pactera has one of the strongest software product engineering delivery capability in China. It also provides localization services and can provide services in 200+ languages. Pactera enables its clients to introduce its products to global audiences.

• Ability to deliver business outcomes: Pactera has demonstrated with case studies how it has delivered business outcomes for its clients in areas such as new product development (UI/UX design), product deployment, user experience management etc. For example, Pactera worked with a Japanese camera manufacturer to improve the GUI of their flagship medical endoscopic system. It focused on three areas including ergonomics, navigation, and information architecture to help client optimize these three problems and also built a mobile version for them to run on tablet.

• Competitive pricing: Pactera offers competitive pricing in comparison to the other service providers included for this Blueprint as it delivers from the tier-3 cities in China.

• Quality of customers: Pactera has a good portfolio of clients in top 100 ISVs, top 10 ISVs, and in the top 25 internet companies list which indicates the client quality mix of the service provider.

• Geographic diversification: Pactera has good client portfolio in APAC and North America region with less presence in Europe; thus, it has the opportunity to diversify and expand more in Europe.

• Expand partnership ecosystem: Pactera has a good partnership ecosystem in some of the digital technology areas that is very helpful for the software product engineering space. But it should expand its notable partner ecosystem by adding specific solution and capability providers to create joint value propositions around its overall software product engineering solutions portfolio.

• Thought leadership: Pactera lags behind some of its peers in developing thought leadership in bringing out its engineering story in the software product engineering space. This is one area in which Pactera can improve.

Execution Powerhouse

Value Chain

NPD

Sustenance

Testing

Deployment

Support

Product Management

Customer Segments

Vertical ISVs

Technology ISVs


Internet Companies

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BelatrixAn emerging Latin America-based engineering service provider with strong agile expertise, fast growth, and thought leadership initiatives


• Vision• Agile expertise• Partnership• Growth• Thought leadership


Acquisitions: N/A

Partnerships:

• WSO2, Microsoft, Endeavor, Vurbia

Top 10 ISV companies as clients: N/ATop 100 ISV companies as clients: 3Top 25 internet companies as clients: N/A

Clients (50+) include:• Adobe• AOL• Disney• Endeavor


Locations: < 5 major software product engineering services delivery center locations including:

• ROW: Argentina, Colombia, Peru


Key IP solution:

• Its in-house solutions are related to proprietary test automation frameworks, talent management solutions, and operation management tools


• Vision: Belatrix has a strong vision to grow its business by 2020. It will open new development centers in another Latin American country in 2018, and is hiring more onshore resources (particularly in its Silicon Valley office) to provide greater intimacy to its clients.

• Expertise in agile: Belatrix has strong focus and expertise in agile implementation. All its employees (both delivery and non-delivery) are trained in agile and more than 25% of its employees are certified as Scrum Masters. It also leverages design thinking (customer centricity, rapid prototyping, product development expertise) to help organizations rapidly adopt agile.

• Association with leading consulting firm: Belatrix closely collaborates with a leading global consulting firm in implementing software product engineering services with clients after consulting assignments. For example, it has partnered with the consulting firm to transform the operations and develop new products and services of one of largest banks in Latin America.

• Thought leadership: Belatrix leaders, experts, and SMEs are involved with webinars and have published a number of articles on trends, technology challenges, and best practices in the area of product development, cloud innovation, software architecture, user experience enhancement, and DevOps.

• Fast growth: Belatrix has achieved one of the fastest growth rates in the last few years on the revenue front among the service providers included in this Blueprint. This growth can be attributed to its customer intimacy model, Latin America business expansion, and thought leadership initiatives.

• Scaling up software product engineering practice: The overall scale of Belatrix'ssoftware product engineering practice is small compared to its competitors evaluated for this Blueprint. The European and APAC markets are significantly less penetrated and should be a focus for go-to-market efforts and capability building in order to acquire new clients.

• Expanding engagements across value chain and internet companies: Belatrix has an opportunity to expand its customer reach among internet companies. Also it can increase engagements in the areas of product management and deployment. Discussions with Belatrix's management suggests that some of these areas are already high priority areas for them.

• Enabling outcomes and new business models: Belatrix's pricing mix is dominated by T&M and fixed price contacts, though it has a few examples of other pricing models. Belatrix has the opportunity to offer other pricing models to its customer base and improve its pricing mix.

• Quality of customers: Belatrix comparatively has less penetration in the top 10 ISVs, top 100 ISVs, and top 25 internet companies. This represents an opportunity for Belatrix to strengthen its client quality mix. Also most of its clients are small, so it can target big clients to increase revenue/client ratio.

