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Are Offshore Players Ready to Deliver on New Demands?

Service Buyers' demands have changed post recession, as a result, they are/will push service providers to deliver very different value. Offshore Providers' current model and efforts are falling short of clients needs!

1 of 21
Sudin Apte

Press Meet
Bangalore – 29th April, 2011
         © 2011 Offshore Insights Research & Solutions Private Limited.
What Clients Are Thinking About Offshore Players?
             Premise                                                         Agenda
Service Buyers’ Internal Demands                            Characteristics of “smart”
Change Post Recession                                       enterprise


As a result, they are / will push
service providers to deliver very                           How it changes the way IT will
                                                            perform at “smart” enterprises
different value

Offshore providers’ current model
                                                            How a mid-sized IT services
and efforts fall short of client needs                      company prepare and win in the
                                                            changed scenario
New agenda for Indian IT emerges

                                                           Discussions and Q&A



                © 2011 Offshore Insights Research & Solutions Private Limited.
Research Methodology
  Surveyed 30 top offshore clients who spend more than
   $100 Million or more per year in January/Feb time to
   understand their offshore spend and post recession
   strategies to tap offshore
  Further surveyed another 45 offshore clients to
   understand shifts in their requirements, and how they
   perceive some of top Indian providers for delivering
   changed requirements
  Interviewed more than a dozen IT services vendors –
   Indian and MNCs
  Analyzed over 75 interactions clients had with Offshore
   Insights on this subject

          © 2011 Offshore Insights Research & Solutions Private Limited.
© 2011 Offshore Insights Research & Solutions Private Limited.
Firms plan to spend more in 2011 on offshore
How do you expect your offshore spending in next 12 months?
                   North America (n=46)                   Europe (n=27)
   50%
  45%
  40%
   35%
  30%
   25%
   20%
   15%
  10%
   5%
   0%

         Increase more      Increase 5%-            Decrease 5%-            Decrease more
           than 10%             10%                     10%                   than 10%
                                     © 2011 Offshore Insights Research & Solutions Private Limited.
N = 76, Source – Offshore Insights
© 2011 Offshore Insights Research & Solutions Private Limited.

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Are Offshore Players Ready to Deliver on New Demands?

