Unraveling the Transformation of IT Services
Welcome, dear readers, to a captivating conversation with Nithin, VP – strategic deals, Capgemini, a seasoned veteran with nearly two decades of experience in the IT industry. Let’s take a deep dive into his illustrious journey as he walks us through the evolution of IT services, the changing dynamics of sales, and the vital role of technology in shaping the future of this ever-evolving sector.
Vinay
Nithin, you have had an incredible journey in the IT industry. Can you share with us your exciting experiences and how it all began?
Nithin
Absolutely! My journey started with TCS, India’s leading IT services company. I joined them in 2004 after completing my engineering degree. It was a significant moment for me as TCS was my first company, and they trained me in SAP, considering my background in logistics and production. The exposure to SAP opened doors to various projects, and one of our clients was none other than SAP itself. This early entry into the SAP world provided me with diverse career opportunities.
Vinay
That’s fascinating, Nithin! Could you tell us how your career evolved from delivery to presales and eventually into sales?
Nithin
Of course! While working in delivery, I became intrigued by the magic of presales. I often wondered how companies secured substantial projects across different geographies. This curiosity fueled my interest in presales, and I started engaging with clients, understanding their needs, and educating them about the advantages of outsourcing and remote work. Over time, I transitioned fully into sales, exploring larger deals and focusing on multitower full-stack projects that encompassed various services packaged into a single deal.
Vinay
Your journey has indeed been quite transformative! How have you seen the IT services landscape change over the years, especially with the advent of technology and data?
Nithin
The IT services industry has experienced an astonishing metamorphosis. Customers now hold the upper hand with access to an abundance of information. They come well-prepared, sometimes even surpassing our knowledge. In the past, we would guide clients on technology aspects, but today, they demand deeper industry-specific insights. Every industrial company now aims to be software-centric, incorporating technology into their products and services. Hence, understanding their business domain has become critical.
Vinay
When you mention engaging in strategic deals, it implies extensive communication with CXOs, right?
Nithin
Absolutely, Vinay. Nowadays, we primarily interact with CXOs, but interestingly, we also have conversations with many business owners. This shift is because businesses have become increasingly reliant on technology. In fact, technology plays a central role in their operations and ability to compete in the market. This transformation is sweeping across all industries, from automobiles to airlines, services to manufacturing. Companies are essentially evolving into software companies, integrating IT into their products and services.
This profound change is prompting customers to reevaluate their organizational structures. They’re adopting a vertical approach, where each business area is treated as a product with clear business outcomes. The principles of agility and efficiency are driving this transformation. Everything is seen as a product, and IT is an integral part of it, contributing to go-to-market strategies, accelerated product launches, and overall efficiency gains.
In this era of transformation, customers are looking for more than just maintaining their business operations; they want value-driven results. They are keen on aligning the outcomes with their business objectives. It’s not about paying for basic maintenance; they want their investments to deliver tangible returns that positively impact their business growth. This demand for demonstrable outcomes is driving the evolution of their organizational structures and how they invest their resources.
Vinay
How can we determine if a deal is truly strategic beyond just the numbers, such as talking to a CXO or something else?
Nithin
The essence of a strategic deal lies in its size and the desired outcome. If the goal is to provide commodity services for a period of five years, achieving a 25% cost reduction, it may be a large deal but not necessarily strategic. True strategic deals go beyond mere size; they involve significant add-ons and value enhancements. For instance, any deal exceeding 10 million USD is classified as large, but strategic deals encompass a broader scope, focused on achieving more than just cost savings but impact the topline.
Vinay
Additionally, does the buyer need to be a CXO for these cases?
Nithin
Absolutely, Vinay. These are CXO-led deals, where the involvement of top executives is crucial for their strategic nature. Interestingly, the significance of a deal goes beyond its size. Even a seemingly small deal can be strategic if it opens the doors to a highly strategic area with immense growth potential. For instance, replacing a legacy system with a digital one may seem modest at first, but if that system is projected to grow tenfold in the next 4 to 5 years, it becomes vital for the overall strategy. These deals are equally strategic whether it’s a cloud-based solution or any digital technology catering to user needs. Losing such an opportunity means being out of the game for the next 4-5 years, underscoring their importance in driving long-term success and competitive advantage.
Vinay
With your extensive experience in sales and other roles, how have technology and IT services transformed the landscape? What changes have occurred due to the availability of technology, data, and tools?
Nithin
Indeed, there has been a significant shift in the dynamics. Customers now hold the upper hand as they are armed with abundant information, surpassing our previous knowledge advantage. In the past, we used to guide clients through technology concepts like Salesforce, on-premise, and cloud, educating them extensively. However, the tables have turned. Many customers have recruited experts from our side of the industry, making them highly knowledgeable. Now, they’re actively discussing how they can leverage technology to excel in their respective fields. Moreover, there’s a growing emphasis on industry-specific expertise. Customers expect us to be well-versed in their industry, not just generic sellers. Adapting to these changes is crucial to thrive in today’s business environment.
Vinay
So what we are saying is that domain knowledge has become a critical factor, as customers now expect solutions that align precisely with their verticals and yield specific outcomes?
