Strategic Opportunities

The IUP Journal of Business Strategy Vol XII No 1 201522

Strategic Opportunitiesfor Indian IT Companies A Study

Indian ITITES industry has seen unparalleled growth since its inception and has been contributingsubstantially to Indiarsquos GDP as compared to other industries This being a knowledge industry has beenless affected by the economic downturn The success story of the Indian IT industry propelled othercountries to expand their business portfolio to move higher towards services offering to a wider geographicbase This forced the value proposition to shift from labor arbitrage to innovation non-linear businessmodels and transformational business needs Hence it has put tremendous pressure on the companies tochange the traditional business model for sustaining future growth The emergence of disruptivetechnologies talent scarcity and cutthroat competition are the major forces acting on the organizationsimpelling them to evolve from traditional linear business model to nonlinear business model Clearly theIndian IT companies need to think from the strategy perspective to garner the customer value chain togain sustainable competitive advantage This study will help the Indian IT companies to cope with thedynamic environment and deal successfully with rivals and challenges that stand as hurdles and obstaclesto their growth

Yagnil Mehta and U S Rao

PG Student Sri Sathya Sai Institute of Higher Learning Prashanthi Nilayam 515134 Ananthapur AndhraPradesh India India E-mail yagnil1988gmailcom

Former Hon Professor Sri Sathya Sai Institute of Higher Learning Prashanthi Nilayam 515134 AnanthapurAndhra Pradesh India India E-mail usraosssihlgmailcom

copy 2015 IUP All Rights Reserved

IntroductionInformation Technology (IT) being a knowledge-based industry and often known as knowledgeeconomy has grown tremendously since the early 1990s and has the potential to become thekey driver for the accelerated growth amongst all the sectors and to contribute substantiallyto GDP employment and exports It has also forced many IT firms to concentrate on optimalutilization of resources productivity and efficiency in terms of both human and hardwareresources The upcoming trends of disruptive technologies like cloud computing andsustainability and Green-IT have the capability to change the equations The value propositionhas also shifted from labor arbitrage to innovation skill variety transformational objectivesand non-linear growth models The success of India in the IT sector has also propelled thelow-cost economies enabling the big players to add offerings and move higher towards serviceofferings catering to a wide geographic base More and more people are using the best of thetechnologies and the consumption patterns are also shifting from US and UK to India Chinaand Latin America (PricewaterhouseCoopers Indian ITITES Industry ndash Evolving BusinessModels for Sustained Growth 2010) According to NASSCOM IT-BPO Industry of Indiahas registered continuous growth in revenues as shown in Figure 1

23Strategic Opportunities for Indian IT Companies A Study

Figure 1 IT-BPO Revenues

Source NASSCOM (2012)

This is one of the industries that is very less affected compared to other industries by theeconomic downturn and India like any other emerging market continues to exercise stronggrowth and opportunities (Mittal IT has packed Agenda 2012) Businesses are also lookingto IT to help face the challenges of modern customer support supply chain managementoptimizing complex business processes and accelerating innovation drive in various businessesEvery industry every process every business paradigm is being re-examined re-engineeredand re-defined In the same way new technology development is also impacting the personaland social lives along with the communities and the societies in which we live(Chandrashekharan 2013) India also holds a dominant share of the global offshore IT-ITESsector approximately 65 of the global market in offshore IT and 46 of the ITES marketIn fact estimates by National Association of Software Services Companies (NASSCOM)and Booz Hamilton say that IT-ITES export could touch $3289 bn by 2020 (Sameer 2010)Internet-linked services and its penetration will generate $100 bn or 33 to Indiarsquos GrossDomestic Product (GDP) by 2015 up from $30 bn or 16 to GDP in 2011 (The HinduBusiness Line 2012) The Industry has traditionally started tapping the opportunities in themainframe space and still this section holds the major portion of the maintenance businessThe development of the modern technologies and the Internet-based technologies promotethe thriving explosion of the opportunities in todayrsquos shrinking world(PricewaterhouseCoopers 2010)

Having seen the significant importance of IT in the business processes and growth ITstrategy has become one of the prime factors while designing business strategies fororganization It makes sure that organizational goals are crafted in line with IT strategicprocess The global business provides enormous opportunities as well as challenges as imposed


by regulatory or market forces which are rapid and radical To respond to these changesbusiness firms should not only develop business strategies but also align them with IT strategiesto remain ahead in the world of cutthroat competition The Indian IT industry which hasspread across the global map in almost 52 countries now needs IT strategies for taking thegrowth story forward With IT becoming so central to business development and strategies itneeds to be given much more attention than it was given in the past

Technological advancements are putting further pressure on each and every firm to remaincompetitive and also creating new opportunities for development and innovation The$100 bn Indian IT sector is seeing a change in the pecking order and continues to see pricingpressures small wage hikes and reduction in project volumes in an uncertain economicclimate (The Hindu Business Line 2012) In addition to that educated buyers and customersare demanding higher value for money and hence there is a strong need to align theorganizationrsquos business strategy to IT strategy to offer transformed business propositions andmore value to customers Therefore the continuous drive concentrated on the RampD theinnovation capabilities and the operational efficiencies will force organizations to beinnovative and offer unique business solutions to the customers The industry needs toembrace new business models which create higher value added offerings to customers

