Infosys aims at consulting market

Narayanan Madhavan and Wei Gu

BANGALORE/NEW YORK: Indian software companies, which have won a share of the technology outsourcing services business by undercutting Western rivals, are now taking aim at the consulting business, officials at Infosys, the Indian software bellwether, said.

Infosys Technologies Ltd. told an analysts conference in India that its cost of technology implementation is 40 percent lower than Western rivals because of its modestly paid engineers.

"What is happening is that the somewhat static industry has become increasingly dynamic," said Stephen Pratt, chief executive of Infosys Consulting, the company's Texas-based unit. "Established brands are somewhat thought of as overly expensive."

Infosys has already won market share from rivals like IBM and Accenture Ltd., in the business of outsourcing.

Consulting involves everything from business strategy to computer advice. Infosys tries to build on its software development strength by specializing in software installation consulting. The task requires more expertise than outsourcing, which ranges from software development to call center management.

So far, technology consulting revenue accounts for less than 5 percent of Indian technology firms' total sales. But the Indian companies are expanding, posing a potential threat to companies like IBM and Accenture, which rely on the consulting business as their bread and butter.

"Once they got a foot in the door with basic outsourcing and maintenance services, they started developing relationships for other kinds of work," said Marianne Hedin, program manager of worldwide services at IDC, a U.S.-based technology research group. "They are still not as competitive as Accenture or IBM, but they are getting there."

Indian software services exporter Tata Consultancy Services Ltd. will be able to make more acquisitions to expand in technology consulting after launching Asia's second-biggest technology initial public offering this year, Hedin said.

Wipro Technologies bought U.S. consulting firm NerveWire Inc. last year for its technology expertise.

Infosys set up its U.S. consulting unit in April with an ambitious hiring plan to take on bigger western rivals, which are aggressively hiring in India. Pratt, who heads the subsidiary, is a former Deloitte Consulting partner.

Chandra Shekar Kakal, vice president of enterprise solutions, told analysts that business software makers like SAP and Oracle Corp. had increased product development in India, giving Indian companies such as Infosys earlier access to emerging technologies.

Shares of Infosys have nearly doubled over the past year, riding on a recovery in the key U.S. market and an increasing acceptance of offshore software services. Infosys shares were up 7 cents at $50.61 late afternoon trade on Nasdaq.