With the onset of new trends and specifically Indian companies shaping up from push products to pull products we see a lot of allied fields emerging. The mobile handset revolutionized the need identification and need creation. The product, technology and service domain cannot remain idle and all the companies are now racing to find uniqueness in their offering. Having said that it needs a big ecosystem around creating such innovation, which is a novel and unique product preposition.
While developed countries are working on new “sensing devices” in different domains the emerging technology nations are finding out new ways to use the advancements. Consider the most retail oriented markets like small appliances which cater to day to day needs of a customer. The margins are shrinking with competition. If you want to ask for higher price you need to give a higher value out of the product. If you want to sustain in the market then you need to cut down on the basic cost of the product. This brings in a need to understand each part of the product to its core thoroughly. Am I saying something new? No!
Its value engineering. Where I need to know electrical, electronics, mechanical, aerodynamics, materials, metallurgy, alternative materials, recent advancements in materials, manufacturing processes, advancements in them, physics, chemistry, also need to understand biology to know what is comfort for a human being under a ceiling fan, what is best process in culinary expertise while I offer a mixer grinder, what is the physics of lighting, what is the psychology of the customer in different lighting, what are agribusiness needs in terms of pumping...
Having such a vast need internally I cannot afford to have all in-house. The only option remains is to have a service provider in each of this domain as and when required. With the blast of virtualisation of each engineering design, I need at least an asset of half my valuation today. Can I afford as I don’t know the utilisation of it. So I need a service provider in each of the virtualisation platforms like solid modelling, simulations, animation, and failure analysis so on and so forth.
Since 2005 in India a minimum growth of five percent year on year of new entrants in technology consulting is seen and in last few years it has almost doubled. Simply reason being organizations want to have lean business with high profits. As well every one of them is talking of innovation, disruption, agile. This is the big boon to the technology consultants in India. Hence this is also been seen as a potential money reaper by Indian as well as foreign consulting houses. They have created separate verticals to cater to these special needs in niche areas.
Primarily looking at the technology consulting industry it is divided in three main categories -
a. The large consulting commercial organisations
b. The high profile educational institutions
c. The niche small scale / individual based technology consulting
While my focus of discussion is more towards new product development in terms of physical retail use products the arguments also apply to other domains as security, software, service, biology, pharma etc.
I took the basis of a retail consumer product to discuss this scenario because they are easy to relate to and difficult to understand as “why do they need any advance technology consulting?”.
Coming back to the point of the three categories of the technology consulting it’s a complicated connection. Let us look at specializations in each category. In category “a” The large technology consulting organizations afford to invest of specific skill set and sustain the long term high cost. Secondly they can also establish a high value infrastructure critical to the related technology domain. While doing so these companies are also dependent on category “b” and category “c” to fill in the specific niche domains where its either high degree of knowledge in the core subject is required which is available in educational institutions with various faculty with deeper research areas or its very small particular area of application which is catered by small scale / individual based technology consulting.
In category “b” they are mostly independent consultants many a times connected to industry through past students taking positions in different organisations where they need strong knowledge base from academia. The other association with IIT, IISc, and international institutions is more towards futuristic research / fundamental research. This category of consultation is going to see a tough competition as this is more skill based, infrastructure based and research orientation based. In category “c” the majority stake is of individuals who have grown with some specific subjects and skill areas. They remain indispensible for years together. Something which I recently came across was welding of mild steel a very old and basic operation but the skilled once the consultants are making money with very specific requirements from the industry.
Speaking from the industry perspective technology consulting is a very difficult game. With the burst of “googling” technology of search you can hit the bull’s eye or you can hit a wrong bet. As for the consultant grabbing a contract is of prime importance but whether the industry is going to get real value out of this contract has to be verified depending on the experience and expertise. This may sound like a bold statement. Primarily this is a specialised sector which can bring in very high value prepositions at low investments to the industry. A project cost of INR 8-10 lakh through a medium sized technology consulting can fetch an industry on an average of about INR 3-5 Cr business in a couple of years. The trade-off of in-house vs. outsourced is the tussle which industry will always be fighting with. Whereas captive long term technology engagements can be a win-win for both side.