Posted on 12/29/2005 3:34:32 PM PST by jb6
'IBM is recruiting. Hop on,' says a large hoarding mounted on a van as it tours various parts of Bangalore city, reflecting the mad rush to secure talent as the IT outsourcing wave reaches a new high. To explain this phenomenon, industry experts are debating what has been the definitive shift in the software industry over the past year and trying to gaze ahead for this sector.
The lesson emerging from the experience of 2005 is that India has the opportunity to maintain its dominance of the outsourcing space if it can sustain the massive growth needed in the global-ready high-end workforce to support the scale of services required to be delivered.
This can be achieved by re-allocating financial resources to the already strong education system.
Said David Peral, co-founder & CEO, Pangea3, a KPO provider, "The major driver to bid out business in the sector remains cost, but the major driver to closing that business is now quality of services and sophistication of service offerings. Lower cost/lower value services are being commoditised quickly, and large transactions are now being closed based on the highest quality vendor."
This value system will gain increased acceptance as the software industry is witnessing a sharp shift from cost arbitrage to value arbitrage where global companies are taking a longer-term, more strategic view as they realise that they need access to both global markets and the best talent in the world in order to remain competitive.
Said Nandan Nilekani, CEO, Infosys, "Over the years, the scope of global IT sourcing has expanded to include business processes and companies are increasingly realising significant benefits from offshoring, making it a strategic imperative. Going forward we will see more firms that will become global, and those operating in the global arena will become more diverse, both in size and origin."
This, he said, will increase the demand for resources and competitive pressures will force companies to rethink their sourcing strategies to exploit global resources.
"Technology will continue to spur the creation of more global movements, which may also emerge as a robust force in international affairs and with further integration of India, China and other emerging countries into the global economy, a larger and younger talent pool will become available," he said.
In the current business environment, investments for funding business change are more needed than ever. There is a compulsion to achieve higher return on every dollar of investment and clients are looking for more in terms of business alignment, flexibility and predictability, the key enablers of business innovation.
They want to plough back resources into building new business capability. As a result they are looking for service partners who offer high quality business solutions with predictable execution capability.
Added Mukul Agrawal, country manager, Unisys India, "Companies that already run successful global sourcing programmes are finding more and more business areas where they can leverage global sourcing and are continuing to expand their offshore operations."
Having seen India's "spectacular success", several other developing countries from Asia, Eastern Europe and Latin America are now aggressively promoting global sourcing, which has added to the overall momentum. "These drivers will continue to operate in 2006 and with more vigor."
The major lever has been the ability of the sector to use technology as an enabler to delivering increasingly sophisticated and previously unseen services, while no longer selling simple technology as the end solution itself.
In short, having mastered technology, sophisticated providers in India now use that technology to simplify the delivery of increasingly challenging and sophisticated services, such as legal services, accounting services and financial and equity research services.
Likewise, the ubiquity of secure facilities and platforms has allowed sellers of high-end services to prove that sophisticated work can be sourced and delivered from India, since security is no longer a hurdle.? Solving the technology/security issue has allowed new entrants to focus on quality and delivery, while using technology as a medium, but not the message itself.
By the end of 2006, establishing complex capabilities offshore will be seen as diverting critical energy and resources from winning in the marketplace. The industry will see a significant shift of work from captive operations to global outsourcing providers who can deliver product development from start to finish.
Said Ajay Kela, president, Symphony Services, "This trend follows the evolution of globalisation practices. Companies have learned that substantial competitive gains only come from full lifecycle outsourcing, not a piecemeal approach, and India will get a major share of this pie."
Bob Hoekstra, CEO, Philips Software sums up by predicting in a funny vein:
"A huge theme park, Disney World India will come up on the outskirts of Bangalore, where citizens can virtually shake hands with Mickey Mouse, who is outsourced to the US. The US is home only to cartoon characters finally!"
The Strong Run Continues
Financial resources need to be re-allocated to the already strong education system for the sector to sustain its growth Technology could emerge as force in international affairs and with further integration of India, China and other emerging countries Firms that already run global sourcing programmes are finding business areas where they can leverage global sourcing
Dont' fool yourself, IT is hot in the US as well. Folks want a warm body to show up in an IT crisis, not an 800 number.
Don't mistake IT as in software development with IT as in a system admin.
The United States needs to export liberals and unions to India, China!
The United States needs to export liberals and unions to India and China!
What? And feed the Chinese slave factories.
Same old saw. "We are all stupid in America, but in the Third World people are geniuses!!! Superhuman Chinese and superior-brained Indians!!!" Except, except, except they slave for the hierarchy they can never become. Caste systems and Dictatorship economies have their price.
"Except, except, except they slave for the hierarchy they can never become. Caste systems and Dictatorship economies have their price."
Corporate executives wouldn't mind using slaves at all as long as those fat paychecks keep rolling in. The danger they don't seem to see is that it would be really easy for a foriegn nation to nationalize their company assets. IBM is having problems with their offshore service but the management is on the bandwagon and won't admit it. It's getting to be a real tower of Babel.
You have to install, configure and support the software though.
They should just outsource the management.
But we can all become the highest level in the hierarchy. They can't. System of failures in every other "democracy" but our own. And we have our problems.
Whenever I call my credit card company or airline, I get someone with an Indian accent, like someone who called himself "Austin" (Powers?). I am very annoyed- sometimes it's hard to understand them. I had an Indian instructor ones who called the letter "A" 'yay' and the letter "F" 'yay-f'. Is there anything that cannot be outsourced??
I heard of an insurance company outsourcing medical procedures. They'll pay 80% or so and you can go anywhere you want or their in network place. Or they'll pay 100% and fly you to Thailand for the operation.
"... Is there anything that cannot be outsourced?? "
I guess a proctologist :- ) !!!
Actually, a lot of servers and PCs can be run remotely and thus fixed, expecially with high speed downloads. Second, the trend in the near future is for people to store their OS and files on a jump drive and bring their "computer" with them, just plugging it into any hardware preconfigured.
Back to the days of the mainframe?
Job security.
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