Intellectual Property Investment Will Push IT Firms' Growth

Constellation Research, Inc., the research and advisory firm focused on disruptive technologies, announced the publication of “Clients Want Outcomes, Are Indian IT Services Vendors Ready?” by Constellation Research CEO and Principal Analyst, R “Ray” Wang. This report reveals that IT Services firms that invest in Intellectual Property (IP)-based offerings will experience accelerated growth in the next 24-36 months. Research conducted by Constellation Research shows a staggering 80% of clients surveyed prefer ‘outcomes’ rather than technologies or solutions from IT service providers. The resulting demand-side dynamics of this preference will compel services firms to focus on IP versus vanilla offerings.

This “Big Idea” report explores the future of the IT services market and helps buyers understand what to expect from Indian IT service providers. Based on the shifts in the technology purchasing environment, Constellation recommends four business models for Indian IT Services providers seeking to drive non-linear growth. Indian IT services firms can create high-volume, high-value opportunities for themselves by applying differentiated intellectual property (IP) creation, enabling disruptive technology-focused business models, delivering innovation value chains, and leading partner ecosystems.

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Disruptive Technology Drives Non-Linear Growth

The abundance of disruptive technologies in Cloud, Mobile, Social and Big Data presents tremendous opportunities for Indian IT firms to craft new business paradigms that expand the business and strengthens relationships with customers. Wang says, “Indian firms should now understand that their conventional business models have matured. Not only have their buyers’ technology challenges and priorities changed, their buyers’ profile itself is changing. Clients have moved way beyond mere staff augmentation, infrastructure, testing and advice. As long as IT services firms deliver on promised outcomes, clients do not care what database, hardware or internal middleware is used to deliver the solution.”

However, Wang warns that simple adoption of new technologies alone will not drive growth. “Success lies in the creation of new business models that tap into more than one disruption. In addition, most Indian IT firms think in terms of getting the job done for the client instead of creating repeatable and reusable offerings. To succeed in future, they must adopt a software development culture.”

Partnerships With Mega Software Vendors Mean Diminished Benefits For Clients

While the report acknowledges leading Indian IT firms’ progress toward non-linear growth, it is critical of Indian IT firms’ partnership approach with mega software vendors such as Oracle, SAP, Microsoft, and IBM. Wang explains, “The new paradigm requires IT services partners to drive the ecosystem instead of being enslaved by the partner model. IT services firms know the clients the best, they have intimate industry expertise, they understand the client’s challenges and opportunities, and they have the account relationship.” Adding, “It’s a now-or-never situation for IT services firms to invert this partnership model. The software mega vendors may in the near future encroach upon the IT services space via acquisitions, leaving number of their valued partners in the lurch.”