Literature ReviewDrsquoAveni (2004) in his article ldquoCorporate Spheres of Influencerdquo explains that it is a frameworkto examine the strategic intent of the organizationrsquos portfolio and its impact on the competitivestrategy Sphere consists of product and geographical portfolio on steroid which is a portfoliowith influence over the organizationrsquos competitive space It clearly gives a systematic approachto develop and manage corporate portfolio that operates integrates and moves beyond thetraditional models The framework also considers market power economies of scale andsynergies while using companyrsquos portfolio to mold the portfolio of rivals to create morefavorable situations It also helps organizations to protect their cores and project the powerto weaken the rivals and devise strategic future moves The organizations must invest inother markets that are used as a defence to core The various zones of the sphere are shown inTable 1

Table 1 Zones of Sphere

Zone of the Sphere Strategic Intent

Core bull To keep economies of scale and value leadershipbull To build critical core competencies

Vital Interests bull To create economies of scope and integrationbull To support leverage or fund core initiatives

Buffer Zones bull To use blocking brandsproducts as barriers to entrybull To fill in a lsquopower vaccumrsquo before a rival does

Pivotal Zones bull To invest in real options ndash risky big upside opportunitiesbull To absorb into (and hence migrate) the core in the long term


A well-balanced corporate sphere indicates the organizationrsquos grand strategies andmaintaining of the market power with respect to its rivals (DrsquoAveni 2004)

Core CompetenceIn their article ldquoThe Core Competence of the Corporationrdquo Prahalad and Hamel (1990)have mentioned that the most powerful way to prevail in the cutthroat competition in theglobal scenario is through the core competence of the organization Core competence providesthe potential access to a wide variety of the global markets It makes a remarkable contributionto the perceived customer benefits of the end product It is also difficult for the competitorsto imitate Hence the top managementrsquos real responsibility lies in the building of strategicarchitecture that enforces competence building of the organization (Prahalad and Hamel1990)

Mapping Your Competitive PositionDrsquoAveni (2007) in his article ldquoMapping Your Competitive Positionrdquo explains that with thedynamic environment and rapidly changing technology organizations need to build freshcompetitive advantages and countervial otherrsquos competitive advantages much faster thanthey used to do In hypercompetitive market this tool is very useful in helping the organizationto systematically analyze their competitorsrsquo position He suggests that companies could capturetheir competitive positions by drawing the price-benefit positioning map It is also used byorganizations to benchmark themselves against their competitors and combat their (rivalsrsquo)strategies Hence by knowing the companyrsquos related position against their competitors itcan device strategies to move up in the value chain

Strategic AnalysisThat brings us to the various profitable areas Indian IT companies need to enter to getsustainable competitive advantage over its competitors and continue to be among the topIndian IT companies and become a top global company To know more about which areaIndian IT companies should enter or in which area they should increase their presence weneed to look at the corporate sphere of influence The strategies can be formulated for currentbusinesses and emerging businesses to harness the opportunities to garner the customervalue chain by evolving from traditional value chain to value grid

Core Competencies of Indian IT CompaniesIndian IT Companiesrsquo core competencies comprise highly skilled and experienced manpowerand Organizational Culture and Global Network Delivery Model (GNDM) which provides

Table 1 (Cont)Zone of the Sphere Strategic Intent

Forward Positions bull To launch offensive strikes to capture rivalsrsquo strongholdsbull To establish multimarket contact in a rivalrsquos corebull To harass distract or divert a rivalsrsquos resources or attention

Power Vacuums bull To be monitored to anticipate future threats and opportunities inemerging areas currently not controlled by any major player

Source DrsquoAveni Corporate Spheres of Influence (2004)


difficult-to-beat end-to-end IT services proposition These give Indian IT companies asustainable competitive advantage over other competitors

As shown in Figure 2 India has the most diverse and talented human capital whichbecomes a significant differentiator in harnessing the upcoming business opportunities infive areas viz social media big data mobility analytics and artificial intelligence

Figure 2 Human Capital Leadership


GNDM has supported the full service capabilities and this strategy is widely recognizedby leading industry analysts and observers as an industry benchmarkmdashoffering lsquoone globalservice standardrsquo to customers across the world seamlessly This model helps customers intheir business expansion plans in emerging markets It also supports customersrsquo variousoperations in different regions of the world This concept has given a significant advantageto the Indian IT companies as they are have a presence in almost all prime business locationsand provide the same superior quality service anytime and anywhere

Hence Indian IT companies need to capitalize their core competencies to remaincompetitive and stay ahead

Mapping the Competitive Position of Indian IT CompaniesIndian IT companiesrsquo competitive position has been plotted by considering two factorsvalue and margins To map competitive position a few major direct competitors are consideredviz TCS Infosys Wipro and Cognizant The major indirect competitors chosen are GoogleFacebook IBM and Accenture

From Figure 3 it is clear that TCS is far behind the global giants like IBM GoogleFacebook and Accenture in terms of high value added businesses and high margins There iscutthroat competition in application development and BPO offerings and Indian ITcompaniesrsquo margins are falling very fast On the other hand Apple Google Facebook IBMand Accenture are delivering high value to the customers and they are also getting high


margins because of their unique capabilities in offering services and products Indian ITcompanies should move up in the value chain to get sustainable competitive advantage overothers by leveraging on their core competencies and extending their capabilities

