Skip to main content

Layer3 Model for Indian IT SME's in Europe


This is the first article from the series I hope to finish for Indian IT SMEs' participation in the European, more specifically the German-speaking European market, mentioned earlier in my blog.

For years and still today Indian IT SME's have struggled to find opportunities for adding value in the European market. I have argued that this is principally because of the lack of ingenuity of business-models on the part of IT services companies from India. For far too long, they have focused on one and only one value-proposition, that of low-cost development resources. I believe it is now time to stop betting the farm on that one value-point, and start identifying under served opportunities, which the same strengths that have propelled Indian IT service companies into global fame, can serve.

The Layer3 Model which I'd like to propose here, segments the market into 3 horizontally laid out layers for visualization purposes. At the left end is Layer-1 where an Indian IT SME fits. Placed right of them at Layer-2 are indigenous European IT companies that consider this market home-turf. At Layer-3 is the end European market which is occupied by IT end-user companies of the most diverse nature.

Playing by Strengths

The Layer3 model champions the idea for Indian IT SME's to work for/behind their European counterparts. The premis for this is simply to play by one's own strengths. Layer-1 companies have it to their advantage that they have significantly more software development resources compared to European companies. Furthermore, while European IT companies have traditionally served their domestic markets, Indian software companies on average derive over 75% of their revenues from overseas customers. This has resulted in global delivery processes and best-practices that have become first-language to most Indian IT SME's. This strength, tested over time and matured over many projects, will result in adapting best-practices for project delivery across the geographical, and to some extent cultural, separation between India and Europe.

Strengths of Layer-2 companies lie in serving their local markets. Europe, with it's multi-lingual, multi-cultural and multi-national fabric can indeed be an overwhelming new market for Indian companies, if they attempt to approach Layer-3 companies, the end IT-users directly. Even zeroing on a single European national market leaves Indian executives with many challenges. Business standards in each market are varied and learning all of them will incur significant costs both in time and money. These hurdles should best be avoided by serving Layer-2 companies as back-end production partners, where a Layer-1 SME's role is limited to technical delivery.

Effects on Bottom-line, Competitiveness and Innovation

Layer-2 companies on the other hand, thanks to added capacities provided by the Indian partner stand a real chance of positively driving their top as well as bottom-lines in their native markets. They become more competitive by offering more services at better conditions in the market. At the same time, if the resources of the Indian partner are leveraged appropriately, European IT companies can also attain higher levels of innovation by freeing up their indegenous engineers to undertake more technically challenging tasks, and allowing their Indian counterparts to perform the more "regular" tasks. Best of all, end customers stand to benefit due to the better deal that the consortium of their regular European IT supplier and the Indian IT SME provide jointly.

Bridgeheads - the Key Success Factor

The advantages highlighted above are infact nothing new in the offshore software services market. When managed successfully all offshore projects offer them, but in the European market, cases of successful offshoring, particularly in the SME sector have been just a handful.

In the context of India, the factor that inhibited successful project work have been points of disconnect at a cultural and work-ethic level. These are full subjects of investigation in themselves, so we'll save them for later. For now, let me introduce the concept of a Bridgehead. Bridgeheads are members of a project team who are comfortable with both the German and Indian ways of work. Lack of bridgeheads in projects can be the single largest failure-factor for offshore projects between Indian and German IT companies.

In perspective of the Layer3 model, on the European side, bridgeheads assume the role of understanding the project requirements, customer's concerns and expectations and standard project management tasks such as scheduling, release-management etc. On the Indian side, they ensure that the team(s) responsible for the delivery are in full understanding of requirements, expectations and standards. Bridgeheads typically also enforce the necessary discipline among all parties involved. In end-effect bridgeheads are point-men who can masterfully coordinate both sides of the buyer-vendor relationship. In the Layer3 model, the presence of bridgeheads could realistically drive the success-rate of projects to near 100% between Layer-1 and Layer-2 companies.

The Layer3 model offers a sustainable and profitable solution for offshoring needs of IT companies in Europe. It significantly increase success rates of projects. At the same times it answers classical political debates like job-loss in local market, because the role of overseas companies is restricted to production activities and they need not be viewed as competitors to domestic players.

.. to be continued ...

Comments



Hadoop training in hyderabad.All the basic and get the full knowledge of hadoop.
hadoop training in hyderbad

Popular posts from this blog

Paypal's Ridiculous Business Practices

In Q3-2005 we discovered the power of online sales and started to market Wapsol's products extensively online. Just as importantly we decided to get into the trading business for WLAN accessories (antennae, cable, connectors etc) which entails buying from manufacturers and selling on online-retail. Needless to say ebay's 26 worldwide markets were lucrative points of sales.

We used Paypal for collecting most of payments from customers outside Germany. The numbers ticked up fast and we were hecticly building up infrastructure for shipping, online-support, product-portfolio and payment-systems.

One morning as I woke up in Germany I found that Paypal decided to lock up our account without any specific reason. There were no disputes or complaints from buyers or anything that suggested provocation. They just locked it. In it a few thousands of dollars of cash-flow and the account was listed as a favored payment option for some 100 pending auctions - now customers couldn't pay for …

The Dream of the Information Age

If this beauty of a device meets it's mission of being owned by every kid on the planet, we are looking to a new dimension of the Information Age.
For full profile of the device, visit BBC's technology page.

SnagIT Problem Solved! (Hangs for minutes)

Here's the solution to the SnagIT sluggishness (hangs for several minutes)
I would try first turning off the magnifier window under tools > program preferences > program options. Uncheck the box to show magnifier windows. Click apply > ok and then try the capture again.Check your security software and make sure that Snagit is set as a safe application. A security program that consistently scans the process will cause a very slow response like you are seeing.Please also check your printers per this article:Answer Title: Slow SnagIt startupAnswer Link: http://techsmith.custhelp.com/cgi-bin/techsmith.cfg/php/enduser/std_adp.php?p_faqid=742Finally, please review the steps here and try these as well:Answer Title: SnagIt crashes or hangs when launchedAnswer Link: http://techsmith.custhelp.com/cgi-bin/techsmith.cfg/php/enduser/std_adp.php?p_faqid=137Let me know what happens.