De - Coding of Services business - Part - 2

Services is part of our DNA and corporate India has shown it to the world consistently. Our hall mark of fame is our huge human capital success.

While I firmly believe larger portion of our domestic market is driven by cost as a factor due to certain misconceptions by many of our "C" level community that - " Services" if opted as an alternative to "execution direct" is always at a low cost. In reality its not the case.

The fact is "lesser you pay to a service the more is your cost", simply because your cost of "managing" such services implementation is a huge cost though many will not admit.

I hope to see a change for services business in the coming decade for domestic market in India. The shift will be :

1. From cost to competency.

2. From control to collaboration.

3. From consolidation to specialization.

4. From process to perfection.

5. From intermediate to integration.

India Inc has a huge potentiality and it has a disadvantage of dividing herself through a disproportionate demographic challenges clubbed with staggering fragmentation. Standardization is a dream which is the key to succeed in services business and corporate India has them in paper till date.

And many services provider be it a Telecom services provider or any other - struggle in India on two fundamental counts.

• Creating a frame work for standardisation

• Perfecting the process

Easy said than done. The challenge is not about creating a frame work. It's about execution.

When you look around globally the most successful services organizations are the ones which are highly decentralized and commonly customized to suit the local market. The underlying principle through which it survived or surviving is quite simple. Its called BUSINESS LOGIC. If its profitable to do services business in one territory it may not be profitable for the same in another. So they design the frame work and collaborate with an execution partner which is the pure logic of doing business from controlling to collaborating.

Secondly cost is not the prime mover to stay fit in this business. It's tempting to do business with every opportunity you come across. A services provider need to be strategically aligned with its core and specifically focused on creating a market presence through its competency metrics which should be so strong in a manner if competition is keen to replicate it, it should not be easy for them to do so. Eroding the price realization in the name of market share or gaining a larger foot hold (India. Telecom is classic example) is something one can afford to do only if they have a deep pocket to fund the business. Services business is a sucker of all sorts no matter which part of the globe you are.

Research proves one out of every third services company in the globe was either dissolved or taken over by hostile bidding on account of non profitable or not sustainable business operation. It also suggests most of the failures are attributed to two primary reasons.

1. Competition replicated their business model much better and made them incompetent.
2. Pressing the panicky button too often and in the process drove price erosion.

India is no different. The market dynamics are changing. Technology enabled new sunrise businesses are rewriting the business rules differently and the consumer access to information is changing the paradigm of the whole business landscape. This means smaller and meaner organizations are taking the lead to shake up some of the conventional wisdom that big is beauty. Mobile VAS application services provider is a classic example and it's just beginning to make sense as a profitable services business. The success is due to a simple fact that its more to do with collaboration and first mover advantage. The caution is some one will re do the whole thing in a bigger and better manner and in the process crazy price erosion will start happening if not it's already happening. Be it SAAS, PAAS or name any of the new attempt - minimization of reach through product is inevitable in the days to come no matter if its B2C or B2B.

Though I will be writing some of the pitfalls of going services way completely with some warning signs as well separately through this article I wish to present 5 simple steps to launch services business in India.

From cost to competency.

Services provider need to have this fundamental DNA in place. Its never easy to do business and stay fit through the eroding method of cost alone. While the cost of acquiring the first customer is always high for a services business, its important for the services organisation to define its competency clearly and stay put on the track of gaining cliental commitment based on the competency alone which will also be termed as its core competency. For example a SAAS provider wants to replicate the PAAS as a model its possible. The differentiation would be lost in the process since defining both the metrics as competency metrics will not be interchangeable.

From control to collaboration.

Leverage the core strength to collaborate with different segments of services provider. The end client is not going to enjoy engaging multiple services provider for each activity. Similarly a capability competency built by a particular services provider is not going to be attractive to an end client when the scale of the requirement is small. It always makes sense to collaborate.

From consolidation to specialisation.

Most of the Services provider who are doing business in India or intend to do are either aiming or visualizing a consolidated play field in the market. My advise is never to get into this trap of consolidating one's position in the market place. The market place has a place for every one. What's important to note and understand is your level playing field as a services provider is appreciated only if you are a specialised player which means you need to have the unique specialization for alignment rather than alignment for specialisation.

From process to perfection.

While its important for a services provider to have a processes in place, processes alone will not assure you success or for that matter gaining more customer commitment. The important element for acceptance is how best one perfected the process. A case study on a rigorously well done project - even if its small doesn't matter - should be the basis of the frame work of the process which will help you to perfect it. The key challenges in any services business is generalising a process and attempting to perfect it liberally could lead to unwanted cost escalation and un wanted wastage of productive resource and collaboration.

From intermediate to integration.

Some of the Services extension by some providers are quite impressive. They have extended the scope as an intermediate to their existing business line and a half hearted entry into it specific to a large client or a large project. Move away from it. If you are into it be in it as an integrated services provider not as a intermediate services provider. The difference is - profitability and the commitment to service your clients better.

More in next. :-)