The corporate spheres of influence for Indian IT companies are shown in Figure 4

CoreThe core of the sphere for the organization is the products or services which generate themajor portion of revenues and profit This is also the basis of the organizationrsquos power Theseare the areas in which an organization wants to create its core competencies It demandsvalue leadership and dominance over the core market (DrsquoAveni 2004) The areas for IndianIT companies are application development and BPO which generate almost 56 of therevenues for the companies Indian IT companies must give priority to safeguarding theircore areas

Vital InterestsThe vital interests provide the core with critical and significant complementary strengthsthat create integration as well as economies of scope Moreover they leverage or support the

Figure 3 Mapping Competitive Position of Indian IT Companies

Facebook Google

IBM

Accen-ture

TCS

Cognizant

Infosys

Wipro

Value

Mar

gin


competencies and core initiatives These provide resources such as raw materials know-howand skilled labor (DrsquoAveni Corporate Spheres of Influence 2004) Indian IT companies haveenterprise solutions and infrastructure services as vital interests in their portfolio

Buffer ZonesThese are defensive positions which provide protection against attack by a rival which mayenter the core Buffer zones are expendable because they constitute a small percentage of thecompanyrsquos revenues The company does not mind losing a battle in the buffer zone than inthe core thus protecting the companyrsquos core products or services (DrsquoAveni 2004) In thissphere Indian IT companies have Global Consultancy and Engineering and Industrial Serviceswhich generate 8 of the revenues

Figure 4 Corporate Spheres of Influence for Indian IT Companies

Note SMACmdashSocial Media Mobility Analytics and Cloud Computing

Forward PositionsSearch Engine Social Media

Portal KPO and ProductDevelopment

Pivotal PositionsSMAC Cyber Security and

E-Commerce

Buffer ZonesGlobal Consulting and

Engineering and IndustrialServices

Vital InterestsEnterprise Solutions andInfrastructure Services

Core

Application

Development

and BPO


Pivotal ZonesThese are the future of the industry or in which future power may reside Entering andsecuring a position in the pivotal zone is making a bet on the future but not with any particularany rival in the back of the mind (DrsquoAveni Corporate Spheres of Influence 2004) Theseareas are Social Media Mobility Analytics and Cloud Computing (SMAC) cyber securityand e-commerce These are the future of the IT industry towards which the entire world willbe moving and hence Indian IT companies should get into these areas by leveraging theircore competencies

Forward PositionsThese offensive positions are frontline positions and typically are the vital interests or coreof the specific competitor These positions can be used to destroy or weaken the core part ofa competitor but it can also be used to create stability when each rival defends and maintainspositions in the otherrsquos core to build mutually assured deterrence These positions can also beused to distract harass or divert a competitorrsquos resources and attentions (DrsquoAveni 2004) Inthis area Indian IT companies should focus on search engine and product development(against Google and Microsoft) social media portal (against Facebook and Twitter) and KPOservices

The corporate spheres of influence have given us the areas where Indian IT companiesmust enter to gain sustainable competitive advantage (see Table 2) Now we can find theapproximate growth rate of the current business areas of Indian IT companies and how far itshould sustain the growth rate for a place on the global business map

Current Businesses

Application Development and Maintenance 4470 2301

BPO 1100 2301

Assurance Services 750 2301

Asset Leveraged Solutions 390 2301

New Businesses

Engineering and Industrial Solutions 460 5000

Global Consulting 260 5000

Enterprise Solutions 1100 5000

Business Intelligence 460 5015

Infrastructure Services 1010 5015

Table 2 Areas Which Indian IT Companies Must Focuson to Emerge as Global Players

Particulars

Average ofRevenue in 2012-

2013 of TCSInfosys and Wipro

Projected GrowthRate ()


Figure 5 Revenue Growth of IT Companies

Revenue GrowthThe revenue growth of IT companies is shown in Figure 5 The revenue growth rate of TCSincreased from 9774 cr in FY2005 to 4889408 cr in FY2012 It grew by approximately2626 on an average during this period while Cognizantrsquos revenues grew by approximately3894 on an average during the same period from 386753 cr in FY2005 to 3746701 inFY2012 Infosysrsquo revenues grew from 7130 cr in FY2005 to 33734 cr in FY2012 It grew byapproximately 2543 on an average during this period Wiprorsquos revenues grew from 727618cr in FY2005 to 3168290 cr in FY2012 It grew by approximately 2461 on an averageduring the same period (see Table 3)

Table 2 (Cont)

Particulars




Make an entry intoselected promisingareas by acquisitionsor joint ventures

Emerging Businesses

Social Media

Product Development and Systems Software

Mobility

Cyber Security

Search Engine

E-Commerce

Chip Design and Embedded Systems

Animation and Gaming

Total 10000

60000

50000

40000

30000

20000

10000

02005 2006 2007 2008 2009 2010 2011 2012

TCS

Infosys

Wipro

Cognizant


And Indian IT companies must find a way to match the rate at which other global giantsare growing

Sustainable GrowthThe sustainable growth rate is the maximum growth rate a company can achieve with arobust and sound financial policy It is calculated as follows

