The Best of Both Shores
Date: Thursday , August 30, 2007
It is a fascinating time to be in this maturing IT services industry. The pendulum has swung to the right and to the left, finally calibrating itself,” remarks Dominick Cavuoto, the new CEO of Global Consultants, Inc. (GCI). A dig into the IT services history shows how some companies gave in completely to the trend of offshoring and went ahead slackening their services business. Until, in many cases, the benefits of doing everything offshore proved of questionable worth. And what to do where became the new focal point.
Therein is GCI’s value proposition. GCI, for one, is right under this swinging pendulum leveraging on the calibration. “We have seen the two phases,” says Cavuoto referring to the earlier swings, “and now in the third: the BestShore phase.” BestShore is a blended model for IT services activities. Its unique proposition lay in tailoring to the customers’ economic, technology, cultural, and strategic needs, while constantly determining what sort of delivery approach will work best. Be it onsite, offsite or offshore or a combination of all these.
“It is a best of breed model that germinated from our constant client interaction,” says Hiten Patel, the chairman and architect of this model. As a CEO of a small professional services firm trying to place consultants in its early days, he had encountered bizarre questions like “do we have to get this work done onshore or offshore?”, “is it possible to outsource?”, “Can we avoid mistakes by keeping this work onsite?” et al. Soon, his pensive mind had crafted two things. One was, of course, the BestShore model, and the other was the future of his company. “We realized early on that clients were more comfortable in dealing with a U.S based company than a pure play offshore outsourcing vendor. So we went ahead and established centers–both organically and inorganically, across US and offshore development centers in India, China and Brazil,” he says.
BestShore model today is the symbol of GCI. “But this didn’t come on a platter for the company, it needed (and will need) insurmountable convincing of clients,” says Ed Glassmeyer, Managing Partner at Oak Investments. Last year, sensing the new wave on which GCI was riding, Oak made a $30 million investment in the company. Glassmeyer, who has watched this transition of GCI from professional services to an IT services company, attributes the success entirelyto the vision of the self-made entrepreneur P a t e l. For Patel, however, this enormous undertaking was an outcome of his long cherished and embraced philosophy: one customer at a time. He has constantly offered superior customer service by understanding each of their business needs. Converting his long existing vendors into partners for GCI’s IT services offerings was solely an outcome of this customer philosophy.
Alongside philosophy, GCI is being helped by one of the world’s hottest business issues: Worthiness and benefits of doing everything offshore. Most IT outsourcing vendors today are making huge profit margins of 30-40 percent from projects outsourced, while the client themselves make 12-13 percent on their entire business. “It often embarrasses the management team to answer their shareholders on their infectivity. The commodity work offshored to the IT outsourcers is basically helping that vendor to make a fortune, while they couldn’t do it themselves,” says Cavuoto.
The moment the clients start subscribing to that perspective, companies like GCI start getting involved in every strategy planning session and board meeting. It sells on two business grounds. One, GCI’s status as a mid-size U.S. based company with a continually growing global sourcing power, convinces customers on better value or the quality of the service. All the while allowing clients to negotiate price as the company doesn’t succumb to the price pressure of the Street. Second, it creates a new layer of market as well ingrained loyalty for companies that often fear being neglected by big IT service providers for the lack of cycle-time or deal sizes.
Well aware of the prospects GCI holds in store, the management is on a full cylinder strategy to turn this into a watershed opportunity. “The company is increasing its portfolio of offerings and domain expertise,” says Ashwin Rao, Sr. Vice President and Global Head of Sales. “We chose not to be a provider of everything to everyone.”
For the last few years the company has built a substantial amount of core competency and domain expertise around its three main verticals—Financial Services, Technology, Communications and Media (TCM), and Manufacturing and Retail. The company has also inducted a competency management team of experts, who form the who’s who of their respective industries.
Banking On Domain
“A look at the banking landscape indicates that Top 50 banks in the US are not going to hit their net income targets by revenue growth, it would however be through efficiency gain in doing business faster, quicker and cheaper” says Bob Olson, Global Financial Services Head whose expansive knowledge about the banking industry derives from half of his 40-year career—remaining half was in managing big technology companies in the same space.