Value Chain

NPD

Sustenance

Testing

Deployment

Support

Product Management

Customer Segments

Vertical ISVs

Technology ISVs


Internet Companies

High Potential

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Happiest MindsAn emerging engineering services provider differentiating through a unique engagement model and deep customer relationships


• Expertise in new product development

• Customer relationships• Unique engagement model• Nonlinear pricing• Acquisitions


Acquisitions:• OSS Cube (2017)• Cupola (2017)

Partnerships:

• Microsoft, Intel, Amazon, Pimcore, Citrix, Cloud Lending Solutions, PTC, NetSuite, SAP


Clients (60+) include:• American publishing company• North American software company• US-based healthcare organization• US-based sports broadcasting company

Software product engineering services headcount (in-scope): <2000

Locations: <5 major software product engineering services delivery center locations including:

• APAC: India


Key IP solution:

• mCaaS: Digital content brokering platform

• Innovative Content Monetization: Collaborative content creation and monetization solution

• Digital Query Assistant: Self-assembling knowledge with smart and federated content explorer


• Good expertise in product development: Happiest Minds has good expertise in new product development in the areas of architecture design, UX design, core development etc. It has demonstrated this capability with a number of case studies where it is working with clients to build network visibility solution, home/building automation applications, and asset management solutions. Client references also confirmed good requirement understanding and delivery capability for new product development.

• Customer experience focus: Happiest Minds has a strong focus on business outcome led digital transformation and "customer experience" is an important aspect of that. It emphasizes business outcomes related to user experience, accelerating time-to-market, and platform reengineering. Customer references have great praise for Happiest Minds' delivery flexibility and account management.

• Examples of unique engagement and commercial models: Happiest Minds has demonstrated with case studies its unique commercial models. One of the examples is capacity based pricing in which Happiest Minds gets paid based on the capacity of power it manages for one of the largest clean energy generation companies in India.

• Nonlinear pricing mix: Happiest Minds secures a significant percentage of total revenue from IP, gainshare, and transaction pricing models. For example, It has implemented a content management solution for two customers and uses an outcome-based pricing model where part of the payment is linked to revenue goals achieved by the customers.

• Acquisition: Happiest Minds is focusing on strategic acquisitions and acquired two companies in 2017. The acquired entities enable Happiest Minds to build capabilities in digital transformation, IoT, open source platforms and other areas.

• Expand software product engineering operations further: The overall scale of Happiest Minds software product engineering practice is small compared to its competitors evaluated for this Blueprint. In the last few years it has achieved a very high growth and the continuation of this trend will be a positive sign for the company to achieve a certain scale for its business operations.

• European client portfolio: Happiest Minds’ revenue mix is tilted towards North America and APAC regions. It needs more penetration in the Europe market and needs to increase its delivery presence in Europe for the same.

• Approach to expand the client engagements: Happiest Minds’ revenue/client ratio is on the lower side compared to its competitors evaluated for this Blueprint, so it needs to grow its share of revenue among existing clients. It has significantly large number of clients given the size of its operations. So focusing on this area can be beneficial for the company in the long run.

Value Chain

NPD

Sustenance

Testing

Deployment

Support

Product Management

Customer Segments

Vertical ISVs

Technology ISVs


Internet Companies

High Potential

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Execution highlights Innovation highlights

» ThoughtWorks has a high onshore presence: ThoughtWorks has one of the highest onshore ratios among the service providers evaluated for this Blueprint.

» EPAM has a large number of long term contracts: The percentage of EPAM's business from long-term contracts is one of the highest among the service providers evaluated for this Blueprint.

» Wipro has a strong client portfolio: Wipro has one of the highest number of clients among the service providers included for this Blueprint.

» TCS thrives on depth of client engagements: TCS' revenue/client ratio is one of the highest among service providers evaluated for this Blueprint, which reflects positively on the depth and breadth of its software product engineering engagements.

» Persistent has a highly educated workforce: Persistent has one of the highest percentages of postgraduates and PhDs in its workforce among the service providers evaluated for this Blueprint.

» HCL leverages its client quality: HCL has one of the highest number of clients in the top 10 ISVs, top 100 ISVs, and the top 25 internet companies, which demonstrates its client quality.

» Infosys has expertise across the value chain: Infosys has strong service offerings to support complete software product engineering with end-to-end capabilities.

» HCL leads in patents and innovation credentials: HCL has strong innovation credentials in the software product engineering space. It has one of the highest number of patents among the service providers evaluated for this Blueprint.

» Altran leverages acquisitions and partnerships: Altran has acquired two service providers including a billion dollar acquisition, and it has partnerships with promising startups, which has created a robust ecosystem.

» Accenture invests in innovation and lab infrastructure: Accenture has invested in labs (applied R&D, prototyping new concepts), studios (design and creation of digital services), and innovation centers (demonstrate and scale industry solutions).

