In a recent exclusive interaction with CRN India, Mike Norris, Group CEO, Computacenter, discusses the company’s strategic growth in India and its global impact. Norris shared insights on Computacenter’s rapid expansion in India over the past few years and its significant contribution to the company’s global business. Highlighting the establishment of their Global Capability Centre (GCC) in Bangalore, Norris discussed the strategic vision behind leveraging India’s skilled workforce and enhancing service delivery for both local and global clients.
How has Computacenter’s growth in India been over the last few years, and what percentage does it contribute to the global business?
We do three things here, and I’ll try to break that into percentages in a minute. We’ve grown from no people at all to 1,800 in about four and a half years.
Firstly, we have our own GCC. You’re currently looking after IS, which is mainly for Computacenter. This involves approximately 300 of the 1,800 people.
The bulk of our team is responsible for looking after customers remotely in the UK, Germany, France, the US, Belgium, Netherlands, and Western Europe. Additionally, two or three hundred of our people look after customers in India, including our US customers, the ASF, and the general customers.
Our GCC here supports some European banks, and this sector is growing quite rapidly. In total, about 350 to 300 employees are involved in supporting Computacenter’s global customers, not from India but immediately. The other 1,000 employees focus on remote management. This number is expected to double in the next three years.
I also anticipate that our GCC services will expand, increasing from 350 to 450 employees. While the remote services will see significant growth in absolute terms, the largest percentage increase will be in servicing our GCC clients here.
From our perspective, we had two phenomenal quarters. We had an incredible first half of last year; when we look back, there was a spike in the first half of 2020, with massive growth compared to the previous year. We had a couple of customers who really boosted us in the first half of last year, so the comparison for the second half is easier, and our numbers will look better. As a UK company, we report fully every six months, not every quarter—that’s the rule. Since December, I’ve been telling people that the first half of ’23 is where it’s going to be. You can’t stress that enough because even in September when announcing results, someone will ask why we’re down. I’ve explained it sixteen times, but that’s the challenge of being a public company. So, rather than comparing to the second half of last year, whether we’ll grow enough in the second half to bring the year up as a whole, I think we will, but it’s going to be tight. I think the market is a bit quiet; people are holding back. You’ve got a few hyperscale customers spending, and then you’ve got a bunch of corporate customers in the middle who are uncertain and waiting to start spending. This creates uncertainty in the market.
How will you leverage your global best practices to meet the specific needs and requirements of customers in the Indian market?
Well, the customers in the Indian market focus a lot on our product sourcing, project implementation, rollouts, and configuration. This approach is consistent throughout the world. We employ the same project management practices, tools, and methodologies globally. Much of our remote management support originates here.
I’m very keen on fostering innovation within the operations. It’s important not to rely on the marketing function for innovation, as they often come up with impractical ideas. Innovation should occur within the operations function. The marketing function should focus on packaging the innovations, making them customer-ready, and presenting them attractively. The marketing team isn’t equipped to innovate; they need to invest in and utilise innovations, whether it’s AI or any other form of automation.
What prompted the opening of a Computacenter GCC in India?
Our customers, whether it’s general car companies, British banks, or whatever, are always asking, “How are you going to support me in India?” So, from the customer’s point of view, they need us to be present there.
Now, regarding access to skills, the skill base that you produce in technology is remarkable. The people coming out of universities and colleges are ready to work technically, and this doesn’t happen to the same extent or volume elsewhere. Access to skills is one reason we came here and have grown in India. The quality of service we provide in India is better than anywhere else in the world. It’s as simple as that.
I think that’s a good point. Some of my people elsewhere have experienced this too. What’s driving this? I believe it goes back to the quality of the people. I’ve always been told that attrition is a challenge because people have choices and move around. However, our experience to date does not reflect this. We are fresh, we’ve been small, we’ve grown fast, and maybe we’ve been lucky. But I can’t say for sure.
We’ve invested a lot in the employee experience. We don’t take it for granted and know we will always have some level of attrition. However, our attrition rate is much lower than what most people tell me we should expect. So, I’m comparing anecdotal market data with our personal experience, and our attrition rate is half of what the market says it should be. This helps a lot.
Globally, our attrition number is 12%, but we have certain locations where it’s very high for various reasons. In core countries for us, like Germany, it’s down to about six or seven percent. There are real-world barriers, but India is doing a great job for us in terms of maintaining our numbers across the board.
What has been your strategic vision for opening the GCC in Bangalore?
The vision for the group is to continue focusing on our core competencies. In terms of our competition, there are six key players globally: CDW, Insight, WWC, SHR, Computacenter, and BESH. These are our main competitors. Among these six VARs, we have the widest geographical coverage and the highest service content. While we are primarily a VAR, we offer a significant amount of services, and I am satisfied with that strategy.