Sustainable Growth Rate = (P(1 ndash d) (1 + L)) (Tndash (P (1 ndash d) (1 + L)))

where

P is the existing and target profit margin

d is the target dividend payout ratio

L is the target total debt-to-equity ratio and

T is the ratio of total assets to sales

The company can achieve sustainable growth rate by increasing financial leverageincreasing equity capital or increasing profit margins

Target debtEquity ratio = 1 1

Sustainable Growth Rate = (02126 (1 ndash 033) (1 + 1))

((27055963211209) ndash (02126 (1 ndash 033) (1 + 1)))

= 5134

The sustainable growth rate is almost three times more than normal growth rate (2301ndash revenue growth rate in last five years) and hence Indian IT companies can raise the debt toachieve sustainable growth rate of almost 5134 This will enable Indian IT companies tolook out for new opportunities to grow faster

Hence considering the opportunities which exist for current as well as new products andservices this is high time for Indian IT companies to embrace the emerging opportunities byleveraging on their strengths and adopting the non-linear business model achieve sustainablegrowth and garner customer value chain

Average fromTCS Infosys Wipro Average

2009-2013

Revenues 4141069 2796578 2695979 3211209(in cr)

Total Assets 2638096 2740060 2738632 2705596(in cr)

Margins 2224 2562 1593 2126

Dividend 038 03 03 033Payout Ratio

Table 3 Key Financials of Indian IT Companies from 2009 to 2013


Strategy RecommendationsWith the emergence of disruptive technologies and cutthroat competition in low valueadded businesses the firms need to move to high value added areas across the value chain togrow consistently The technological developments are also mounting pressure on the currentlinear business model of the organizations With the rapid adoption and acceptance of IT invarious verticals the customersrsquo knowledge and understanding of the areas have also improvedThe organizations also need to think out of the box and evolve from traditional value chainto value grid and fence their core and vital businesses to get sustainable competitive advantage

Strategies for Indian IT Companies

1 Indian IT companies should acquire skills in the social media (which is one of theemerging technological trends) in the following ways

bull Acquire companies which have expertise in social media to get theknow-how Table 4 lists the recent mergers and acquisitions in social media

Table 4 Recent Mergers and Acquisitions in Social Media

Acquirer Target Month Description

IBM Kinexa April 2012 To improve customer service by providing front-office software tools and foster internal innovationand expert discovery through a cloud-based socialnetwork solution

LinkedIn SlideShare May 2012 To get connected to people through content sharing

Facebook Instagram April 2012 To get photo sharing applications from Instagram

Source Bird and Ward (2013)

bull Provide training and development programs to employees to build competencieswhich are required for social media as India being the human capital leader ithas an ample talent pool which can build the competencies required to harnessthe potential of social media

bull Make strategic alliance with the companies which have the expertise in socialmedia for example in August 2013 Google Wildfire and Isobar announced aglobal strategic alliance Through this alliance Isobar will have the benefit ofusing Wildfirersquos Security-as-a-Service (SaaS) to achieve new level of globalscale and true accountability (Brockington 2013)

2 Indian IT companies should acquire skills in enterprise mobility (which is one ofthe emerging technological trends) in the following ways

bull Acquire companies which have the expertise in enterprise mobility to get theknow-how Table 5 lists the recent mergers and acquisitions in enterprisemobility


Table 5 Recent Mergers and Acquisitions in Enterprise Mobility


Source McQuire and Salmeron (2012)

AppSense Rapsphere May 2012 To embrace BYOD in the enterprise whileprotecting corporate applications and data on mobiledevices

SAP Syclo April 2012 To strengthen and broaden the Enterprise Mobileapplications portfolio

IBM Worklight February The industry leader (Worklight) helps to reduce2012 the time to market complexity and cost

Motorola Rhomobile October To expand their Enterprise Mobile applicationsSolutions 2011 portfolio

bull Provide training and development programs to employees to build competencieswhich are required for enterprise mobility (organic growth)

bull Make strategic alliance with the companies which have the expertise inenterprise mobility for example in March 2012 IBM Global Business Servicesformed a strategic alliance with Huawei to develop mobile solutions forenterprise customers (ITP 2012)

3 Indian IT companies should acquire skills in the cloud computing (which is one ofthe emerging technological trends) in the following ways

bull Acquire companies which have the expertise in cloud computing to get theknow-how Table 6 lists the recent mergers and acquisitions in cloud computing

Table 6 Recent Mergers and Acquisitions in Cloud Computing


Source Boissevain and Cummings (2012)

Oracle Taleo February 2012 For expansion of cloud computing business

Twitter Dasient January 2012 To get cloud-based antimalware technology

IBM Platform January 2012 To get grid and cloud management software forComputing distributed computing environment

IBM Green Hat January 2012 To get automation testing tools for integrationimplementation and cloud-based deployment

bull Provide training and development programs to employees to build competencieswhich are required for cloud computing (organic growth)

bull Make strategic alliance with the companies which have the expertise in cloudcomputing for example in July 2013 IBM formed a strategic alliance withEMC for Platform as a Service (PaaS) (ITBusinessEdge 2013)


