MBA Association :: IT Learning, Courtesy Factory Floor.

Anantara Designs & Integrates,While Suppliers Manage The Rest

AT FIRST glance, Chennai-based Anantara Solutions might look like another manufacturing company. It designs products, buys components from some 25 supplier companies spread across India, China, Russia, Singapore and the Malta island and assembles them. So typical of any assembly line, but Anantara is an information technology consulting company.

Started by a group of former employees of Satyam Computer, Anantara has taken a novel path to technology services business and calls it the ‘second generation outsourcing.’ The business model is based on using the best practices of the manufacturing sector in IT: Design and integrate, but leave the intermediate steps to an ecosystem of component suppliers.

And leading the innovation at Anantara is none other than GB Prabhat, who was one of the pioneers in taking the Indian software outsourcing industry to consulting league. Years ago, he helped start what is today a hot trend among services companies by cofounding Satyam Renaissance Consulting. After moving out of Satyam, Mr Prabhat contemplated ways to integrate business consultancy expertise and information technology prowess seamlessly to create a combined offering. “I was disenchanted with the existing methods for harnessing the value of IT. Most IT efforts were and continue to be cost-focused rather than getting value from IT investments that will improve business performance,” said Mr Prabhat.

And his search soon turned towards the so-called old economy. “When I was confused by how one company would gain leadership in such a vast spectrum of capabilities, I was struck by the global manufacturing model widely employed by the auto, electronics and the consumer goods sector. Toyota, the pioneer of this integrated supply chain management model, was an inspiration,” Mr Prabhat said. So, just as Toyota and Cisco bought from the global best companies a vast proportion of the components and subsystems that would go into their final product, Mr Prabhat thought, IT and consulting firms too, could assemble their business solutions by sourcing parts from partner firms. Anantara’s departure from the traditional algorithm has helped it evolve a network of 25 companies with a collective employee strength of 3,000 that it can leverage to sew up a solution.

Further, the company also works with partners who stock up on reusable components and don’t write all codes from scratch. “In bigger companies, there is a huge disconnect between groups and there hasn’t been much effort in building components that can be part of a library,” Mr Prabhat said.

This global franchise helps Anantara to optimise the use of talent, cost and time. For example, the company has a supplier in China, which charges $8-$10 an hour for a service, half of what it costs in India. That firm, which subscription-based websites, has made a security program required for every website reusable. Often, a little tweak is all it takes to customise it to a given project, thus saving on resources.

Mr Prabhat uses an everyday analogy to explain how automation tools can spruce up efficiency. There are three ways in which you can buy food. You can get prepared food in which case you accept what is available and the price it is offered at. Or you can go to a restaurant, which will cook everything from scratch. The cooks there will start peeling the vegetables after you order. But imagine an eatery which keeps a combination of gravies and semi-cooked food. It can work to any configuration and produce a finished food with little effort.

So, just like the food business, IT has three models. In the first case, you have the software products where you need to adjust yourself to use them well. The second case is the software services space, where they do the coding from scratch and which is a labour intensive model. The intermediary case is where the automation tools fit.

“Cost of manpower leading to a decline in profit margins and the rising infrastructure costs are driving automation in the IT industry today,” Mr Prabhat said.

The Anantara model, though different and new, crossed the initial hurdles of acquiring clients quite easily. “The senior management’s past reputation was a key factor in getting clients. But, manufacturing companies are not that surprised with this outsourcing model because IT is doing now, what they have been doing all along,” says Mr Prabhat. The eight members of the management team were senior executives at Satyam Computer Services, who grew quite close while they built Satyam’s consulting practices from scratch. The company gets 40% of its business from India and 60% from abroad. While the Indian projects are mostly in the manufacturing and logistics space, the projects abroad include verticals such as media and entertainment. It is working with an European player involved in Internet Protocol Television and movie distribution. “We are advising them on the more efficient use of their hybrid platform,” Mr Prabhat said.

Earlier this year, Helion Venture, led an investment of $6.5 million in Anantara solutions. The other investors include Walden international, SVB Financial Group and a US-based venture capitalist, Christian Wedell.

Reference:
Chandra Ranganathan

3.23 Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."