Olson’s strong understanding of the business and operational issues that banks and financial services institutions are currently facing, combined with GCI’s experiences in solving technology problems, puts it in a very strategic position with clients to meet the business challenges. “We are working to provide business relevant solutions on industry ‘pain points’ such as Basel II, Reference Data Services, AML Solutions, Check 21, Structured Financial Offerings and Vehicles,” says he.
Financial services is GCI’s highest revenue garnering and biggest vertical currently. With 50 percent of the company’s business emerging from this vertical, the company houses more than 10 of Fortune Top 100 banking and financial clients. One of whose (GCI doesn’t disclose this clients name for competitive reason) entire system of fraud filters was developed by GCI. “We had to develop technology intensive fraud filters that monitor all touch points for the bank, which included all branches, ATM, teller, back office, central operations, Internet and corporate customers. Our subject matter experts spanning the globe came out with integrated solutions through a layered approach that could potentially identify all fraudulent activities relating to automated check and deposits,” says Cavuoto who was a financial services executive for over 30 years having worked as a banker and with IT services firms including KPMG / Bearing Point where he was Global Head of Financial Services and Unisys where he was Global Head of Operations prior to joining GCI. .
“GCI’s ability to provide strong subject matter expertise combined with technology solutions and Bestshore capabilities while being flexible, scalable and agile makes us one of the best alternatives to Tier 1 offshore providers”, says Rao.
With an ‘A plus’ team of banking eggheads the company ventured into the consulting advisory capacity similar to an Accenture, Bearing Point or a Deloitte. To strengthen this, it recently acquired a US based consultancy called Blue Hammock.
In the compliance sub vertical, which oversees 100s of millions of dollar being spent in the near future, GCI has been focused on email fraud and the payments arena. In the legacy modernization space, the company’s eJuvenate program lets customers get a comprehensive and flexible approach to generate greater value from existing application investments. It provides a cost effective way to maintain and enhance application portfolios. Other hot areas of investment for GCI are the digitization of paper and the image enablement spaces and the transition and merger supports from a technology and integration perspective.
“We are building a meter-wide-and-mile-deep sort of competency, matching up with our BestShore practice” says Olson about his domains.
Communications & Convergence
GCI’s Technology, Communications & Media (TCM) vertical is the oldest and one of its most mature verticals. Like the banking vertical, the TCM vertical is highly domain focused and very keen on sourcing its work to the right center.
GCI’s TCM vertical derives from GCI’s core offerings in the space of application development management, testing, enterprise solutions and business warehousing and intelligence. Combining these core competencies with strong domain expertise is GCI’s value proposition to the Telecommunication service providers, OEMs and Media companies. Kevin Elder, Global Head of TCM vertical, picks a case from the communication industry to explain how BestShoring works: “we took our domain expertise of LSS and BSS capabilities—which involves managing billing and customer care activities—that is very centric to the communication industry and formed a global model of provisioning. We moved a few resources that have typically resided in the US to India and vice versa to help in cross pollination of knowledge.”
All of those who have relocated have a high level of domain expertise, with 15 plus years track experience and impeccable records of project execution in their respective domains, adds Elder. It is here that a few big competitors of GCI have gone wrong. What has happened in the industry is that the big companies have left large skill sets in India assisting the growth of technology centric mindset, without physically putting the domain there.
Besides involving themselves in sourcing talent, GCI today has ventured into the high IP environment. The company’s India teams were involved in packaging and productizing the solutions for GCI’s revenue assurance practice. Revenue assurance is a classic example of how the company identified and insulated an industry issue and created a very specific architecture as a set of class libraries to address that and go to market. This solution has been adopted by one of the Fortune Top 3 wireless companies. In another instance, GCI was also involved in developing the entire OSS and BSS architectural road map for a wireless company for the next five years.
“We have a rich blend of domain expertise in core Telecom areas such as enterprise integration (EAI), enterprise resource planning (ERP), supply chain management (SCM), customer relationship management (CRM), eBusiness and Data Warehousing,” says Elder.
Solving Enterprise Issues
GCI’s strong heritage in Enterprise applications and eBusiness solutions has been the evolution of the focus in the Manufacturing, Retail and Logistics (MRL) vertical where this experience is widely in demand.
