Today in Tech: What iGate ads say about outsourcing; Mary Meeker on internet trends & iTunes in India

What the new iGate ads say about outsourcing

iGate launched a series of aggressive, even sensational, ads in some of the leading  US newspapers such as New York Times and Wall Street Journal. In these ads, a fat-cat flips a wad of cash with a conspiratorial smile on his face. And these words hit your face: "Conspiracy Uncovered"...... "Mega Corporations’ No 1 enemy exposed."

The enemy, apparently, is the business model called 'time and material'. It’s an assault on its competitors, whose predominant model relies on getting paid for their services based on the number of people they use.

iGate followed the multi-million dollar ad campaign with a PR blitz. (I got two emails on the ad campaign compared to one when iGate acquired Patni.) I have no idea if the ads will have the intended effect (which, I assume, is to get more business, more market share). But, they definitely mark a phase in the evolution of Indian outsourcing industry - as it relates to branding.

The first phase - let us call it ‘promote outsourcing' phase - had many interesting messages, and most of them were conveyed in the boardrooms during sales pitches. But one exercise that stands out is what Satyam did in the early 90s. It sent about a dozen engineers to US, and instead of asking them to work onsite, it asked them to work from an apartment just across the street from its client. From there, these engineers worked as if they were in India - they followed Indian Standard Time, and worked during the nights; they used only satellite connection; they resisted the temptation to walk across the street to go ‘on-site’ to clarify doubts and discouraged client visits. The centre was called “Little India”. The idea was to show that offshoring can work. And that is the point. The exercise helped Satyam, and it also helped its competitors.

The defining message of the next phase - 'differentiate yourself' phase - came from TCS. Sometime in early 2007, TCS launched a campaign called Experience Certainty. It was a multi-million dollar, multi-country campaign. Till then, the only ads that you saw from IT Services companies were in the form of recruitment ads. But, here was a conscious attempt by a company to differentiate itself from its competitors, who were also offering similar services. It happened almost at the peak of post-dotcom high growth phase - and highlighted the separation between the tier 1 and tier 2 players.

So, what does iGate’s recent ad campaign say? It highlights a point that most IT executives are reluctant to discuss when they talk to media: money. IT managers always begin by saying, pricing doesn't matter, and that the customers are concerned only about the value, and in fact, money is the last thing to enter conversation. But as they go further, they say, 'Yes, there is pricing pressure.' Money might be the last thing that they discuss, but they spend a lot of time discussing it. The ad also says something about the new normal competition - you not only have to differentiate yourself, but you also have to tell your customers that they are getting a bad deal from your rivals. It's opposite of what you did in phase one. You are not increasing the size of the pie, you are trying to get more market share. This doesn't mean there are no growth opportunities. It simply means that most of their revenues come from segments that have lost momentum.

Welcome to the new normal.

Mary Meeker’s follow up deck on internet trends

As usual, fascinating set of numbers

iTunes in India Apple charges more than Flipkart for music. A friend said he saw iTunes store on his iPad yesterday: “My predominant feeling was one of fear. It’s now so easy to buy music.” (He was worried about spending too much.)

The thoughts and opinions shared here are of the author.