4 Indian IT companies should use their highly skilled and experienced manpower inthe emerging technological trends like SMAC in the following ways

bull Acquire companies which have the expertise in SMAC to get the know-how(inorganic growth)

bull Provide training and development programs to employees to build competencieswhich are required for SMAC through RampD (organic growth)

bull Make strategic alliance or joint venture with the companies which have theexpertise in SMAC

5 Indian IT companies should enter into defence and aerospace sector by offeringcyber security and cyber warfare applications by creating a separate division whichwill cater to their needs

6 Indian IT companies should get into search engine development for IndianGovernment as it would like to avoid using Google on concerns of spying and cybersecurity

The spying activities of the US on Google Facebook and other social networking siteshave increased a lot They are collecting huge amounts of Internet and confidential data(McGregor and Waters 2013) Hence the Indian government will support a local searchengine with cyber security Later it can be made available for the entire country in variouslanguages and extended to China and other countries after addressing their cyber securityrequirements

7 Indian IT companies must acquire certain skills in cyber security (one of the biggestconcerns in the world) in the following ways

bull Acquire companies which have the expertise in cyber security to get the know-how Table 7 lists the recent mergers and acquisitions in cyber security

Table 7 Recent Mergers and Acquisitions in Cyber Security

Acquirer Target MonthYear Description

Source Booton (2013)

Cisco Sourcefire (FIRE) October 2013 To provide intelligent cyber security solutions

IBM Trusteer August 2013 To provide cyber security solutions

Intel McAfee February 2011 To include next-generation firewalls andintrusion detection

bull Provide training and development programs to employees to build competencieswhich are required for cyber security through RampD (organic growth)

bull Make strategic alliance or joint venture with the companies which have theexpertise in cyber security for example in September 2013 Alert Logic which


is the leading provider of SaaS solutions for the cloud allied with Kroll- theworldrsquos leading risk management to tackle data breaches and other securityattacks Jaiprakash Associates will open a chip unit in association with IBM totackle security issues in space atomic energy defence and power sectors

8 Indian IT companies should develop e-commerce portals logistics managementsoftware and online marketing portal which will be helpful for Small and MediumEnterprises (SMEs)

9 Indian IT companies should move higher in the value chain to get sustainablecompetitive advantage by entering into high value added businesses of productdevelopment Table 8 shows the difference between revenues and profit as of 2012of TCS Infosys and Apple As we can see the product development companyApplersquos revenue and profit are much ahead of Infosys and TCS with less number ofemployees

bull Acquire companies which have the expertise in high value added businesses toget the know-how Table 9 lists the recent mergers and acquisitions of productdevelopment firms

Table 9 Recent Mergers and Acquisitions of Software Product Development Firms

Acquirer Target Year Business

Google Bump 2013 Mobile Software

Microsoft id8 Group R2 Studios 2013 Home Automation

Google Channel Intelligence 2013 Product e-commerce

Apple AuthenTec 2012 PC and Mobile Security Products

Source Google Microsoft and Apple (2013)

Table 8 Product Versus Service

Apple Infosys TCS

Founded 1976 1988 1968

Employees 72800 155629 263637

Revenue 156508 70 1017(Y2012 billions US$)

Profit 41733 171 22(Y2012 billions US$)

Revenue (US$) 2150 million 44978 38575per Employee

Profit (US$) per Employee 573255 10987 8344

Source Verma (2013)


bull Provide training and development programs to employees to build competencieswhich are required to grow more in product development through RampD (organicgrowth)

bull Make strategic alliance or joint venture with the companies which have theexpertise and large market share in product development as MSC Software andIBM formed the global strategic alliance to help industrial manufacturingcustomers like automotive defence and aerospace (PRNewswire 2013)

bull Make partnership with the major clients in high value added businesses

10 Indian IT companies can also promote or form subsidiaries for rural shores ndash ruralBPO to achieve inclusive growth and compete effectively with companies fromthe Philippines Bangladesh Cuba China Sri Lanka Vietnam etc

11 Indian IT companies should selectively move into various countriesmarkets likeChina Middle East South Africa Australia Japan APAC etc to diversify therisks related to specific markets like US and Europe as Infosys has recently openedthe new branch in Sydney as it expects business growth of more than 500 in NewSouth Wales by 2018 (Deccan Chronicle 2013)

bull Acquire companies which have the large market share in these countries(inorganic growth)

bull Set up development and delivery centres in these countries

bull Make strategic alliance or joint venture or collaboration or partnership withthe companies which have the large market share in these countries

bull Make collaboration or partnership with big clients in these countries to spreadthe footprints

12 Indian IT companies should increase their presence in emerging verticals likehealthcare education energy and utilities and e-governance in the following ways

bull Acquire companies which have the expertise in these sectors to get the know-how (inorganic growth)

bull Provide training and development programs to employees to build competencieswhich are required to grow more in these sectors through RampD (organicgrowth)

bull Make strategic alliance or joint venture with the companies which have theexpertise and large market share in these sectors as Cognizant is the marketleader in the health and life science sector IBM is the market leader in energyand utilities sector Moreover Samsung has already started enterprise solutionsfor healthcare education transportation and hospitality Hence Indain ITcompanies should form strategic alliance with Samsung to get to know aboutvarious verticals


bull Make partnership with the major clients in these sectors like Apollo Hospitalsstate governments various educational institutions etc

