Forrester on Indian firms Consulting capabilities

Stephanie Moore at Forrester has just issued a report (subscription required) on the consulting (as against software development/maintenance) capabilities being grown by major Indian firms.  A friend at an offshore vendor showed me a copy and asked for my opinion.

To start with, I think Stephanie is the most knowledgeable offshore analyst around. She has followed the offshore market for several years now, first at Giga and after Forrester acquired Giga. Secondly, the timing of the report is appropriate as most Indian firms are looking to move up the value chain, and their BPO initiatives are making them more savvy about business processes, not just technology tools.

But the report reflects the fragmented nature of market coverage at Forrester (and other analyst firms). Their services analysts are not that business process or vertical aware; their application analysts are much more aware of HR, supply chain or vertical process trends.

a) Most clients buy process consulting on a vertical (deep expertise in utility work management) at a horizontal basis (help us analyze compliance issues) or geographic basis.  Satyam and TCS are fairly strong in manufacturing markets, Wipro in energy/utilities, Infosys and Cognizant around banking/financial services. Frankly, none of the Indian firms have developed deep horizontal capabilities - best practices, process benchmarks around finance, procurement etc. The report is at a much higher level and evaluates the offshore vendors at that level - not at the vertical, horizontal or geographic level.

b) Quite a bit of process consulting is bought around enterprise applications. There is very little discussion of the vendors' savviness around packages like SAP, Oracle etc and how that has contributes to consulting revenues.

c) The report gives quite a bit of weight to the employee and management pedigree of the consulting arms. In particular, Forrester cites the fact that Infosys has been hiring ex Big Five consultants. Frankly, that scares a number of my clients. They are concerned that the "re-treads" (as one client calls them) will bring their traditional pricing and large project size mentality and corrupt the offshore model.

d) In what may be a typo Forrester assigns zero weight to a category called "Market presence". That could be because the current presence of Indian firms in the consulting market is fairly small. In fact, from what I hear from several offshore vendors many of the process and strategy consultants have to date had more impact making more traditional IT proposals, presentations and deliverables sharper - rather than generate consulting business.

e) I would have liked to see the report talk about how the consulting focus is also leading in to growing offshore vendor BPO positioning. Clients need quite a bit of consulting assistance around "buy v/s build" BPO decisions.

f) Finally, Forrester seems to suggest that potential rates for engagements sold as combined consulting and technical work could be as high as $ 200-250 an hour. No client that I know of is willing to pay an offshore vendor that much...frankly IBM, Accenture are not averaging anywhere close to that any more.

So, overall it is an early analysis of an exciting new area for Indian and other offshore firms. The vendor offerings and the analysis should both improve over time..