We in India appear to be complacent at the thought that the imminent fall in software development projects from the US is not going to affect our IT-related earnings. Chiefly because we are already making news in IT-enabled services, with the call center market alone being worth $60 million today, and rising rapidly. But then, let’s not forget that in the development space we couldn’t really move up the value chain—to the product development level—largely due to a self-satisfied attitude.

There is a crying need to see today that call centers are only a part of the much larger customer relationship management (CRM) process. And we must take steps now to move up the value chain of this process. Indian companies would do well to position themselves to address the entire spectrum. And not only for the US market, but the European market too.

The CRM value chain

At the top of this value-chain is CRM consulting. It involves system design, contact handling strategies, product evaluation and recommendations. The next layer involves CRM implementation. Here one is concerned with the design and implementation of new facilities and systems, upgrading of existing systems, and design and implementation of middleware computer telephony solutions.

The next layer in the value-chain deals with CRM outsourcing. This typically involves either the complete or partial transfer of a client’s actual customer care operations, systems and processes to specialized service providers. CRM training services focus on end-user training of CRM front-office applications and processes. This involves customer service representatives in contact centers, and sales and marketing professionals. As far as CRM support services are concerned, they primarily focus on providing ongoing proactive and reactive services for installed software and hardware incorporated into a CRM-specific set of systems and processes.

Business consulting: Key layer

Front-office CRM activities are critical, as they represent touch points for customers. Typically companies begin enhancing their customer-related processes by addressing these activities, more as standalone implementations. This would normally involve several of the activities mentioned above, and would offer providers the opportunity to provide consulting, integration and outsourcing.

More than half of CRM services revenues currently come from ‘operations management’. This consists primarily of contact center outsourcing, technical support outsourcing and hosting. However, what’s clear is that business consulting will be the key layer as CRM projects entail solving business issues at a strategic level. Implementation services in this area, while growing rapidly, will also tend to get more complex, requiring a high degree of integration across systems and processes. Training services, while small today, are also likely to grow quickly in the near future. The hard fact—support is the smallest revenue stream.

The approach to CRM services could vary based on the individual service provider. Some service providers specialize in particular components of the broader customer relationship management process, such as sales automation processes or contact centers. Other service providers take a more comprehensive approach by integrating various elements of a company’s customer care process so that the enterprise as a whole operates in a customer-centric manner.

An interesting case in point is Accenture (the erstwhile Andersen Consulting). Accenture’s total European service revenue reached $3.8 billion in 2000, with CRM services representing almost 40% of this revenue. The firm has about 2,300 dedicated CRM service consultants in Europe. Accenture’s CRM practice offers expertise in the areas of customer strategy, customer insight, and customer interaction management and brand integration.

Accenture has formed new alliances recently in order to gain more depth and breadth. It formed an alliance with Vignette Corporation, a provider of e-business applications and content management solutions. Together they will jointly market services and solutions for integrating customers online and offline. Accenture Technology Ventures, the venture capital unit of Accenture, joined a consortium of second-round investors for a stake in Data Distilleries, a European CRM analytics provider.

Other major CRM Services vendors include Deloitte Consulting, CSC, IBM Global Services, EDS, PwC, Siemens Business Services, ICL, and Cap Gemini Ernst & Young.