13 Indian IT companies should get into IT consultancy IT services managementmarket intelligence KPO CRM and predictive analytics which are high valueadded in the following ways

bull Acquire companies which have the expertise in the above-mentionedtechnology trends to get the know-how (inorganic growth)

bull Provide training and development programs to employees to build competencieswhich are required for the above-mentioned technology trends through RampD(organic growth)

bull Make strategic alliance or joint venture with the companies which have theexpertise in the above-mentioned technology trends

ConclusionClearly the IT industry is at a very crucial stage and it has the potential to become one of theimportant growth engines of the Indian economy It can contribute to urban employmentand exports to achieve a vision of lsquoyoung and resilientrsquo India The study avers that for capitalizingon the above opportunities it is necessary for Indian IT companies to create profit centres fornew areas of business under able and dynamic leaders (by putting under each profit centers allthe allied businesses) giving them the necessary mandate to make companies significant playersin the world in each of these areas The study is helpful to the companies to cope with thedynamic environment to gain sustainable competitive advantage to evolve from traditionalvalue chain to value grid and to become top global IT companies in the world

Limitations of the Study

bull The study mainly uses secondary data available in the respective sectors and henceit is bound by limitation of information available

bull The selection of companies (Top Indian IT companies) is based on the data availableand also as per the credibility expressed by the various websites

Scope for Further Study Future studies can focus on collecting primary data throughinterviews of top executives who can give more meaningful insights The most strategicopportunities for Indian IT companies are in the emerging technological areas IT being avolatile industry these technological areas can be studied in-depth for a comprehensiveunderstanding of the challenges and opportunities for Indian IT companies

References1 Bird T and Ward T (2013) ldquoUnited Kingdom Technology MampA ndash Trends For 2013-14

Social Networkingrdquo Retrieved from mondaq httpwwwmondaqcomx219194M+A+Private20equityTechnology+MA+Trends+For+2013+4+Social+Networking


2 Boissevain B and Cummings D (2012) Agile Equity Cloud MampA Activity Report FebruaryRetrieved from Agile Equity httpwwwagileequitycomreportscloud-report-feb2012html

3 Booton J (2013) Cyber Security Ablaze in MampA World September 13 Retrieved fromFoxBusiness httpwwwfoxbusinesscomtechnology20130913cyber-security-turns-red-hot-in-ma-world

4 Brockington T (2013) Googlersquos Wildfire and Isobar Form Global Strategic Alliance to AchieveAccountability in Social Media August 13 Retrieved from Campaignbrief httpwwwcampaignbriefus201308googles-wildfire-isobar-announhtml

5 Chandrashekharan N (2013 January 11) ldquoForget Slowdown We are on the Fast Lane ofTech-led Transformationrdquo Business Line

6 DrsquoAveni R A (2004) ldquoCorporate Spheres of Influencerdquo MIT Sloan Management Reviewpp 38-46

7 DrsquoAveni R A (2007) ldquoMapping Your Competitive Positionrdquo Harvard Business Reviewpp 110-120

8 Google Microsoft and Apple (2013) MampAs Retrieved from Google Microsoft Apple

9 Hamel C A (1990) ldquoThe Core Competence of the Corporationrdquo Harvard Business Review

10 IT Business Edge (2013 July 24) IBM Details the Strategy Behind its Pivotal PaaS AllianceRetrieved from ITBusinessEdge httpwwwitbusinessedgecomblogsit-unmaskedibm-details-the-strategy-behind-its-pivotal-paas-alliancehtml

11 ITP (2012) Huawei and IBM Collaborate on Enterprise Mobility March 8 Retrieved fromITP httpwwwitpnet588204-huawei-and-ibm-collaborate-on-enterprise-mobilityUqc7F9LfDds

12 McGregor R and Waters R (2013) Google and Facebook Call for End to US Spy AgenciesrsquoData Mining December 9 Retrieved from The Financial Times Ltd httpwwwftcomcmss0416fdd82-6059-11e3-b360-00144feabdc0htmlaxzz2nWl6quPW

13 McQuire N and Salmeron A (2012) Mobility Platform as a Service for Mobile EnterpriseEnablement and Acceleration

14 Mittal S (2012) ldquoIT has Packed Agendardquo The Hindu Survey of Indian Industry

15 NASCCOM (2011) Indian ITES and BPO Industry

16 NASSCOM (2015) Human Capital Leadership Worldrsquos Largest Most Diverse Talent PoolRetrieved from NASSCOM httpwwwnasscominknowledge-professionals

17 Prahalad and Hamel (1990) ldquoThe Core Competence of the Corporationrdquo Harvard BusinessReview Vol 68 No 3 pp 79-91


Reference 33J-2015-03-02-01

18 Pricewaterhouse Coopers (2010) Indian ITITES Industry ndash Evolving Business Models forSustained Growth

19 P R Newswire (2013) IBM and MSC Software Form Global Strategic Alliance to Help IndustrialManufacturing Customers Improve Product Development February 18 Retrieved fromPRNewswire httpwwwprnewswirecomnews-releasesibm-and-mscsoftware-form-global-strategic-alliance-to-help-industrial-manufacturing-customers-improve-product-development-71689022html