Late last year, GCI acquired IVL India (now renamed GCI Enterprise Solutions), which was one of the largest independent SAP services firms in India to strengthen the Enterprise Solutions & Support competency. With over 700 resources globally, GCI has, in a short period of time, ramped up its SAP domain capabilities to provide Post Implementation support, Upgrade services, Netweaver services and Business Intelligence strategy and implementation services to the US market.
“We are constantly looking at inorganic growth opportunities that can help us scale and strengthen our competencies. The acquisition of IVL India gave us the perfect platform to scale up our Enterprise Solutions Support services and this acquisition is also in line with our commitment to grow in mid-tier cities in India for the obvious reasons of cost and retention”, says Patel, who in the role of Chairman, looks at strategic growth opportunities through acquisitions while ensuring smooth progress from plan to execution. Patel was referring to GCI’s newest acquisition in Thiruvananthapuram in South India where the retention levels are an astonishing 90 percent plus due to the quality and cost of living.
GCI’s Enterprise solutions experience is very complementary to its strong experience in the end-to-end supply chain visibility and effective execution area. When one of the worlds leading apparel and footwear manufacturers wanted to streamline their supply chain, they turned to GCI for a solution. An extensive assessment led to the design of a custom enterprise class Supply Chain visibility solution that significantly reduced inventory costs and improved supply chain velocity. GCI has a track record of delivering business solutions that leverage their experience with global 2000 enterprises to directly impact a client’s business performance. “Our goal is to provide continuous and predictive value to our clients by engaging with them on their critical IT initiatives to provide them with measurable ROI” says Jawahar Bekay, Chief Strategy Officer of GCI, based in India.
As GCI scales from professional services company to end-to-end service providers in the project and business consultancy space, there is a clear picture formed in the minds of each one of the management. Rao, one of the long serving management members, is still heavily rooted in professional services offering, despite an overwhelming growth in IT services. “Our clients respect us for this end-to-end service; we shall continue to provide professional services, though we look forward to expand on our projects and business consulting offering,” he says.
Ifty Ahmed, the man who spotted GCI on Oak’s radar, is also convinced that the company heralds a major change in IT services, which can be viewed as “NextGen” . His argument is that, with the balancing of the swinging pendulum of the IT service industry, US companies are going to wrest control back but will have fulfillment in India or whichever country that has the requisite resources. And GCI is a leading candidate in capitalizing this upswing. “As customers become the kings again and decide which work of theirs should be offshore, near shore, and onshore, companies such as GCI will have continued success.”
Today GCI is a $250 million company with 4000 employees, 22 offices and 6 global delivery centers worldwide. The company owns three campuses in Bangalore, Thiruvananthapuram and Baroda, each one specializing in different competencies. As the company embark on its cruise towards the new status of being a half a billion dollar enterprise, there is a strong belief that their history in most ways will lead the future.
“This year we turn 10,” says its exuberant Chairman. Patel is in many ways the new-founder of the company. He acquired it in 1997 from a defunct management, ‘put his skin in the game’, built a solid management team and took the company on a services trajectory. All through doing what the company still does best: Client-centric approach.
So by most measures, customers are naturally at the center of GCI’s universe. There is an ardent belief that any venture that follows customer needs is in turn followed by business. In that respect, Patel is an authority. He focuses more on customer needs, than markets “Rather than just blindly follow trends, we have looked at how market changes, like offshore or the Internet, may impact on the customer, and tailor specific solutions to what will work for their business.”
True to his words, Patel has stuck to customer centric approach for almost a decade now. And in most ways created, what Ahmed at Oak calls, “an imperial-time story of scratch to skies, quite literally.”
* Revenue: $250M
* Offices: 22 Office Globally
* Development Centers: Morristown, NJ, Tampa, FL, Dallas, TX, Bangalore, India, Trivandrum, India and Baroda, India;
Delivery Centers in Brazil and China under development.
* Verticals focus: Financial Services, Technology, Communications & Media (TCM) and Manufacturing, Retail & Logistics (MRL), Others.
* Core Competencies: Application Development & Maintenance (ADM), Legacy Modernization, Testing, Enterprise Software Solutions & SAP Services, Datawarehousing & Business Intelligence and Strategy Consulting.