I just got back from a flying (literally!) visit to India - flew 40 hours to be in Chennai for 70 hours.
While the visit was primarily to attend a cousin's wedding, I took the opportunity to meet with the board of a mid-tier IT firm and a few senior executives from some of the leading service providers in Chennai. Some of the discussions were indeed thought provoking and I acceded with alacrity to a request from a friend to address the Board of a mid-tier firm on what ails the Indian mid-tier firms from developing brand equity in Australia / New Zealand - to the same extent they have been able to develop in say, Europe or USA.
That set me thinking and I came up with essentially three reasons for this:
- Market size / dynamics - it is a small market when compared to Europe or US, the traditional hunting ground of the India based service providers. The market is dominated by the larger firms - the big 4 banks, a couple of large airlines, telcos and retain chains. There are simply not enough mid-tier firms that can deliver sustainable business to mi-tier IT firms!
- Price focus / Me-too story - very few of the mid-tier India based firms seem to possess a clearly defined and marketed differentiator. In a market like Australia which is driven by marketing & branding, it is essential to have a clear message in a highly networked marketplace - I am not sure if this is actively pursued by some of the mid-tier Indian firms.
- Advisor approach / existing brand equity - In my experience, I have found Australia to be an advisor driven market - most large firms work closely with the leading local analysts (& they may not always be the Gartners of the world!). An advisor driven strategy is essential for a firm to penetrate the market. Perhaps the smaller firms lack the financial muscle, the marketing budgets or the knowhow on effectively leveraging analysts to create brand equity.
During the discussions with the Board and the management team, I could discern that they & some other mid-tier India based service firms were actually considering decreasing their Australian investments or moving out altogether.
Reasons given are simple and comprehensive - it is an expensive country to do business in, returns are very slow to come by (& at the same time there is significant customer stickiness) - long and complex sales cycles, entrenched local and larger players, cost doesn't seem to be a key factor unlike in say the US, IT investments while seriously sized, are much smaller than the US or western Europe & there still seems to be some reluctance to engage even the larger IT firms for outcome based full-service contracts. What struck me in the discussions was one of the Board members speaking about price not being a differentiator and she felt this probably comes as a result of being an oligopoly.
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