20 Sameer S (2010) IT Industry amp TCS Strategy Analysis

21 The Hindu Business Line (2012) ldquoITrsquos a Change of Hierarchyrdquo August 7 The HinduBusiness Line

22 Verma R (2013) Whatrsquos Wrong With Indian IT Industry February 5 Retrieved fromSlideshare httpwebcachegoogleusercontentcomsearchq=cacheUpyYaOHksHsJw w w s l i d e s h a r e n e t R a j e s h R a j Va r m a w h a t s - w r o n g- w i t h - i n d i a n - i t -industry+ampcd=1amphl=enampct=clnkampgl=in

Reproduced with permission of the copyright owner Further reproduction prohibited withoutpermission


Figure 1 IT-BPO Revenues


This is one of the industries that is very less affected compared to other industries by theeconomic downturn and India like any other emerging market continues to exercise stronggrowth and opportunities (Mittal IT has packed Agenda 2012) Businesses are also lookingto IT to help face the challenges of modern customer support supply chain managementoptimizing complex business processes and accelerating innovation drive in various businessesEvery industry every process every business paradigm is being re-examined re-engineeredand re-defined In the same way new technology development is also impacting the personaland social lives along with the communities and the societies in which we live(Chandrashekharan 2013) India also holds a dominant share of the global offshore IT-ITESsector approximately 65 of the global market in offshore IT and 46 of the ITES marketIn fact estimates by National Association of Software Services Companies (NASSCOM)and Booz Hamilton say that IT-ITES export could touch $3289 bn by 2020 (Sameer 2010)Internet-linked services and its penetration will generate $100 bn or 33 to Indiarsquos GrossDomestic Product (GDP) by 2015 up from $30 bn or 16 to GDP in 2011 (The HinduBusiness Line 2012) The Industry has traditionally started tapping the opportunities in themainframe space and still this section holds the major portion of the maintenance businessThe development of the modern technologies and the Internet-based technologies promotethe thriving explosion of the opportunities in todayrsquos shrinking world(PricewaterhouseCoopers 2010)

Having seen the significant importance of IT in the business processes and growth ITstrategy has become one of the prime factors while designing business strategies fororganization It makes sure that organizational goals are crafted in line with IT strategicprocess The global business provides enormous opportunities as well as challenges as imposed




































Facebook Google

IBM

Accen-ture

TCS

Cognizant

Infosys

Wipro

Value

Mar

gin









E-Commerce




Core

Application

Development

and BPO





Current Businesses


BPO 1100 2301



New Businesses







Particulars







Table 2 (Cont)

Particulars





Emerging Businesses

Social Media


Mobility

Cyber Security

Search Engine

E-Commerce



Total 10000

60000

50000

40000

30000

20000

10000

02005 2006 2007 2008 2009 2010 2011 2012

TCS

Infosys

Wipro

Cognizant





where








((27055963211209) ndash (02126 (1 ndash 033) (1 + 1)))

= 5134




2009-2013

Revenues 4141069 2796578 2695979 3211209(in cr)


Margins 2224 2562 1593 2126






































































Apple Infosys TCS

Founded 1976 1988 1968

Employees 72800 155629 263637





Source Verma (2013)














































Reference 33J-2015-03-02-01










































Facebook Google

IBM

Accen-ture

TCS

Cognizant

Infosys

Wipro

Value

Mar

gin









E-Commerce




Core

Application

Development

and BPO





Current Businesses


BPO 1100 2301



New Businesses







Particulars







Table 2 (Cont)

Particulars





Emerging Businesses

Social Media


Mobility

Cyber Security

Search Engine

E-Commerce



Total 10000

60000

50000

40000

30000

20000

10000

02005 2006 2007 2008 2009 2010 2011 2012

TCS

Infosys

Wipro

Cognizant





where








((27055963211209) ndash (02126 (1 ndash 033) (1 + 1)))

= 5134




2009-2013

Revenues 4141069 2796578 2695979 3211209(in cr)


Margins 2224 2562 1593 2126






































































Apple Infosys TCS

Founded 1976 1988 1968

Employees 72800 155629 263637





Source Verma (2013)














































Reference 33J-2015-03-02-01
































Facebook Google

IBM

Accen-ture

TCS

Cognizant

Infosys

Wipro

Value

Mar

gin









E-Commerce




Core

Application

Development

and BPO





Current Businesses


BPO 1100 2301



New Businesses







Particulars







Table 2 (Cont)

Particulars





Emerging Businesses

Social Media


Mobility

Cyber Security

Search Engine

E-Commerce



Total 10000

60000

50000

40000

30000

20000

10000

02005 2006 2007 2008 2009 2010 2011 2012

TCS

Infosys

Wipro

Cognizant





where








((27055963211209) ndash (02126 (1 ndash 033) (1 + 1)))

= 5134




2009-2013

Revenues 4141069 2796578 2695979 3211209(in cr)


Margins 2224 2562 1593 2126






































































Apple Infosys TCS

Founded 1976 1988 1968

Employees 72800 155629 263637





Source Verma (2013)














































Reference 33J-2015-03-02-01






















Facebook Google

IBM

Accen-ture

TCS

Cognizant

Infosys

Wipro

Value

Mar

gin









E-Commerce




Core

Application

Development

and BPO





Current Businesses


BPO 1100 2301



New Businesses







Particulars







Table 2 (Cont)

