Digital Transformation Requires a More Local and Collaborative IT Services Partner

R. Bhattacharyya

Summary Bullets:

• 2019 will bring renewed efforts by IT services providers (ITSPs) to shore up their local presence, particularly international players that have traditionally serviced their client base via an off-shore or near-shore model.

• To remain competitive, ITSPs must change the nature of their client interactions, which will require deeper relationships to implement transformative solutions.

Most of the large, global IT services companies generate a substantial portion of their revenue from the U.S. market. In the past, U.S. clients were often served in large part by international teams based overseas or by teams brought in from other countries to support specific tasks or projects. However, the changing political climate in the U.S., and its potential to impact the issuance of H-1 visas, as well as the evolving nature of client engagements, has caused many organizations to reevaluate their localization strategies. As a result, several large players are growing their U.S.-based teams and hiring local employees. It’s a strategy that has extended beyond that U.S. and has been applied to other countries as well.

Furthermore, although there are still plenty of opportunities for offshoring and near-shoring, ITSPs are no longer solely focused on taking over the tedious tasks that customers are interested in offloading. Instead they are looking to help their customers adopt innovative solutions that improve operations, sales, and customer support. Selling these emerging, higher-value solutions requires a more collaborative customer relationship.

Earlier this month, India-based ITSP TCS announced plans for TCS Pace Ports, centers designed to promote collaboration on new, innovative technologies with customers. It already opened its first TCS Pace Port in Tokyo and will open sites in New York and Toronto in 2019. But TCS isn’t the first to pursue a localization strategy to improve collaboration. Several providers are putting in place similar plans. France-based Atos is staffing up its U.S offices and plans to open an AI Lab in Dallas, Texas early next year. India-based Infosys is opening a series of Technology and Innovation Hubs across the U.S. Similarly, Tech Mahindra announced new ‘Makers Labs’ in the UK, Germany, and the U.S. And recently, IBM notes it was adding employees in France to meet growing demand for AI.

In the next year, ITSPs will be opening more local sites that foster collaboration, often in the form of innovation centers or solutions labs. Instead of maintaining only a handful of regional locations that are primarily sales centers designed to showcase new technologies, these sites will be staffed by subject matter experts and located closer to key customer hubs. They will act as venues in which experts can come together to develop innovative use cases and plan for adoption of new solutions. The local sites allow customers to test technology in a local environment, and enable them to work side by side with their vendor on ideation and implementation. These closer, more frequent interactions lead to improved dialogue and build trust.

Buyers should ask prospective vendors about their local presence: When it comes to digital transformation, projects yield better outcomes when customers and vendors collaborate closely together. Often, physical proximity improves communication; customers should talk to potential vendors to better understand their local staffing resources.

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