The just concluded "India Leadership Forum 2010"
conference held by NASSCOM in Mumbai, India
brought together technology & IT services gurus and outsourcing &
globalization pundits from all over the world to the Grand Hyatt for three days
in the second week of February. This event is arguably the largest gathering of
technology executives and was attended by over 1000 delegates representing
multiple countries from across the globe.
The underlying theme, like many other similar industry
events was - you guessed it - "Change & Innovation".
As we all know, the
words change and innovation has been overly used and abused by corporations
trying to monetize its agendas by coupling their message to these words, that it
lost its meaning. However, this time around, it did seem very real that the
world of outsourcing and IT services will actually see some quantifiable process
changes. I believe that the following phenomenon will be evident this year.
Cloud
and SAAS are more real than ever: Although we have been seeing
bits and pieces usage of cloud computing this past year or so, it is becoming
more of a reality this year. The mystic on cloud is definitely being more
revealed. Simplistically speaking, customers are seriously looking at reducing
their capital expenditure (CAPEX) by depending less on capital heavy
infrastructure portfolio. According to Wikipedia, cloud computing is a paradigm
shift whereby details are abstracted from the users who no longer have need of,
expertise in, or control over the technology infrastructure "in the
cloud" that supports them. It is a new supplement, consumption and
delivery model for IT services based on the Internet, and it typically involves
the provision of dynamically scalable and often virtualized resources as a
service over the Internet. The CXO's of the major service providers present in
the NASSCOM sessions definitely showed a willingness to promote this
technology.
As a derivative result, there will be more uptake of
software as a service (SAAS) and application as a service. Companies will also
want to utilize the full benefits of cloud by availing the application based
services that traditional installed software's provide. This will again drive
costs down significantly by eliminating software install and maintenance
charges. SAAS will probably become a mainstay in any managed services
engagement model for delivering IT services.
Broader
usage of new age pricing: As I wrote in my recently released book
on finding, structuring and delivering globally deployed IT services &
outsourcing deals - "Winning
Strategies: Secrets to Clinching Multimillion-Dollar Deals" John Wiley
& Sons, 2010, the world of IT services and outsourcing pricing is about to
see tremendous amount of changes. Linear pricing of equating more full time resources
(FTE's) with more work is changing quicker than we can imagine. Technologies
like cloud computing are encouraging customers to venture more into outcome
based pricing. This simply means that service providers take full
responsibility of delivering outcomes. The "how" and "where" mechanics of
delivery will be controlled by the service provider to a greater degree than
before.
This is a major shift from traditional price plays.
Leveraging offshore capabilities simply as a labor arbitrage ploy will not cut
it anymore. All major global and Indian pure plays recognize this and are
working hard to process designs to effectively accommodate this new turn of
direction. The ability to provide full managed services or variations of
managed services with outcome based service level agreements (SLA's) will be
critical for service providers that want to win in this new world order.
India as a consumer of services: India is known to
the world as an IT and BPO service delivery hub. But, it has recently become
quite a consumer of services. The public sector unit (PSU) in India has
opened the kimono and major deals are in the works in the next 2 to 5 years. The
private sector is also not too far behind either. Needless to say, all major
service providers are seriously implementing a "sale in India" strategy
whether it is strategic or opportunistic.
Vertical
expertise is a must: Simply being a quality system integrator (SI)
or providing superior technology support is not enough anymore. Companies need
to definitely have the technology capabilities but should have vertical centric
offerings, history and frameworks to truly capitalize in today's market. Today customers
expect SI's to provide not just direct technology benefits but help them
actually strengthen their positions in their own verticals by bringing in
superior capabilities.
Relevant,
responsible and secured outcome delivery: The ability to quickly
deliver relevant customer requested outcomes and present them in multiple
formats quickly and effectively will be crucial for the service provider's
success. The delivery mechanism should be environmentally responsible (read
less utilization of CAPEX heavy energy dependent infrastructure) while having
the ability to provide a common security framework across platforms.
With all these changes in the fray, this year will be a very
interesting year for both the customers and the services providers who are both
trying to recover from the economic downturn by being innovative in their
consumption and sales approach. Will these new directions turn into actual
monetary gain for service providers? Well, personally, as I am prospecting
customers, I am seeing more interest in transformation discussions than last
year. I am hopeful that this year will be a better year than last for all of us
in the service delivery business.
Anirban Dutta, a
director at CSC is proficient in helping grow
IT service delivery organizations. As a key member of a strategic deals group,
he played a major role in helping a particular service delivery provider grow
its top line from $1 BN to $2BN in 2 years. He is the co-author of a leading
book on IT services and outsourcing deal making called "Winning Strategies: Secrets to
Clinching Multimillion-Dollar Deals", John Wiley & Sons, 2010. He
tweets @ www.twitter.com/duttaanirban1.
Note: All viewpoints depicted in this article are mine and
in no way or form represents the viewpoints of my present employer, former
employers, present and past customers and collaborators.
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