Strategic CIO // Executive Insights & Innovation
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8/14/2009
09:55 AM
Chris Murphy
Chris Murphy
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Patni Going Deeper, Not Broader For Outsourcing Growth

How does a mid-sized player not get squashed as Indian IT outsourcers scrap for business in a battered market? Patni CEO Jeya Kumar is betting Indian IT companies need to specialize on even deeper industry expertise--a strategy he describes as "less about bodies, more about people."

How does a mid-sized player not get squashed as Indian IT outsourcers scrap for business in a battered market? Patni CEO Jeya Kumar is betting Indian IT companies need to specialize on even deeper industry expertise--a strategy he describes as "less about bodies, more about people."I spoke with Kumar this week about his idea that "growth is granular". That means having insurance industry expertise isn't enough to score new IT outsourcing contracts, it needs to be specific to property and casualty insurance, or life insurance. "That's the level people work at," Kumar says. Patni has that, Kumar reckons, though in the healthcare payer space it needs to build or acquire expertise. Overall, he sees providers needing to become more domain and technology specific.

Parallel to that industry push, Kumar thinks geography will start to matter more--in part because of politics.

Most prominent is the proposed U.S. "50-50 rule," which would cut off additional H-1B visas for companies that have more than 50 employees and have more than 50% of U.S. workers on work visas. The numbers and other specifics of such proposals might change, but some kind of new rules in this spirit are "no longer a question of if, it's when," Kumar says. Similar moves are likely in other countries amid high unemployment. "It's the economic reality," he says. "You have to learn to adopt and adjust how you're going to be successful within it. We're still learning." One way that'll happen is outsourcers' value being less dependent on low unit labor cost and more on providing client companies faster time to market on projects.

Proposals like the 50/50 rule are part of the reason Kumar this week announced geographic group presidents for the first time in Patni's history, in the Americas and Asia Pacific.

Kumar's goal is to double Patni's U.S. business over the next three years, from a $555 million business with about 2,300 North American employees, to $1 billion and about 4,000 employees. It has 13,800 employees worldwide, and 2008 revenue of $718 million.

Kumar also sees growth opportunity in helping companies put cloud computing to use. It moved its own employee management application for tasks like vacation scheduling and time tracking to a Web platform, and it's working to move its entire infrastructure to the cloud. It's piloting cloud initiatives with five customers, and "every customer we talk to tells us they're either thinking about it, planning it, or at least interested to learn more," Kumar says. If this downturn drags on, Kumar thinks alternative computing models such as cloud computing and software as a service will get more appealing.

Will the IT outsourcing slump drag on? Kumar says the "de-growth has stopped" and that "shallow" growth and "more stability" are the new reality for the Indian IT services industry. But he says the big lesson of this recession is that you don't build a company for the high times, you build it to last through any times. So as he looks ahead to a shallow recovery, the question Kumar keeps asking is, "What if it's a double dip?"

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