Indian IT outsourcing vendor Infosys Technologies Ltd. today made a bid to take on U.S.-based consulting companies such as Accenture Ltd. by launching a new consulting subsidiary in the United States.
Rather than buy its way into the U.S.-based IT and business consulting market, the Bangalore, India, firm is building a new subsidiary from the ground up. Infosys Consulting Inc., headquartered in Fremont, Calif., is putting together what officials characterize as a "disruptive model" aimed at grabbing market share in a market that has seen declines for the last few years.
"Our mission is to build the worlds most competitive consulting firm—one that delivers a higher return on consulting dollars to our client than any other firm and [one that] continually improves the competitiveness and value of Infosys," said Stephen Pratt, CEO of the new consulting startup. Pratt, formerly with Deloitte Consulting, was named one of the Top 25 consultants in the world last year by Consulting Magazine.
Its "disruptive" business model calls for high-quality business consulting to be done locally while functions such as number-crunching, analysis and technology delivery will be executed in India, where labor costs are much lower.
"Well be hiring a combination of people with business and technology-strategy backgrounds," Pratt said. "We will focus on customer service experts, marketing-analytics experts and supply chain experts. For example, with customer service, what wed do is look at the operations of the field-service agents—all the business processes around customer service—and design those onsite, along with business preparation and training of client teams."
Infosys Consulting plans to hire some 500 consultants over the next three years, primarily in the United States. The firm plans to hire about 75 consultants in its first year.
Along with Pratt, Infosys has lured other high-profile consultants from U.S. firms to become officers in the startup. They include Romil Bahl, formerly lead of consulting services at Electronic Data Systems Corp.s 5000-person consulting unit; Paul Cole, former global operations leader at Cap Gemini Ernst & Young; and Raj Joshi, former CEO of Deloitte Consultings Offshore unit.
Pratt believes that a backlash among corporate clients against the high cost of consulting projects, coupled with the rise of high-speed telecommunications, are key enablers for the startups business model.
"We think there is tremendous backlash for paying too much for consulting projects, so this model has a higher focus on business results," he said. "Fundamentally, the big enabler of all this is high-speed telecommunications. It used to be that the way you did a consulting project is that you would work with the client to do the business design and fly in the [business and technology] consultants from their different locations. High-speed communication allows global collaboration between consulting and technology. Now were moving the work to the worker, as opposed to moving the worker to the work."
Parent Infosys Technologies Ltd. is investing $20 million in the startup, which officials believe is a less risky approach than buying existing consulting firms, according to Chief Operating Officer Kris Gopalakrishnan, in Bangalore. "Acquisitions bring baggage, and the challenge is integration," he said. "We think this is less risky, and the chances of success are better. To date, Indian IT services rival Wipro Ltd. has acquired a couple of U.S.-based consulting firms, but none have gone the startup route," said Gopalakrishnan, who is also chairperson for the startup.