Particulars





Emerging Businesses

Social Media


Mobility

Cyber Security

Search Engine

E-Commerce



Total 10000

60000

50000

40000

30000

20000

10000

02005 2006 2007 2008 2009 2010 2011 2012

TCS

Infosys

Wipro

Cognizant





where








((27055963211209) ndash (02126 (1 ndash 033) (1 + 1)))

= 5134




2009-2013

Revenues 4141069 2796578 2695979 3211209(in cr)


Margins 2224 2562 1593 2126






































































Apple Infosys TCS

Founded 1976 1988 1968

Employees 72800 155629 263637





Source Verma (2013)














































Reference 33J-2015-03-02-01













Facebook Google

IBM

Accen-ture

TCS

Cognizant

Infosys

Wipro

Value

Mar

gin









E-Commerce




Core

Application

Development

and BPO





Current Businesses


BPO 1100 2301



New Businesses







Particulars







Table 2 (Cont)

Particulars





Emerging Businesses

Social Media


Mobility

Cyber Security

Search Engine

E-Commerce



Total 10000

60000

50000

40000

30000

20000

10000

02005 2006 2007 2008 2009 2010 2011 2012

TCS

Infosys

Wipro

Cognizant





where








((27055963211209) ndash (02126 (1 ndash 033) (1 + 1)))

= 5134




2009-2013

Revenues 4141069 2796578 2695979 3211209(in cr)


Margins 2224 2562 1593 2126






































































Apple Infosys TCS

Founded 1976 1988 1968

Employees 72800 155629 263637





Source Verma (2013)














































Reference 33J-2015-03-02-01















E-Commerce




Core

Application

Development

and BPO





Current Businesses


BPO 1100 2301



New Businesses







Particulars







Table 2 (Cont)

Particulars





Emerging Businesses

Social Media


Mobility

Cyber Security

Search Engine

E-Commerce



Total 10000

60000

50000

40000

30000

20000

10000

02005 2006 2007 2008 2009 2010 2011 2012

TCS

Infosys

Wipro

Cognizant





where








((27055963211209) ndash (02126 (1 ndash 033) (1 + 1)))

= 5134




2009-2013

Revenues 4141069 2796578 2695979 3211209(in cr)


Margins 2224 2562 1593 2126






































































Apple Infosys TCS

Founded 1976 1988 1968

Employees 72800 155629 263637





Source Verma (2013)














































Reference 33J-2015-03-02-01











Current Businesses


BPO 1100 2301



New Businesses







Particulars







Table 2 (Cont)

Particulars





Emerging Businesses

Social Media


Mobility

Cyber Security

Search Engine

E-Commerce



Total 10000

60000

50000

40000

30000

20000

10000

02005 2006 2007 2008 2009 2010 2011 2012

TCS

Infosys

Wipro

Cognizant





where








((27055963211209) ndash (02126 (1 ndash 033) (1 + 1)))

= 5134




2009-2013

Revenues 4141069 2796578 2695979 3211209(in cr)


Margins 2224 2562 1593 2126






































































Apple Infosys TCS

Founded 1976 1988 1968

Employees 72800 155629 263637





Source Verma (2013)














































Reference 33J-2015-03-02-01










Table 2 (Cont)

Particulars





Emerging Businesses

Social Media


Mobility

Cyber Security

Search Engine

E-Commerce



Total 10000

60000

50000

40000

30000

20000

10000

02005 2006 2007 2008 2009 2010 2011 2012

TCS

Infosys

Wipro

Cognizant





where








((27055963211209) ndash (02126 (1 ndash 033) (1 + 1)))

= 5134




2009-2013

Revenues 4141069 2796578 2695979 3211209(in cr)


Margins 2224 2562 1593 2126






































































Apple Infosys TCS

Founded 1976 1988 1968

Employees 72800 155629 263637





Source Verma (2013)














































Reference 33J-2015-03-02-01











where








((27055963211209) ndash (02126 (1 ndash 033) (1 + 1)))

= 5134




2009-2013

Revenues 4141069 2796578 2695979 3211209(in cr)


Margins 2224 2562 1593 2126






































































Apple Infosys TCS

Founded 1976 1988 1968

Employees 72800 155629 263637





Source Verma (2013)














































Reference 33J-2015-03-02-01










































































Apple Infosys TCS

Founded 1976 1988 1968

Employees 72800 155629 263637





Source Verma (2013)














































Reference 33J-2015-03-02-01



























































Apple Infosys TCS

Founded 1976 1988 1968

Employees 72800 155629 263637





Source Verma (2013)














































Reference 33J-2015-03-02-01






































Apple Infosys TCS

Founded 1976 1988 1968

Employees 72800 155629 263637





Source Verma (2013)














































Reference 33J-2015-03-02-01




















Apple Infosys TCS

Founded 1976 1988 1968

Employees 72800 155629 263637





Source Verma (2013)














































Reference 33J-2015-03-02-01




















































Reference 33J-2015-03-02-01






































Reference 33J-2015-03-02-01

























Reference 33J-2015-03-02-01








Reference 33J-2015-03-02-01








Documents

Strategic Opportunities