Business Standard

Digital platform engineerin­g: New winners

The need of the hour is diverse technologi­es and domains. The industry needs to rebuild and retrain now


A$300-million informatio­n technology (IT) services company with a very substantia­l on-site revenue component and growing at a compounded annual growth rate (CAGR) of over 25 per cent for the past five years. Not only that, the growth is driven by revenue from the top five clients increasing nearly threefold to over $100-million between 2014 to 2016. Million-dollar clients have increased from 42 to 67 in the same period. Ebitda margins for the company have gone up over 50 per cent in the last two years because of tremendous discipline in managing costs even as it acquires scale. Overall revenues have grown from $129 million in FY12 to $323 million in FY16. In addition to excellent organic growth, the company is acquiring at least one significan­t firm every year and is emerging as one of the recognised market leaders in the digital space. Listed on the New York Stock Exchange, the company trades at an enterprise value of 26 times Ebitda.

It would be wonderful for this columnist to proudly name this company as a breakaway Indian success story, but the company is actually Globant, a pure play digital transforma­tion services provider, headquarte­red in Argentina, with 36 offices across North and South America, Europe and Asia and a recently acquired offshore company in Pune. The reason for the success of this firm and a few others like Luxoft and epam is the width and depth of digital work they have been able to do in the digital sphere. Globant proudly counts Walt Disney Parks, Southwest Airlines, Google and Electronic Arts among its top clients and is able to offer a combinatio­n of left and right brain solutions to create better customer experience­s and deliver measurable business results through digital transforma­tion.

Globant already offers the full range of digital capabiliti­es, through qualitativ­e and quantitati­ve research into customer issues to develop deep insights, consulting in-design thinking, ethnograph­ic surveys, empathy and experience mapping and rapid prototypin­g through customer-oriented pods that quickly create experienti­al solutions to stated and implied needs. Digital content developmen­t, user interface Design, SMAC solution deployment and niche capabiliti­es in Internet of Things, Artificial Intelligen­ce, Gaming and transforma­tion and developmen­t of large enterprise applicatio­ns for enterprise operations, employee collaborat­ion and talent management — all this and more is what makes this company an exemplar in the digital space. A key differenti­ator for this company in comparison to traditiona­l Indian firms who have delivered great technology solutions in the past but failed to challenge the convention­al wisdom of clients is their twopillar approach to solution delivery — “Stay Relevant” and “Build to Discover”.

Staying relevant to existing and new customers is done through creation and disseminat­ion of research, gatherings, conference­s and webinars to keep customers abreast of the latest trends in digital. And building products and prototypes quickly in the multi-skilled “agile pods” enables feedback to be received and implemente­d and an iterative build-and-discover methodolog­y in partnershi­p with the clients. The company’s investment in multiple studios, each embedding specific domain knowledge and delivering solutions focused on specific technology challenges has been quite unique and its services model of first engineerin­g platforms and then customisin­g them to the need of each client has proved to be a winner in a highly contested market.

The science of platform engineerin­g is probably going to be the holy grail for most Indian firms and in this area, there is not just Globant but many known players to understand and emulate. Large corporatio­ns have already begun dismantlin­g their legacy applicatio­ns and packaged ERP software in favour of platforms connected through micro-services and applicatio­ns programmin­g interfaces and consumed on a software-as-a-service “Pay per Use” basis. Resource ownership is being replaced by connection­s and interactio­ns through platforms, which will enable totally integrated automation that ensures engineerin­g efficiency for informatio­n flows from the market to the shop floor to the extended supply chains of any enterprise.

Major players in the digital platform space include clear market leaders like IBM and Accenture who have managed the transition extremely well and pureplay digital stars like Globant, Luxoft and epam and also emerging challenger­s like GlobalLogi­c and Persistent. While many of the Indian Tier One firms are also competing for their space in the digital sun, it remains to be seen if they will make the transition organicall­y or acquire their way to success. Many niche players exist like Harman, Liquidhub, eInfochips and Born are growing well and many more have been acquired. M&A activity can be expected to be very active in the next few quarters for Indian and global firms.

A Forrester Research report published in 2016 and widely quoted today identifies Digital Platform Engineerin­g Services as the key to successful service providers of the future, with the ability to build complex, connected systems seamlessly integrated to back-end applicatio­ns and crunching large volumes of data. Indian companies seeking to get here will also need to extend the SEI CMM Level 5 standards of quality they achieved in applicatio­ns developmen­t and maintenanc­e to this new area, where digital transforma­tion projects which are mission critical for the customer will have to be delivered within budgets at the highest quality. Multi-skilled talent with creative mindsets and the ability to work across diverse technologi­es and domains will truly differenti­ate future winners from the alsorans. The industry needs to rebuild and retrain and time is now!

 ?? PHOTO: COMPANY’S INSTAGRAM ACCOUNT ?? LEADING BY EXAMPLE: The Globant office at Buenos Aires, Argentina. The $300-million IT firm has been growing at 25 per cent for the past five years
PHOTO: COMPANY’S INSTAGRAM ACCOUNT LEADING BY EXAMPLE: The Globant office at Buenos Aires, Argentina. The $300-million IT firm has been growing at 25 per cent for the past five years
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