Scientists, chemical companies, and individuals from around the world have contributed to that site, and with the legal framework in place, P&G expects that half of all new products would have some component of ‘not made here’ in them in the near future. I don’t have the statistics, and have not heard or read of P&G use the Long Tail of Production, but I would like hear your thoughts on this, cheers.

I chanced on this post a few days back and have been thinking on how it might apply to a company like ours. Vamsi, Ganesh, Sibu and Joe have got it pretty much covered on the sell side.

More on the Sell side:

Companies like ours with a lower cost model and the global delivery model probably started exploiting the Long Tail of the F-1000 and the F-2000 for IT Outsourcing, as these end user companies probably could not afford the IBM, EDS, etc. of the time to provide them integrated solutions.

Today, as TCS, INFY, etc. have graduated up the value curve, and are dropping smaller non-growing customers, other service providers like iGate, MindTree are servicing those abandoned by the larger compaines, but have their own significant branding and growth challenges.

My take is that given the relationship-intensive model of companies like ours, there will be a limit to how small a customer companies in our model can service. Unless the model changes, the Long Tail will be difficult to service cost profitably.

However, what if we look at the Supply side:

In the Global War for Talent, and here I surmise, maybe our physical reach goes into 20% of the Supply pools from where we get 80% of our Talent. Whether at the ELT stage or the lateral hire stage, we probably have strategies, programs that ensure that the numbers we require are being met.

By thinking about Chris Anderson’s 98% rule, what if the company brand reaches into portions of the market that we are today not able to physically cater to? Each and every one of use had heard that if you respond to an Open Position on a company’s web site, you will never get a response, or if you do, it is a vanilla boilerplate email.

Are there screening programs and methods that a company could adopt, that would actually reach out to the balance 80% at all levels? Are there cost effective methods to do this efficiently? If so – would it not be possible for a company to meet its Talent numbers, but probably at a 3% or 5% or maybe even 10% better Talent quality? What difference would that make to the quality of future leadership of the company?

Today, we probably reach into a certain number of named universities, and go to a certain number of cities to recruit. This method has a clear cost, timeline and dedicated resources. The Long Tail here are those people in universities we don’t visit, whole cities we don’t go to, resumes that go unresponded to, that our brand today permeates.

If that were the Long Tail of our Supply side, what if we could build channels for those people to come to us? Maybe we could have dynamic online tests (to avoid plagiarism) that people could take, that the company could then screen or be in touch with for the future.

Now, I am getting into details, but I wanted to suggest the Supply side for companies in our model as where the Long Tail might be relevant. Your comments and responses welcome.

- Shridhar

Chasing the SMB market is definitely not in line with the business model of the large outsourcers. The current business model of the large outsourcers that rely on high touch customer relationships definitely does not support servicing these numerous small “David’s”. The whole business premise is based on finding the next Goliath. For example, in Cognizant we pride in having a small customer base and deepening our relationship further with these customers. Given these factors, we need to explore the reasons that could make the SMBs attractive to Cognizant & other large outsourcers. Couples of thoughts come to my mind on what could lead the large outsourcers to consider the SMB market.

1. The head of the curve is getting saturated. The large outsourcers need to look at other market segments to deliver the 30 – 40% growth that the market is accustomed to. We have seen moves by the large companies in looking at complementary services like IT IS, KPO, Market Analytics etc to sustain the double digit growth.

2.There is huge revenue potential in the long tail. If the companies can get the model right, there is potential for exponential growth.

3.Instead of venturing out into complementary service areas, these companies can focus on their core strengths of developing application software to service the SMBs.

If large outsourcers are interested in the SMBs, then the next big question is the service model that could be used to service the SMBs. Some thought on a potential service model are given below.

1.Borrowing on the “Economics of Abundance” theme, companies like Cognizant could tap into their large unutilized talent pool of programmers. Given the current offshore utilization rates of around 60%, we can safely assume that at any point in time, there is a talent pool of at least 1000-3000 programmers that are not fully allocated to any project. These numbers also include the entry level trainees.

2.Create SBAs (Small Business Accounts) that can matrix the unutilized talent pool to deliver custom solutions to the SMBs on an as needed basis.

The advantage for the large outsourcers is that this model opens up a potential channel for revenue and also has the added benefit of getting its entry level / less experienced programmers trained on real cases without exposing them to the larger strategic clients. Since the relationship is low touch, the resources assigned to a project could easily be rotated out if there is a need in a larger strategic engagement. Questions do come up on Brand dilution, potential market plan for SMBs, why would SMBs go with big gorillas as Ganesh alluded to in his post.

I was thinking along the same lines, but partnering instead of subsidiaries. In the architecture that I had proposed with the database layer, Object to Relational Mapping layer etc., I was wondering how we could scale building the business objects layer specific to a niche market/vertical. The answer – partnering. This is more of a franchise model, where Cognizant provides the infrastructure to to build your company for a niche market quickly. The service provider can either build the additional layers themselves or leverage others.

In terms of revenue, a model needs to be devised for revenue/profit sharing between the infrastructure provider and the service provider.

Ganesh