A few years ago when an industrial-design dropout decided to set up an IT-services firm, he knew that the big fish in the sea had all that was needed to survive — process maturity, proven track record and deep pockets to grab any customer, big or small — unlike him who just had a vision to offer innovative solutions, something that these biggies did not. Sunil Malhotra, the founder and CEO of a very small IT-solutions firm, knew he had to build his core competency somewhere else. He chose interdisciplinary capabilities, ideas and innovation to be it. And that remains the seed of his venture called Ideafarms, where he and his team of 30 work toward not delivering a good cost or technology model, but ideas.
Small and mid-sized service providers may not have thousands of workers on their payrolls or funds to last them very long, but innovation by means of personalization is core to them. While they have to work many times as hard to deliver on the promises and to match up to the biggies in the game, boutique service providers need to bring in more innovation in the solutions they offer. Many a times, they are trusted for not the cost or technology they are going to deliver, but for ideas and quality with which they will.
Yet, many companies prefer to outsource to the big players. The risk of things not working out is very high, and it’s better to opt for a known devil than an unknown one, they reason. The large service providers give the comfort of well-designed processes as a result of having repeatedly done the same job for hundreds of customers. So what, if they offer the best fit (the closest possible match to the customer needs) and not the perfect fit? They are too big to devote time to the nuances of your business.
Myths Surrounding Boutiques
While boutique outsourcing service providers — companies providing specialized services, with strength varying between few tens of people to may be a thousand odd — may not have something for everyone because of the limited resources they have, they intend to excel in any service they provide. As a consequence, most of these firms have specialist areas in which they operate. And since they have to work twice as hard to win customer confidence, they need to exhibit quality to survive. Where it is difficult for the Tier-2 players to make a mark in this highly competitive market, there are many myths surrounding them. Some of them are:
Contracts with boutiques come at a lower price: While there may be a price differential, Tier-2 providers are not always the cheapest solution providers. In a conscious attempt to provide some services that the big companies are not able to provide, these companies go that extra mile to service their customers.
"None of our projects come to us because we were cheapest on the bid. They come to us because of the talent that we bring to the project and out flexibility to respond as the customer grows"
Kevin Bolen, CMO, Lionbridge
“None of our projects come to us because we were cheapest on the bid,” says Kevin Bolen, CMO, Lionbridge, a company into content support and software development and testing services that has six centers worldwide with two in Eastern Europe (about 350 staff), two in India (more than 1,300 workers) and two in China (a total of about 300 employees). “They come to us because of the level of the relationship, the level of access to talent that we bring to the project, and our flexibility to respond as the customer grows,” adds Bolen.
Another reason why clients consider smaller outsourcing firms against the bigwigs is that they provide more intimacy and agility, and lesser bureaucracy than the big players. The Tier-2 players operate with minimal level of intervention as against the large providers that take decisions slowly due to multiple layers of bureaucracy. Customers also opt for the smaller players as a means to spread risk across providers.
“A big advantage [of working with a small provider] is that customers can reach decision makers without too many intervening layers, and so work proceeds quicker,” says Vijay Menon, VP, Marketing, QuEST, a boutique IT firm in the engineering services outsourcing space.
Smaller and lower priority projects come to boutiques: Important projects and big clientele is proof that this is not true. Companies as big as Pizza Hut, Continental AG, AOL, Merck, DocuSign and Palm are working with these specialized players for some of their important projects. It is also not a good idea to work with boutique providers for routine tasks like quality testing and maintenance; these are better left to the larger players who have over time developed process maturity and trained people for such tasks. The smaller firms are more suited for innovative projects — they have the time to invest in your business.
