India is often cited as the biggest threat facing the Irish software industry. John Collins (pictured) does not agree.
He knows all about threats: he was formerly managing director of Orygen, the once high-flying e-business consultancy that bit the dust last April when its multinational owner, Level 3, decided it was non-core. From having about 170 employees at its peak, Orygen disappeared virtually overnight.
It might be imagined that this experience might have been enough to kill his enthusiasm for the industry but Collins bounced back a month later with a new business, Original Solutions, that grew from the ashes of Orygen. Not only is two thirds of its 45 employees ex-Orygen but also a number of customers stayed loyal to Collins and his team as one company died and another took its place. Today, less that a year after launch, Original has a roster of clients that includes AIB, Bank of Ireland, EBS, Eircom, Vodafone and is looking at a turnover of €3.5m-4m in 2004 according to Collins.
IT services firms come in all shapes and sizes. At one end you have primarily resellers of technology that throw in a bit of installation and maintenance; at the other are the ‘big five’ professional services firms that offer both the technology and high-level strategic counsel – but at a price. Original Solutions fits in between the two but is closer to the Big Five model, and it tends to be these firms that Original comes up against when competing for business.
However, he feels that on a couple of counts at least, Original has more to offer. Not only does it benefit from the fact that “people are afraid of the price tag” of the Big Five but they are also afraid of the cultural infiltration. “The big company comes in and the internal morale suffers almost by default because the consultants take the high ground on all the decisions,” he asserts.
As with any owner of a service business, Collins’ holy grail is a portfolio of long-term satisfied customers who come back again and again for help and advice.
“Right now we’re engaged in credibility building and ensuring that we go beyond the ‘giz-a-job’ phase into ‘now that we’ve done that what else is do you need us to do?’ It’s true to say that wherever we’ve been engaged, we’re continuing to be.”
Back to India, some clarification is needed: it’s not that Collins sees no threat there; it’s just that he thinks our software industry is far from defenceless. It’s about getting the positioning right.
Elaborating, he says that in the past cost was the reason why the UK outsourced so much IT project work to India. But the backlash has begun, he feels, and businesses are starting to question the strategic value of such outsourcing and to investigate other options.
If they had a choice, many UK firms would prefer ‘near-shore’ rather than ‘far-shore’ outsourcing, he claims. This would give them the cost benefits of outsourcing without losing any business agility.
Collins is positioning Original Solutions as a firm that can offer such near-shore services through its Limerick facility – another legacy from the Orygen days when sales were done in Dublin and development in Limerick. With the help of Shannon Development, Collins is on the lookout for potential partners in the UK market that can broker outsourcing contracts with UK businesses. He is not being overly ambitious; he says he would be satisfied if he had secured one UK customer by the end of 2004.
“What we’re trying to do is to package a proposition that’s much more appealing to the mid-tier company that’s scared of far-shore outsourcing,” he explains. “I think at the IT level, people are becoming more conscious that they need business-intelligent IT professionals. The essence of IT is around delivering business benefit. It’s that business-technology mix is what companies are looking for.”
He continues: “Increasingly it’s not cost that’s a criterion for making a decision about outsourcing; it’s ‘can I trust the predictability of the service’ – that’s what coming into question.”
Surely the bottom line, though, is whether Limerick can compete with Bangalore? “In our research, the Indian resource is averaging out at about 60pc of the UK resource cost. We as an off-site resource in Limerick would be somewhere around the 70-72pc mark. So it’s not that big a difference. One scary aspect of that is that it shows that the Indians are making a lot of profit and could go a lot lower, but the fact is it’s now low enough to hide the fact that the business implications of change are the things that cause the most issues.”
Collins’ ambitious plans for the future clearly shows that he has moved on from the Orygen days but does the spectre of Orygen ever overshadow his business dealings? Only in a positive way, he insists. “The fear of failure is almost a good calling card because people know you’re going to put in every effort to make sure there are no cock-ups.”
By Brian Skelly