  • 1. Sudin Apte Press Meet Bangalore – 29th April, 2011 © 2011 Offshore Insights Research & Solutions Private Limited.
  • 2. What Clients Are Thinking About Offshore Players? Premise Agenda Service Buyers’ Internal Demands Characteristics of “smart” Change Post Recession enterprise As a result, they are / will push service providers to deliver very How it changes the way IT will perform at “smart” enterprises different value Offshore providers’ current model How a mid-sized IT services and efforts fall short of client needs company prepare and win in the changed scenario New agenda for Indian IT emerges Discussions and Q&A © 2011 Offshore Insights Research & Solutions Private Limited.
  • 3. Research Methodology  Surveyed 30 top offshore clients who spend more than $100 Million or more per year in January/Feb time to understand their offshore spend and post recession strategies to tap offshore  Further surveyed another 45 offshore clients to understand shifts in their requirements, and how they perceive some of top Indian providers for delivering changed requirements  Interviewed more than a dozen IT services vendors – Indian and MNCs  Analyzed over 75 interactions clients had with Offshore Insights on this subject © 2011 Offshore Insights Research & Solutions Private Limited.
  • 4. © 2011 Offshore Insights Research & Solutions Private Limited.
  • 5. Firms plan to spend more in 2011 on offshore How do you expect your offshore spending in next 12 months? North America (n=46) Europe (n=27) 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Increase more Increase 5%- Decrease 5%- Decrease more than 10% 10% 10% than 10% © 2011 Offshore Insights Research & Solutions Private Limited. N = 76, Source – Offshore Insights
  • 6. © 2011 Offshore Insights Research & Solutions Private Limited.
  • 7. Business and societal factors impact next wave of technology  Data flood continues, gets further complex and important  Architecture focus shifts from server and app centric to Services  Pervasive technologies connect physical and digital worlds  Individual rights and abuse issues keep focus on Security and Privacy  Cloud computing’s value becomes real  Social platforms evolve as new source of business intelligence  Firms look at Analytics as basis for differentiation and client service  User interface & convenience matters even more © 2011 Offshore Insights Research & Solutions Private Limited.
  • 8. Top Offshore Clients Re-strategize To leap- frog Benefits – Findings from our study  Offshore Insights surveyed 26 top offshore clients.  Clients profile – typically Fortune 500 clients, more than 5 years clients of offshore services, based across NA, Europe and Japan  Survey covered satisfaction level and reasons, and what they will do in coming 24 months  Survey and interviews conducted in Dec 2010/Jan 2011 © 2011 Offshore Insights Research & Solutions Private Limited.
  • 9. Most clients are generally happy with their experience so far A] How satisfied are you with your offshore experience? - Overall satisfaction Don’t know/Can't Very unhappy say, 6% Very happy with with what we what we received, 7% received, 12% Fairly or to some extent unhappy, 11% Fairly or to some extent happy, 63% N = 26 Source – Offshore Insights © 2011 Offshore Insights Research & Solutions Private Limited.
  • 10. Clients express satisfaction over offshoring basics B] How satisfied are you with your offshore experience? - basic offshore benefits like saving, process, quality Very unhappy with Don’t know/Can't what we say, 1% received, 6% Very happy with what we Fairly or to some received, 18% extent unhappy, 7% Fairly or to some extent happy, 68% N = 26 Source – Offshore Insights © 2011 Offshore Insights Research & Solutions Private Limited.
  • 11. © 2011 Offshore Insights Research & Solutions Private Limited.
  • 12. Geo-political issues, cultural aspects, and innovation are client pain points C] How satisfied clients are on various offshore characteristics? Satisfied Indifferent Dissatified Geo political issues Account management GDM - Non-India delivery centers Staffing issues (including attrition) Innovation Pricing transaprency Global culture Process/Quality superiority Saving 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% N = 26 Source – Offshore Insights © 2011 Offshore Insights Research & Solutions Private Limited.
  • 13. © 2011 Offshore Insights Research & Solutions Private Limited.
  • 14. “What” and “How” of offshoring dominate strategy re-visit goals "What are your top offshore services management initiatives in this offshore revamping?" Other initiatives 6 Restructure vendor portfolio 4 Review/revamp offshore strategy 5 Increase offshore projects/work 11 Improve governance process 12 Change the way we work (price… 16 Restructure work portfolio 20 N = 38 Negotiate offshore rates 21 Source: Forrester Research © 2011 Offshore Insights Research & Solutions Private Limited. N = 26 Source – Offshore Insights 0 5 10 15 20 25
  • 15. © 2011 Offshore Insights Research & Solutions Private Limited.
  • 16. Top shifts on offshore client side (1/2)  Newly created steering committees influence IT strategy  Almost 65% companies have such committees  Committees have influential representation from business leaders, Operations, Finance, and even Strategy group  IT Project approvals and budgeting are linked to actual business, not IT value  Alignment and higher response to business requirements is new mandate  Most CIOs performance is measured on business metrics  Business client needs higher flexibility and agility  Clients prefer incremental solutions, not outright replacements  Deal size becomes small,  Clients look for solutions on top of existing platforms  Easy to adopt/exit and “investment light” solutions are in demand © 2011 Offshore Insights Research & Solutions Private Limited.
  • 17. © 2011 Offshore Insights Research & Solutions Private Limited.
  • 18. … But current relationship formats are not good enough for new needs  Majority of client engagements are still resource centric  The deliverables and service levels are linked to technology and things which don’t essentially convert into business value  Substantial work coming to offshore is mundane and from IT Ops and support area  Providers have limited capability to transform clients’ key business processes end to end  Relationships are managed junior to middle management levels and hover around rate cards, not looked by many clients as strategic partners © 2011 Offshore Insights Research & Solutions Private Limited.
  • 19. © 2011 Offshore Insights Research & Solutions Private Limited.
  • 20. © 2011 Offshore Insights Research & Solutions Private Limited.
  • 21. Want to know more? Email – shashank@offshoreinsights.com Phone - +91 020 25459851/52 Website: www.offshoreinsights.com Research Garage, 12 Shailesh Society, Ganesh Nagar, Pune – 411 052, INDIA