In the emerging As-a-Service Economy, engineering services are becoming a core offering to fuel expertise and capability through new forms of IT and Business Process outsourcing. For enterprises that source engineering services, today’s top priorities are getting access to specialized skills and reducing the time-to-market—just as cost savings was at the top in the past. Enterprises need help from service providers to gain access to skills and in becoming effective brokers of capability, which is one of the eight ideals of our eight ideaIs-based As-a-Service framework for enterprises. But our recent buy-side research revealed that only 28% of enterprise buyers viewed service providers as brokers of capability, whereas 52% of enterprise buyers viewed service providers merely as brokers of efficiency. To act as a broker of capability, service providers must reorient their operations and be capable of sourcing specialized expertise from multiple avenues to address capability gaps. We see a real opportunity for engineering services providers to differentiate themselves by becoming effective brokers of capability.
We recently met with Anita Ganti, SVP and Global Head Product Engineering Services (PES) at Wipro, to talk about engineering services trends and Wipro's growth plans. Wipro has deep roots in engineering services, having served global clients for the past three decades. With the coming of the digital age, Wipro is heavily investing in next- generation technology areas to help customers realize their connected vision. Some of these initiatives include 3-D printing, data-driven engineering and smart city solutions.
Anita talked about an ingenious solution her team had developed for a healthcare customer. The solution, in addition to unlocking massive cost savings, made a tremendous impact to the entire medical ecosystem. The limited functionality of the old equipment was replaced with new technology features that enabled “smart” healthcare—the ability to monitor patients anytime, anywhere and, most importantly, at a fraction of the cost. Wipro's comprehensive solution combined digitization, mechanical & embedded services, industrial design, software product engineering, process design, systems integration, analytics and infrastructure support. In delivering this solution, Wipro effectively became a broker of capability and addressed the hot button issues of the entire medical ecosystem.
Scale and scope are two levers for engineering service providers to become effective brokers of capability. Through scale, service providers can invest in new capabilities and move into new geographies and service lines. Nonetheless, scale is just one part of the puzzle. It is the synthesis of scale and scope that makes service provides effective brokers of capability—the ability to amalgamate expertise from different geographies and service lines to present a holistic and integrated solution to customers.
To become effective brokers of capability, service providers should invest and excel in different services and should be able to combine different services (which often reside in different P&L silos) to provide value to customers in a way similar to Wipro's healthcare example.
This is in line with our Engineering Services Blueprint findings, which indicate that broad-based service providers have grown faster than specialized engineering service providers have, in the recent years. The broad-based service providers were able to do so by also engaging with existing IT customers for engineering services. Now, by becoming brokers of capability, broad-based service providers can provide further value to customers. Observing this trend, specialized engineering service providers have started acquiring new capabilities through acquisitions to expand their service footprint.
Whether it’s a broad-based service provider or a specialist service provider, becoming a broker of capability is essential to succeed in today’s As-a-Service Economy. As engineering service providers start down this path, M&A activity is sure to follow as access to these capabilities becomes paramount. It will be interesting to see how service providers (Wipro in particular) redefine themselves in the new digital age.
Service Provider : Wipro