» Cognizant delivers on business outcomes: Cognizant delivers business outcomes through PODs, a team of 4-6 team members, that implement good programming practices and assure high-quality deliverables.

» HARMAN focuses on emerging areas: HARMAN has strong expertise in DevOps and agile areas including a balanced solutions portfolio.

» ThoughtWorks focuses on thought leadership: ThoughtWorks employees have authored 85+ books on software product engineering

» Persistent offers nonlinear pricing models: Persistent has shown a variety of case studies with nonlinear commercial models, including IP and gainshare, risk, and reward pricing models. It works with 25+ customers in IP or revenue sharing deals.

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Market direction and recommendations

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Service provider selectionWhy this service provider? The top reasons that clients offered for selecting their service provider are:

1. Software engineering service offerings across the value chain

2. Expertise in emerging areas including analytics, IoT, DevOps, agile, and the cloud

3. Client management and delivery capability

4. Historical relationship

5. Recommendation from references and similar experience in the industry

6. Solution approach demonstrated during RFP process

7. Pricing flexibility and competitiveness

8. In-house tools, templates, and accelerators

9. Ease of resource onboarding and resource capability augmentation

10. Geographical reach and client proximity

11. Risk appetite to take IP ownerships

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Recommendations: Enterprise buyers (1)

» Select service providers that can support the entire value chain: Most of participants for this Blueprint were selected for their ability to support the end-to-end software product engineering value chain activities. Every software product engineering service provider covered is capable of meeting buyers’ broad needs, although capabilities differ significantly across the value chain and different customer segments. Therefore, buyers are advised to match carefully the service providers’ skills and take analysis to the appropriate level before short listing a service provider for an RFP.

» Leverage the service provider’s in-house tools and solutions: The service providers included for this Blueprint have a good portfolio of software product engineering solutions. Buyers need to be very precise about their particular technology need and this can be one of the selection criteria while evaluating them in the RFP process and leverage the benefit in project engagements. Some client references pointed out that the end-to-end agile and DevOps services of service providers were very useful for continuous delivery.

» Leverage commercial models for the engagements: Buyers should try nonlinear pricing models, such as outcome-based or risk-reward pricing to get the maximum out of the service providers, particularly for the non-core product portfolio. Fixed price and time and material (T&M) are already the most popular, and outcome-based models have started showing up more frequently in the service providers’ pricing mix as well. We recommend buyers engage with service providers for end-to-end business processes, i.e., from the design phase to the product sustenance phase, enabling service providers to plan and invest according to buyers’ needs. In this way, buyers can get the best out of their service providers.

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Recommendations: Enterprise buyers (2)

» Develop only a few strategic service providers: Typically, buyers work with several service providers for specific technology needs. Due to cost pressure, quick product launch, and competitive landscape, there is a need for alignment and more collaboration between customers and service providers for growth initiatives and future roadmap. This demands a strategic partnership model and consolidating the broad base of traditional vendors.

» Evaluate capabilities in localization: Buyers are expanding their market reach by launching new products more frequently across geographies. Buyers need to select the service provider that has understanding of the localization and the capability to do value engineering and compliance management for the market.

» Keep an eye on project management: Buyers have confirmed that most of its engagements are a part of broad digital transformation agenda implemented across the product portfolio. There is a lot of uncertainty about the requirement, leading to delay in delivery, late resource onboarding, and other factors that have impacted the product launch timeline. Buyers need to be more proactive about tracking deliverable progress.

» Expertise in emerging areas: Buyers need to engage with service providers to define roadmaps for how machine learning, analytics, cloud computing, etc. can be leveraged for future product development or existing product enhancement. These emerging areas demand a new set of capabilities, so buyers need to select service providers that can support these advanced technologies, co-work with an internal R&D team, and develop an advanced product portfolio by leveraging both internal and external capabilities.

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Recommendations: Service providers (1)

» Develop expertise in the emerging areas: The major software product engineering influencing technologies are artificial intelligence, cloud computing, IoT, analytics etc. Based on our discussions with the buyers and our understanding of present software product engineering landscape, the service providers need to build capabilities including a strong solutions portfolio in these emerging technology areas.

» Developing a robust partnership ecosystem: The service providers have partnerships with diverse technology companies for different technology areas. As the digital technologies become differentiators in the software product engineering space, service providers need to leverage their partnerships and collaborate more with their own digital team to develop joint solutions, collaborative pricing models, and developing PoCs specific to client needs.

» Investment in domain knowledge: In software product engineering services, domain-specific business process knowledge is of paramount importance. Buyers expect threshold industry knowledge and more horizontal technology expertise from service providers. Service providers need to increase their domain knowledge to improve their customer experience.

