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December 30, 2003

Indian IT cos. giving headaches to large US system integrators

In an interview to BusinessWeek, Chell Smith, Global Managing Director of Cap Gemini Ernst & Young's Technology Services group, talks about how the weak US economy and "upstart Indian firms" have transformed the IT consulting business in the US.

Here are some extracts-relating to Indian companies:

The pure-play firms from India (are) coming on and offering services like systems integration at much different price points than had traditionally been there. In some segments of the market there has been 40% price reduction -- or more -- over the last three years because of that.

There's no question some organizations like Wipro, for example, are building up on-shore capabilities. They've acquired some local firms, they're moving upstream. As they start to do that, their costs go up. Their onshore people cost the same as ours.

I wouldn't say "oh doom and gloom, life as we know it is over," but it's tougher for us. We have to work harder.... We're absolutely taking smaller contracts with more specific expectations and greater risk on our part.