Nithin
Absolutely right. Another significant change is the disappearance of Big Bang projects. Gone are the days when customers would commit to massive implementation projects spanning several years. Instead, they now prefer modular solutions, breaking things into smaller, manageable chunks. This approach allows them to be flexible and avoid over-committing. As a result, the value of orders has reduced, as customers reserve the right to adjust their investment based on performance. Additionally, we’ve noticed an increase in customers building their own capabilities, not relying solely on vendors. They keep some expertise in-house, ensuring they have a diversified approach and retain control over crucial aspects of their operations.
Vinay
Are we experiencing higher churn rates compared to previous years?
Nithin
Indeed, the churn rate has increased, and there’s a notable shift in customer preferences. They are now inclined towards using more niche, agile, and smarter companies – ones with a strong background in open source technologies, resembling developer houses deeply immersed in that realm. They seek a mix of smaller, nimble players who excel in their specific domains. Interestingly, customers seem comfortable managing complexities on their own and are not hesitant to collaborate with 2-3 vendors for a single project. This approach allows them to leverage the expertise of different players, resulting in a single product benefiting from the best capabilities of 3-4 different specialized companies.
Vinay
In this era where customers retain their capabilities to a certain extent, how can IT service vendors or Managed service vendors adapt?
Nithin
It’s an intriguing shift we’re witnessing. For the first time, the number of employees in the customers’ global competence centers in India surpassed those working in IT service giants. This trend indicates that customers are reclaiming many capabilities, particularly focused on innovation rather than just routine run services. It’s a dynamic situation in the market.
In the future, as high technologies become more commoditized, there might be another transition. In bullish economic times, customers might opt to establish their own centers, but they could consider handing those capabilities back to IT service vendors in bearish markets. It’s akin to a cycle where economic conditions and technological advancements are pivotal in reshaping the landscape. As the industry continues to evolve, flexibility and adaptability will be key for vendors to navigate this ever-changing terrain successfully.
Vinay
How can IT services companies stand out and bring distinct value to the table? Are there any best practices that can be implemented?
Nithin
For us, the key lies in demonstrating superior industry knowledge and understanding our customers’ specific challenges and opportunities. We focus on staying informed about the latest industry events and how business processes evolve, irrespective of technology. Our vast experience with various customers gives us a unique efficiency that sets us apart. While some companies may choose to set up their own entities, we offer a compelling advantage with our dedicated centers of excellence constantly innovating across multiple industries. This ensures that we bring a wealth of fresh ideas to the table.
Moreover, when it comes to run services, we pride ourselves on being highly efficient, allowing us to invest in continuous improvements and innovations. While there may be a perception that talent prefers working for customers rather than service-based setups, we still have a significant role to play. Our brand value and track record attract top talent, and our ability to deliver efficient services further reinforces our position as a valuable partner. The key is demonstrating our unique value proposition and adapting to the ever-evolving market landscape to stay ahead in this dynamic industry.
Vinay
Are there any specific IT tools your team uses for business development?
Nithin
Indeed, business development requires a well-rounded toolkit. We leverage various tools to gain insights and execute the business development cycle effectively. One crucial tool we use is the target universe list, which outlines the global companies we aim to pursue. This list is defined based on specific criteria, be it numerical, industry-related, or geographical. For instance, targeting only Fortune 500 companies or focusing on a particular industry or region.
CRM technologies play a vital role in managing opportunities, pipelines, and budget alignment within the company. Additionally, we employ specialized tools for account planning, which delve into the nuances of individual customers. Understanding their objectives, pain points, and stakeholder maps helps us devise targeted strategies.
Account segmentation is another crucial aspect. We create a partnership map to assess the significance of our relationship with each customer. Identifying whether it’s a strategic partnership or merely transactional guides our approach. We strive to transition from transactional interactions to strategic relationships. This is evaluated through an XY grid analysis, where the importance of our company to the customer and vice versa is plotted. Based on this assessment, we make data-driven decisions on which customers to prioritize.
Vinay
Are there any best practices you would recommend for young professionals entering the IT services or sales field based on your experiences?
Nithin
There’s a valuable lesson to learn from my experiences. Before stepping into sales, it’s essential to have delivery experience. Selling something you haven’t delivered yourself can be quite challenging. It’s like navigating a steep learning curve without a clear connection to what you’re selling or the teams creating the proposals.
I’ve observed many fresh MBAs entering IT services and immediately moving into sales roles because they excel in making impressive presentations. However, they often struggle during the initial years since they lack practical knowledge of what they’re selling. Though they eventually overcome these challenges with time and experience, it’s a tough journey.
A wiser approach is to spend a couple of years in delivery, gaining hands-on experience with different types of projects, such as maintenance, implementations, upgrades, and consulting. I had the benefit of working on all four types of projects, which greatly contributed to my growth as a salesperson. Understanding the intricacies of delivery and witnessing different project aspects will make one a more effective and knowledgeable sales professional. Those who have successfully made this transition without prior delivery experience are few. So, investing time in delivery before venturing into sales can be immensely beneficial for a more rewarding and successful career path.