I acknowledge that we operate in a low-margin business. Of course, I would prefer higher margins, but realistically, that’s not going to change. Many people suggest we should start more consulting and move up the value chain, but there are already competitors doing that. I want to focus on what we do best—expanding our customer base, becoming more global, achieving better economies of scale, and creating a unified identity worldwide. This includes having a single set of tools, processes, and IT systems. Our goal is to capture a high market share within the 5,000 largest customers globally.
Regarding the changing role of partners, particularly with digitisation, I believe partners are essential for creating value solutions. Partners do two main things for vendors: breadth and depth. Breadth involves finding numerous customers for a brand, whether in SME marketplaces, globally, or locally, uncovering customers the vendor might not be aware of. Depth involves going into large corporations, understanding them thoroughly, integrating third-party products, and delivering comprehensive solutions. This approach expands the market and increases market share within that customer base, adding value to the vendor by understanding the customer’s needs better than they do.
We specialise in depth, focusing on large customers, but you can choose to do either breadth or depth, or even both.
Have you ever explored the alternative option?
Over the years, I’ve had to decline opportunities, saying, “No, I don’t want to do that. I don’t want to do that.” I do enjoy dining out at restaurants, but I’ve always joked with my wife that if I ever suggest buying one, she should shoot me. It’s just not my thing. I prefer eating locally and enjoying the experience without the ownership responsibility. Similarly, when it comes to venturing into the SME marketplace here, shoot me if I try it again. I’ve attempted it a few times and realised it’s not my forte. The dynamics are very different. The business requires low costs of sale and highly repeatable offerings. In contrast, in the big corporate arena, you can manage higher costs of sale but need to be extremely adaptable. Scale matters significantly there.
In what ways you are leveraging the benefits of GenAI?
Like everyone else, we’re still very early in that process. It’s challenging to determine the exact starting and stopping points of these use cases. And currently, the technology we use in GenAI is almost at ground zero. Yesterday I was demonstrating a GenAI application where I could create a personalised video welcoming someone to the company. You input the person’s name, job title, and company location. Then, using all that data, a personalised video message is generated from me. If you’re familiar with IT, it’s not too complicated. I created it by recording a few hours of video. Then people can easily customise it and generate their own. I mean, what’s the value in receiving a video from me if it’s not personalised? It becomes generic in some aspects. But does that kind of change the world? However, I encourage my kids to use Alexa because it helps them get accustomed to using technology with voice recognition. So, even using it in a fairly basic manner has its benefits in terms of learning and practise for the organisation. It may not be the most financially rewarding use case, but it ingrains the use of these technologies into the organisation’s DNA, which I believe holds some value.
What upcoming technology trends do you think will have the most significant impact on the IT services industry?
Well, regarding the latest trends, I’ll revisit what I mentioned earlier about the current trends. There’s a lot of buzz around AI right now, overshadowing other technologies, which might be a bit overdone. Because there are still plenty of other technologies evolving. Software continues to advance in an ideal direction, taking up a larger share of your budget. The amount spent on Microsoft increases, as does spending on Salesforce and ServiceNow each year because they’re consistently raising their prices. Since these are software-as-a-service models, organisations have no choice but to comply. I find this trend concerning for everyone else in the market because IT budgets can only grow so much. People will start looking to cut costs elsewhere since they can’t cut costs in software. This trend worries me the most because much of our revenue comes from discretionary spending. The less there is to spend, the more pressure it puts on discretionary spending. That’s probably why it’s crucial to be prudent right now. It’s already affecting us.
Do you have a mix of customers in the Indian market, including enterprises, startups, or are your clients predominantly enterprise companies?
The majority of our direct customers are from our global sales efforts. They include companies headquartered in Western Europe and a few in the US.
Do you see an increasing demand for AI-powered PCs in India or any other specific markets?
There seems to be an expectation of demand, but there’s no demand yet.
What is your business roadmap for the next few years?
My roadmap is very clear. I aim to target those 5,000 customers. Some of them are located in regions where I currently do not have a presence, so reaching them is not feasible. However, the vast majority of these 5,000 major customers are situated in Western Europe and North America. Approximately 4,000 out of the total worldwide. This constitutes my primary target market. Currently, I hold about 10% market share in this area, and my goal is to increase it to between 15% and 20%.
Our services revenue globally amounts to 1.2 billion pounds, with approximately 10% of that being delivered from this location. Therefore, I anticipate that the 1.2 billion figure will increase in the future.
To achieve this, I possess the necessary capabilities, skills, and global facilities. However, as they say, it’s easier said than done. The challenge lies in executing these plans effectively.
