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The Complete IDC Intelligence Solution
The Complete IDC Intelligence Solution
The Complete IDC Intelligence Solution
The Complete IDC Intelligence Solution
The Complete IDC Intelligence Solution
The Complete IDC Intelligence Solution
The Complete IDC Intelligence Solution
The Complete IDC Intelligence Solution
The Complete IDC Intelligence Solution
The Complete IDC Intelligence Solution
The Complete IDC Intelligence Solution
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The Complete IDC Intelligence Solution

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  • 1. Global Sourcing - The Coming Reversal of Offshore Delivery: Are The Critics Right? – A Panel Discussion Bob Welch, IDC
  • 2. Panel Members
        • Samantha Covell, VP Services Procurement, BT
        • Aidan Connolly, Finance Director, UK & Ireland, Sodexho
        • Neeraj Gupta, Executive Vice-President, Patni Computer Systems
        • Padma Ravichander, President & Managing Director, Global Consulting and Applications Solutions and Chief Executive APAC region, Perot Systems.
  • 3. Offshore Services - Key Messages
    • Offshore is transforming to a strategic and disruptive form of service delivery
    • Offshore labor-only model has a limited lifespan of effective service delivery
    • Customers are looking to ensure that they mitigate their sourcing strategies across geographies and service delivery models
    • Expansion by non-India countries as primary sources of services is expected to be incremental over the next 2 to 3 years, but potentially significant in the longer term
  • 4. From Defense to Offense: Offshore Player Strategic Directions and Challenges Integrate Transform Optimize Phase
    • Automation/capital
    • Brand image
    • Delivery Investments
    • Partnerships
    • Geographic reach
    • Expansion of skills (e.g. consulting, BPO, IT)
    • Brand image
    • Delivery Investments
    • Target buyers (e.g. CXO)
    • Global footprint
    • Delivery Investments
    • Partnerships
    • Skills
    • Brand image
    Provider Challenges 2004 2008 2007 2006 2005
    • Integrating global sourcing with hosting, utility computing/Software-as-Service
    • Market enabler: SMB, emerging
    Integrated Global Delivery
    • Cost
    • Project-based (develop, maintain)
    • Tactical
    • Legacy environments
    Offshore: Discrete Sourcing
    • Transformation via self-financing
    • New technologies (innovation)
    • Operational services (e.g.outsourcing)
    • Strategic
    • Industry-centric
    Global Sourcing Defense Offense
  • 5. Emergence of Digital Services Supply Chains: Integrated Global Delivery “Platform” Procuring integrated IT, business process and industry-specific services Customer
    • Business consulting
    • Operations
    • Hosting
    Local Delivery Access to community of developers, technologies, processes and industry-specific expertise and skills Global Resource Community
    • Transformational services
    • Operations
    • Hosting
    Global Delivery
  • 6. Emergence of “Disruptive” and “Transformative” Global Sourcing Delivery Options
    • Delivering “large-scale” IT outsourcing on a cost-effective, global delivery model (e.g. HCL – Autodesk/$50M, DSG International/$338M)
      • Integration of global sourcing (offshore) with a hosted “onshore” infrastructure (e.g. data centers)
      • Leverage partnerships for hosting
    • Enabling new service options: SaaS (Software-as-a-Service)
      • Tata, Wipro partnering with salesforce.com
        • Providing systems integration via global sourcing to SaaS provider customers
      • OpSource and IndusLogic
        • IndusLogic acts as offshore “SOA” factory for OpSource’s on-demand delivery platform
    Offshore providers expanding market potential with disruptive delivery models and placing greater pressure on global players to maintain pace
  • 7. Global Sourcing Risk Mitigation and Management
    • Customers are increasingly looking to mitigate sourcing risks via:
    • Diversification of geographic locations
      • Require core requirements: strong infrastructure, educated workforce, language, IP protection, security (physical and logical)
    • Vendor requirement of investing in local assets for strategic relationships (business consulting, outsourced/managed services)
    Market data from 2007 US Utility Computing Market Adoption Respondents: CEO, CIO, CTO, IT/telecom Directors/VP, N=320
    • Utilization of newer service delivery models as substitutes (e.g. utility computing/SaaS)
    Top 3 benefits from leveraging utility computing as an outsourced service
  • 8. Competing Business Models: Investment Considerations and Staffing Impacts
    • 2005 Data: Company Reports
    Growth $612K $185K $41K Revenue per Employee Headcount Requirements Delivery investment strategy will impact (1) Future opportunities (e.g. SMB, emerging markets) and (2) Competitive positioning (new players: online, SaaS) Offshore Economics Onshore Economics On-Demand Economics
  • 9. Emerging Offshore Providers
    • Focused on project-based IT services such as CAD (custom application development)
    • Negligible focus on BPO
    • Increase focus on R&D/engineering and testing services
    • Relatively small with only a few players having approximately $300-400M in revenue and the remaining less than $100 million
    • Lack scale, brand recognition, strong global footprints needed to gain quick traction
    • Need to develop more focused approach (e.g. industry, market – R&D/engineering services) while making strategic investments (e.g. delivery footprint and capabilities)
    • Potential Competitors
    • Latin America
      • Mexico: Softtek, Neoris, Epsilon
      • Brazil: CPM, Politec
      • Argentina: Cubecorp, Globant
    • CEMA
      • Russia: SBS Luxoft
      • US-headquartered: Exigen, ePAM
    • APEJ
      • China: HiSoft, Augmentum
  • 10. Potential Next “India’s”
    • Emerging geographic centers for offshore services
      • Increase focus on building NASSCOM-like lobbying groups (MexicoIT, Russoft, BRASSCOM)
      • Increase focus by governments to drive offshore/sourcing industry (China, Chile, Mexico)
      • Continued weaknesses in IP protection, infrastructure, language, project mgmt, security and politic dynamics inhibit growth
      • Competing on cost for smaller countries is not sufficient to drive scale
      • Becoming effective competitors to India increasingly requires focusing on industry-specific area (e.g. Brazil/finance)
    • Offshore Countries
    • Latin America
      • Brazil
      • Chile
      • Mexico
    • CEMA
      • Southeast European: Romania, Bulgaria
        • Entering EU in 2007
      • Central European: Czech, Poland, Hungary
      • Baltic States and Russia: Russia
    • APAC
      • China
  • 11. Panel Discussion
    • What has changed in the sourcing model for offshore delivery?
    • What are some of the key lessons learned by buyers of offshore services?
    • What are some of the key lessons learned by providers of offshore services?
    • Conversion of offshore owned to offshore/ contacted?
    • Do clients favor vendor sourcing models that include offshore delivery?
    • Examples of where it works well and why
    • Examples where it hasn’t worked well and why
    • Major investment areas for companies with offshore delivery capabilities

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