» Provide flexibility in services and commercials: Buyers appreciate the flexibility of service providers in services and commercials. As software product engineering services projects are facing requirement uncertainties, stringent go-to-market timeline, and cost pressure, technology competency combined with a flexible approach to deals is one of the key factors for winning new customers for service providers.

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» Continue to invest in talent management and retention: Talent management remains one of the biggest challenges for all software product engineering services providers. Service providers need to focus more on hiring and retaining talent. The technology landscape is changing very fast in the software product engineering space, thus upgrading knowledge is of paramount importance. Service providers can address these concerns by increasing investment in resource capability augmentation. We have observed a number of university tie-ups and association with online learning platforms by service providers.

» Build scale and look at acquisitions: Overall, we have observed very high growth in software product engineering services over past few years. Scale is becoming an important factor in this space to enable service providers to make the required investments in emerging technologies, design, domain, and IP capabilities. Most of the service providers have been proactive to build scale fast inorganically by primarily vertical specific and digital technology specific acquisitions. Small-scale software product engineering service providers could be good acquisition targets to gain market and client access.

» Focus on mid-tier and small companies: Most service providers are focusing on big enterprises (typically with more than $1 billion dollar in revenue) for software product engineering services. However, many mid-tier and small companies (particularly in the range of $100 million in revenue) are outsourcing their software product engineering work. This can be a target segment for service providers. We came across few similar engagements with development and testing services in this Blueprint.

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» Expand onshore and nearshore presence: Many software product engineering customers are looking for service providers that can provide service delivery at a location very close to them for better execution. The implementation of DevOps and agile across the engagement also demands client proximity in few cases. Some countries in Latin America are becoming popular nearshore countries in addition to APAC and Eastern European locations.

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About the authors and HFS

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Pareekh Jain is Senior Vice President, Research and India Operations at HFS Research. He runs India operations for HFS Research. He is also the lead analyst for engineering services, IoT, telecom, and manufacturing. He established the global engineering services practice at HFS Research which covers mechanical engineering services, embedded engineering services, software product engineering services, PLM services, and Industry 4.0. His IoT coverage includes consumer IoT, industrial IoT and smart cities He also tracks telecom and manufacturing verticals. He authored various industry leading engineering services research reports including HFS engineering services blueprints, HFS engineering services top 20, HFS engineering services quarterly trends, etc. He is regularly quoted in media on engineering services, IoT and outsourcing trends. Some of the media publications he is quoted in include Harvard Business Review(HBR), NDTV, Times of India, Economic Times, Business Standard, Hindu, Business Line, Livemint, Financial Express, Rediff, Voice of America, and Business Insider.

Read [email protected]

@pareekhjain

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Pareekh JainSenior Vice President and Managing Director India

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https://www.hfsresearch.com/team/pareekh-jain

mailto:[email protected]

https://twitter.com/pareekhjain

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Tanmoy Mondal is a Senior Research Analyst at HFS Research, identifying global trends in engineering services from both industry & technology perspectives, tracking global outsourcing deals & investments including partnership agreements & R&D announcements in the sector and supporting the domain leads in secondary research, data analysis, PoV’s and research writing.

Tanmoy has over 4 years of research, pre-sales and market intelligence experience in TCS, HCL and Tracxn. At his TCS and HCL role, he worked on preparing RFP responses including solution construct and commercial proposition. He was responsible for analyzing the business scenario for ERP implementation for different industry verticals and participated in several Enterprise Transformation projects across domains to optimize the IT landscape, increasing IT integration among client business verticals, improving productivity and reducing business incidents. At Tracxn, he was part of the emerging technology team that helped finding companies (start-ups) specializing in upcoming technologies (virtual/augmented reality, drone etc.) for acquisition and portfolio investments for PE and VC firms.

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[email protected]

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Tanmoy MondalSenior Research Analyst

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mailto:[email protected]

http://www.hfsresearch.com/


HFS Research: Defining Future Business Operations

The HFS mission is to provide visionary insight into the major innovations impacting business operations: Automation, Artificial

Intelligence, Blockchain, Internet of Things, Digital Business Models and Smart Analytics.

HFS defines and visualizes the future of business operations across key industries with its OneOffice™ Framework.

HFS influences the strategies of enterprise customers, to help them develop OneOffice backbones to be competitive and to partner with

capable services providers, technology suppliers, and third-party advisors. The "As-a-Service Economy" and "OneOffice" are

revolutionizing the industry.

Read more about HFS and our initiatives on our website.

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Documents

Cognizant—HFS Blueprint Report: Software Product ...engineering services market across the value chain for new product development, product sustenance, product ... and adopted the