Strengthen low value chain services

Most of the analysts advise Indian IT service providers of moving up the value chain. The benefits of moving up the value chain is proven, well documented and beyond dispute. However, some people think that the low value chain services are taboo. Some even resort to name-calling like ‘Cyber Coolie’ and project it as a lowly thing. They want the Indian IT providers to shed the low value chain services and primarily focus on the high value chain services including product development and consultancy.

Apparently, the high value chain services bring high billability and better profitability ratio. It offers a chance to work with CxO level executives and influence the decision making thought process of them. It also helps to generate many downstream opportunities for the service providers.

While there is no second opinion on the benefits brought by high value chain services, the core strength of Indian IT service providers is the IT related technical services which need to be realized and strengthened – not ignored. The IT related services – in the low to middle end of the value chain services – are the ones that make major chunk of the business for Indian IT service providers. The main bread and butter of Indian IT service providers are these low to mid level IT technical focused services. It will always matter to the business and be the major volume for Indian IT service providers in the foreseeable future.

In my opinion the Indian IT service providers need to fortify their lead in this space by bringing more innovation in deal structuring and execution excellence. High end services need to be thought as add-on boosters to the core IT services business. These services need to be built around the core services. The high value chain services need to co-exist with the low end services in a complimentary fashion.

Unless one wants to be boutique niche player, Don’t shed the low end of the value chain. Rather strengthen it.


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© Dhandapani Ammasai, 2011. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given with appropriate and specific direction to the original content.

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