Wednesday, August 10, 2005

On Best Garage...

India, an offshoring and outsourcing hub, is home to a unique model of business in the shape of the IT service industry. Of course, neither is India home to the largest IT services company (thats EDS, if I am not mistaken) nor was it the place where it was first invented (that is the US withEDS?). But India is home to a large number of IT service companies (Infosys, Wipro, TCS, Satyam).

Comparing it to the automobile industry gives an amazing perspective of the work that these guys do. Imagine that software industry is the automobile industry. The ones who produce cars, the manufacturers (like Microsoft, SAP, Oracle, IBM) are the ones who produce software products. Let us for a moment assume that the service industry in software is the equivalent of a garage, say "Best Garage" in the physical, automobile world.

The motto of Best garage is "to be the best garage in the world", while steadfastly refusing to build a car. They can service everything from a vintage Ford T ( say, a mainframe) to a new sleek Rolls Royce (well, not a straightforward comparison, but say, Windows Vista). But they will not produce a car of their own.

Why will car owners take their car to "Best Garage", when the manufacturers can do it themselves? One obvious reason is cost. Second less obvious reason is the fact that Best garage can service Model T's (and a sleek Ferrari) even though they are long out of production without as much as a whimper. They also service cars from multiple manufacturers without a complaint. Will a GM service center touch a Ford or a Toyota that you added as your fleet expanded? But Best garage will. A third reason is that some manufacturers have awarded Best garage a partnership as well, so he is as good as an authorised service center in some cases. What if you opened your car and souped it up (customized your software?)? Will your authorised service center help you with your souped up car? Best garage will do it , for a price, of course. Best garages, have also, in course of time built a reputation that they have the best mechanics in town. So, folks flock to Best Garage, demand that they build a car, but they dont!

Criticism still remains in Bests country that Best will never come out with a Best car of its own, which is really the high end market where Best can make more money. Criticism also remains that people bring their cars to Best because Best charges lesser than authorised service centers (but also does a lot of work that they wouldnt). They also say that this cost advantage is because Best pays less to mechanics, many of whom can be engineers. Theoretically, Best can make any car, but he wont, he simply wont take the risk. Some of the Best cars actually produce a vehicle or two, but they service niche markets.

Best still doesnt produce cars, but some of the garages have opened automobile design consultancy centers, so they span the design stage and the service stage without touching the manufacturing stage. Best is so competitive that some of the big names of the design consultancy centers (Accenturs, Cap Gemini) have opened their own service units and they also dont touch the manufacturing aspect.

The more I think about this, this model seems to be applicable only to the virtual world, not in the physical world at all. Is it so? Would a Best garage really have survived in an automobile industry?

11 comments:

Kaps said...

Nice Analogy....really liked it.
Since there are so many garage shops, they need to obtain quality certifications to distinguish one from the other.

NC said...

Excellent write up.
i have only this to say, the anology might not quite be right - reason:software service companies are actually producing (manufacturing) software and the only difference is in the brand. An infosys does not sell the same software as "Infosys" (except for Finacle) because its produced for the client and the client owns the produced/manufactured/developed application....



Regards
Naresh

@mit said...

Perfect Analogy.... Actually Best Garage does not manufature CAR because once it does that it will cease to be a Garage.... clients will feel that Best Garage is no longer a jack of all cars but just a master of its own car

Neelakantan said...

Kaps, yes you are right. It is these certifications that distinguishes one best garage from another.

Naresh, thats a good point. Best garage is Best because of its ability to service niche areas (customised service). Some garages produce niche vehicles (Finacle for instance!).

@mit, nice play on jack of all trades!

Anonymous said...

let's take the case of the "best" sports in the cars.. F1. No car manufacturer can win it own its own. Mercedeze-Mclerean for instance, Even if a Ferari does it own its own,even then it depends on Bridgestone for Tyres etc. So possibly just possibly there is a place for someone who puts the best components together, Now if we want to call that the Garage guy.. be it.
But then the Garage guys need to stop thinking like roadside mechanics.

Anonymous said...

Hi just visited this great automobile website called khichdee.com. They have reviews, roadtest, first drives, owners' feedback, comparisons everything you need to know about cars in India.

http://www.khichdee.com/maincat-id-1.htm

Anonymous said...

I checked out khichdee.com hoping to find some info about the SX4, however what I did find was a massive database of classifieds. And the best part, the site is pretty fast inspite of such a massive amount of information. khichdee.com seems to have classifieds on everything ranging from automobiles right up to marriages! Pretty impressive..

BTW... I found comparisons of different cars on indiacar.com, the link is on the bottom of the page.
Amen!!

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