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Raja of re-invention

Sapient’s interactive media business is an unlikely hero.

When Sapient, the US-based IT solutions company, first set up its India centre back in 2000, during the height of the dotcom boom, it flew down a team of 40 expats to manage its operations as it struggled to find enough people in a buoyant market. Seven years on the company, which has been through a gamut of re-inventions, ranging from pioneering the ‘fixed price’ concept, to profiting from the internet boom, to morphing into the world’s number 1 e-commerce player, is now looking at India as much more than an IT back office, as it seeks to step up hiring people for its interactive media business. Sapient inherited this business with the acquisition of the Planning Group back in 2005. “We were one of the earliest players to have a sizeable presence in India, and we’ve grown that to 3,000 people, covering our entire gamut of activities,” says Alan Herrick, CEO of Sapient.

Two years after it ventured into the interactive media (a move that analysts attacked unsparingly at the time), this business unit already accounts for 40 per cent of Sapient’s revenues and is on the way up.“This business offers us the opportunity to increase our margins and profitability, since there is relatively lower cost involved,” says Herrick. “The market for online and mobile-driven advertising could be as large as IT services and consulting.” He estimates that many of his clients spend around 3-4 per cent of their revenues on interactive channels, and expects this number to at least double in the next couple of years as companies realise the business benefit of going online—and, in many countries, onto the mobile phone. Aside from a raft of advertising services related to web design and the development of micro-sites, Sapient helps its clients track the progress of its online initiatives with its own tools and then helps them tweak their advertising strategy based on these numbers.

While Herrick contends that analysts were slow on the draw in understanding the value of the interactive media business, Sapient’s bigger worries may come in its legacy business, where much larger players such as IBM and Accenture are investing heavily in not just expanding their presence in highervalue consulting, but ramping up in India too. “The consulting business is very fragmented with the largest player owning just a 10.5 per cent market share. We’ve got well-established customers and contracts to compete successfully in this market,” says Herrick. Meanwhile, he reckons that despite the growth of Indian companies in this space, it continues to be large multinationals that Sapient competes with most often in these highvalue deals. “Our larger competitors may have over 50,000 people here. But most of them are in BPO and low-end maintenance roles,” he claims. While India isn’t an isolated development outpost for Sapient, the real action may happen when the company begins to target the local market. “We’ve historically focussed on large, Fortune 100 companies, (but) the mobile explosion in India is hard to ignore,” Herrick admits. India just could be at the heart of Sapient’s next re-invention.