Is branding all-important for Indian software firms?
Express Computers, 06th May 2002.
During the mid-nineties Indian Software Inc. was branded as a cost-effective destination for outsourcing software.

Now, after almost a decade, as TCS, Infosys, Wipro and others strive to move up the value chain in a bid to command better rates, some players have realised the importance of branding and re-positioning. There is an increased thrust on building brand equity to take on heavyweights like IBM Global Services, EDS, CSC and Accenture in the global market. While the biggest Indian software firms can afford to invest heavily in marketing and branding, second-tier firms are left with no choice but to brand themselves as niche players with strong domain expertise in various verticals. The big question is can Indian Software Inc. take on the Big Five in terms of brand recall and credibility that has long been associated with the latter?

What’s in a brand?
Simon Pollard, managing partner of TPI, one of the leading outsourcing consultants in the world, says that when he tells his client that IBM Global Services will do the project, no doubts about delivery and quality are raised. “One can go on talking about the ramp-up time, quality and delivery, but what you are selling is trust, which unlike a packaged product, is intangible. Therefore, branding is even more relevant for software services,” says Jeroen Tas, president, MphasiS. Brands like Wipro and Infosys are built over a period of time by consistently delivering value-added projects on time. Today, they not only command a cost-effective positioning, but are also looked upon as vendors who can deliver services at par with global standards. Phaneesh Murthy, head of marketing at Infosys describes how Infy leveraged its relationship with NASDAQ when it got listed on the exchange. “We negotiated with NASDAQ for giving exposure to Infy in the US,” he explains.

Branding services
Branding is often felt necessary only when you are selling a product, but changing times make branding imperative for positioning software services too. For a country like India that was branded as a ‘Y2K only’ destination, this has been a long journey. Today, Indian software companies are not only doing mainframe maintenance projects, but they are also being entrusted with high-end e-business projects. “It’s more about moving up the value chain in a particular assignment,” says Sangita Singh, vice president, Strategic Marketing, Wipro Technologies.

Branding software services usually involves corporate branding. Slogans such as Wipro’s ‘Applying Thought’ and Infy’s ‘Driven by values. Powered by intellect’ are some good examples of how branding can be used to gain mind share among outsourcers. Another interesting example is Infy’s decision to put Senator Larry Pressler on its board of directors. This gives the company a leg up on its Indian counterparts when it comes to wooing clients in the US, especially in the government segment. Moreover, it adds credibility to the Infosys brand.

Quality certifications like SEI CMM, etc, have now become a pre-requisite while bidding for any major project. They help in branding a company as a vendor whose quality processes are intact and commitment towards understanding business processes is also high.

But for a company like i-flex, which has built global brand equity for its banking product Flexcube, branding software services becomes easier. “The only way to differentiate is to focus on productised solutions. And once you have a successful product brand, services branding becomes easier,” says an official at i-flex. The company is now planning to brand its software services business as ‘Prime Sourcing’ and efforts are underway to launch an advertising campaign in several trade publications. Singh also talks about e-branding, i.e. using the company website for reaching out to target customers. “We have recently started what we term as e-branding. We put out lots of white papers and articles written by Wipro-ites. The white papers generate a good response from potential clients.”

Customer branding
Most Indian companies we spoke to admitted that branding is mostly done through existing customers. “We get more than 80 percent of our business from existing customers, so keeping them happy as strong referrals plays an important role in branding,” says Singh. Even Chinnikrishna Kommi, country manager and senior vice president, Global Delivery, Aztec Software, believes that branding software services is essentially done through word of mouth. “Unlike IBM, which has a well established brand equity, Indian companies have traditionally been focused on services. Therefore, it is not fair to compare IBM Global Services with Indian firms.”

In the US, customers are very particular about referrals provided by vendors. So, most branding and positioning efforts are focused on maintaining a satisfied and happy clientele. “The best brand ambassadors are existing customers who have been and are beneficiaries of the service. Traditional modes of mass media advertising help build brand image among stockholders. But it is the continuous strengthening of the intrinsic worth of the organisation and ensuring customer and employee delight that are the key aspects of branding software solutions,” says a Cognizant official.

Singh talks passionately about the concept of ‘customer delight’. “In today’s market, adding value to what you offer to a customer counts a lot. Things like offering reusable components in a project and always meeting deadlines result in a delighted customer,” she says.

Challenges in branding software services
Branding services has never been easy and this becomes even more difficult in the software services segment. The cost-effective tag is also a bottleneck for companies who want to move up the value ladder and command premium prices. “The differentiation and credibility of the organisation and all that it stands for has to be clearly demonstrable. Of late, branding and differentiation have become all the more challenging because of commoditisation of the marketplace. And that’s why prospective customers are keen on talking to existing customers, visiting vendor locations and interacting with the people who would actually provide the services, checking out for themselves the processes, connectivity and hardware that would be used for providing services,” says a Cognizant official.

Bodies like Nasscom will have to play an instrumental role in the overall branding strategy. “Indian Software Inc. will need a different brand now and that brand cannot be achieved unless Indian companies individually, and industry bodies such as Nasscom, TiE and CII build that brand,” he adds. “The cost-effective proposition has to change now; moving up the value chain and branding as high-value vendors cannot become a reality until we do that,” adds Murthy.

Tier-two opportunities and woes
Whenever big outsourcers like General Motors or Citicorp look for a vendor, they go by top-of-the-mind brands, such as TCS, Infosys or Wipro. This is because these vendors have established their brands in the US and APAC markets as cost-effective and credible options for cross-border outsourcing. Tas of MphasiS believes that tier-two firms cannot take on the Infosys and Wipros when it comes to brand recall. “However, a company like MphasiS will always remain a vendor with strong domain expertise in the financial services segment. This is the brand we are planning to build.” For this MphasiS is also planning to advertise in trade publications like Asian Banker, etc. This will help the company in acquiring ‘domain expert’ positioning.

Some of these niche firms are also headed by veterans from the vertical segments the firms focus on. For instance, Jerry Rao, CEO of MphasiS, used to head Citicorp’s Transaction Technology Inc. Indian firms have also started hiring foreign executives, which imparts a local flavour while marketing their services overseas. Aztec’s hiring of Chris Brown, ex-vice president at IBM Global Services, is a good indicator of this trend.

The changing dynamics in the outsourcing industry have made it imperative for Indian companies to invest in building brand equity. The offshore proposition can no longer be used as a differentiator since the likes of Accenture and EDS are fast building a considerable offshore presence in India.

As Singh suggests, the Americans once labelled even the Japanese manufacturing industry as ‘cheap’. The Japanese used that to create a niche for themselves, and today are considered to be the best when it comes to quality. So, it might not be a bad idea to continue using the ‘cost-effective’ tag for acquiring new businesses and at the same time ensure that quality sits on top of delivery. This will help Indian companies in joining the really Big League where Accenture, IBM and EDS sit pretty today.