Outsourcing: Lalit Dhingra, President Of NIIT Technologies (Part 4)

By Sramana Mitra and guest author Aditya Modi

Sramana Mitra: But that is true about TCS as well. TCS also has insurance clients, and so does Wipro.

Lalit Dhingra: The difference is when you run and you compete, somebody wins, right? I am losing only because somebody says I want to give it to a larger vendor. That means I want to talk to only billion-dollar plus companies. We lose that. Each time, I get a reply from the customer that says, You guys know what you are talking about. That is the difference, and that gives us satisfaction, because that keeps me focused on the middle of the pyramid. This is where I am. I am telling the customer the right thing,  and the customer understands it. This may not be true for TCS. It may not be true for Infosys also sometimes, but what we are trying to do is say, We understand. Proactively, we can tell you where all the solutions are going to be. Sometimes we compete, but not really compete, because we coexist with them. We are there when TCS is there in most cases. We know that we are competing against some of them, and over a period, we [will] have a larger share of the outsourcing [market], but it is from the customers. I understand these guys are bringing knowledge of the domain.

SM: They use you in the design phase and TCS for implementation, is that what you are saying?

LD: No, they will give us one piece and they will give TCS another piece. That is what we have seen with some customers.

SM: And is there a set of customers who proactively want to work with somewhat smaller vendors rather than going to Infosys and TCS?

LD: There are, because they want to get the attention. We just got one deal from somebody whose parent company is working with all the larger ones, and they said, OK, now we have seen them. I don’t think we can work with that. We won the deal. They are pretty happy with us because the get all the attention and they get all the right kind of input from us.

SM: And you are at about $200 million in annual revenue, right?

LD: We are at this time around $280 million. And the U.S. is around 37% of the total.

SM: There many new outsourcing destinations coming up, right? There are a lot of vendors coming out with outsourcing  operations in China, Latin America, Eastern Europe or even Africa and East Asia. Some of them follow the same strategy. I’ve talked to many of them who follow the same strategy. They find a differentiated niche or vertical, a particular core competency within a vertical even, and they specialize in and execute on that specialized core competency, and that is how they are winning. That is how they are building their businesses. What has been your experience with that trend?

LD: There is one customer of ours who used Buenos Aires and Manila as two different destinations apart from India with us. Their experience has not been good. OK, let me tell you where the issues are coming up. In their perspective, they feel that, for example, productivity in Buenos Aires was not as good as what they were getting in India. The other thing was, Manila was very far from the U.S., and they can do low-end work but not the high-end work.

Interestingly, a lot of customers used Krakow in Poland. Their experience is good, but the cost is becoming a key issue for them. So, what they call scalability is not theirs, in fact. They want to scale up very high, and their cost is going to be totally out of wack, what they are thinking in terms of managing the budget. That’s the only experience I have with them. I have not heard anybody from a China perspective. I don’t have any experience with what people are talking about or what they are doing in China.

SM: I haven’t been seeing a lot of real outsourced software development work happening in Southeast Asia, whether it is the Philippines or Malaysia or Indonesia. There is a lot of call center work that goes out. The Philippines has become one of the top call center destinations, but I am not sure if there is a lot of software development going on in the Philippines.

This segment is part 4 in the series : Outsourcing: Lalit Dhingra, President Of NIIT Technologies
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