A few weeks ago, I wrote about the challenge posed to Indian IT by a range of cloud service providers, from the smaller and more nimble companies like Zoho to the larger stars in this firmament such as Salesforce.
There I mentioned the elephants in the room -- leviathans such as Amazon (AWS) or Google who are already giants in providing infrastructure cloud services (IaaS) globally -- and the destruction that would ensure if they decided to wade into the spaces that Indian IT occupies. From cloud integration to digital solutions, these are the fastest growing components in IT today and easily outstrip declining businesses such as infrastructure maintenance. They also already make up 50 percent of the revenue pie of leading global players such as Accenture.
You can imagine the utter havoc that some of these companies would create in the business model of IT services incumbents if they were to start spreading their tentacles across the value chain of technology services.
That time may have come. The Hindu BusinessLine newspaper recently reported that Google has stealthily begun rolling out its consulting services across the country, where it aims to work directly with large clients. "These are consulting services (and) change management services for the customers where we work with them to solve some of their most complex problems," Mohit Pande, Country Head - India, Google Cloud, told BusinessLine.
Could they be in direct competition with Indian IT leaders such as Infosys, TCS, and Wipro?
The answer that came straight from the horse's mouth seems a little contradictory. On one hand, Google's Pande told the Hindu that his company will not compete with Indian IT in any way. On the other, he said, "We work with our (IT) partners for scale. But professional services are Google-led where it engages with the customer directly."
While we try and figure that out, one clue seems to let the cat out of the bag.
Pande admitted that one of the main focuses of this initiative would be to train the staff of their clients in machine learning and artificial intelligence and assist in building apps on top of Google's machine learning platform.
Both these disciplines are sizzling hot in a world where companies are increasingly leveraging data to figure out business solutions to existing problems and are proactively deploying them to increase efficiency and agility. In other words, they are linchpins to future success.
Consulting is IT's creamy layer, ushering in fat margins and new business, while keeping old clients happy, all in the new world of digital. It is a gateway to further riches and something that Indian IT has so far struggled to build. The irony of course is that if you look at the top shelf consulting outfits in the world such as McKinsey or the Boston Consulting Group, they are chockfull with Indians. Yet, industry observers say that Indian IT doesn't yet have the pedigree to attract people of their caliber.
That doesn't mean that these in-house, home-grown consultants don't have the brain power to work on complex client solutions -- it's just that in a world where branding is king, doors tend to open on the basis of this somewhat fickle concept called 'pedigree'. They should have picked up smaller outfits out there such as an AT Kearney or a Bain with the staggeringly large mounds of cash they had stockpiled over the years, but that opportunity may now be behind them thanks to the recent shortsighted plan to issue stock buybacks to appease investors.
Pedigree, of course, is something that Google Consulting doesn't need to worry too much about considering its Valley credentials. But beyond these trifles, the main reason to be petrified about a Google incursion into home territory is because of three things:
- India has become a very big market for its cloud services, something that it has pumped $30 billion into over the last few years globally. Consequently, one of its data centers is scheduled to pop up in the country. Its public cloud platform is also something that Google is apparently aggressively marketing in India.
- According to the Hindu, it is planning to transplant an offshoot of its Advanced Solutions Lab located in Mountain View, Calif., to India where solutions to client problems are together worked on by teams comprised of Google engineers as well as clients.
- Core markets such as the US and Europe have slowed down dramatically. For Infosys, for instance, they declined 1.3 percent and 3.1 percent, respectively, in constant currency terms this last quarter ended June over the previous year. However, India business grew a whopping 14 percent.
Indian IT is no pushover at home, having forged deep client connections over the years while trying to claw itself into contention in new lines of business such as digital and cloud.
However, having someone like Google enter your home turf at this critical juncture and compete with you is the last thing that you would want, especially while your global business is in some peril and things in your own backyard are looking up.