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Started by : sumitra dutta, Consultant, XYZ   06 24 2009 07:55:57 +0000
Industry : IT ServicesFunctional Area : Quality Management(Operations)
Activity:  86 views;  last activity : 07 06 2010 20:18:09 +0000

2009 is looking so much like 2002 in the IT outsourcing industry. Back then clients were cutting back, driving economies of scale and consolidating vendors. Decision-making moved away from business and IT managers to purchasing teams. The difference back then was western IT companies – the incumbents - suffered as Indian outsourcing companies benefited and took ground.

In 2009, the Indian IT companies are the incumbents and clients are scrutinizing all vendors and contracts. Senior executives at IT outsourcing companies need to take action now to make sure they aren’t the losers when the consolidation decisions get made.

So, how should they prepare? Start by looking at what happened in 2002. Purchasing departments at large clients used two metrics to make vendor optimization decisions – cost and quality. Cost is easy to compare but what about quality? In 2009 this focus on quality will remain critical; however, there needs to be a shift in the measure of quality.

As the industry moves towards more high level tasks such as research and development and KPO (Knowledge Process Outsourcing) that put the focus on the qualifications and quality of the professionals doing the work. The quality of the talent and the workforce is the next key measure of quality. There is no measure of quality distinction offered by IT providers and therefore the only variable left is cost. In this scenario we run the risk of IT providers dropping pricing in order to survive. This will cause a long term earnings and investment gap in the industry. Dropping pricing today will take down long-term earnings and in order to minimize the impact to earnings, companies will reduce critical investments to remain competitive.

IS THERE A BETTER WAY?

 
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1 Good Quality Product, Empathy with Client and Technical Direction to Product Improvement
2 Post your views
3 Innovation
4 Backup Plan
5 Good Leaders are good Stratergists actually

Good Quality Product, Empathy with Client and Technical Direction to Product Improvement

idea posted by Mandar Joshi Product Development Manager, Thomson Reuters

I think the future of IT Leadership is to first build reputation in market that the quality of a vendor is never questioned and overall market impression is that the Outsourced Company is best in class for its quality. Once clients start looking at cutting costs the first to be touched are those who are always questionable on basis of Quality and Reputation. To site some examples Microsoft or Oracle in a very well developed and implemented setup would be the last to take brunt of cost cutting than small time Maintenance vendors.

Client empathy is gone out of picture in the last few years of corporate growth. The IT Outsourcing companies and there top management is only playing the game of profit margins and revenues. Sometimes due to mismangemed planning, or wrong sales predictions or wrong investment decisions the Client may go under fire like Lehman and similar Ibanks. In such a scenario the IT Outsourcing companies should empathise with the client and help them come out of the fix with lesser costs, more delayed billing or different revenue cycles sometimes even helping in consolidation of operations at the cost of ones revenues. This would develop a long lasting relationship which the Client would definitely repay once he has circumsized his problems

IT Outsourcing companies are the best to be informed about upcoming technology trends, evolving product and technology spectrums most importantly game changing features in products. The client CIOs, CTOs are generally concentrating on Project Success and ROIs for investment. In such a scenario the IT Outsourcing companies should direct and infuse the idea with the Client to change to a lighter technology or a enhanced version of product and present proactively ways of ROIs for the same. No client would be inhibitant to adopt to newer investments when he can realise now only immediate but long term value.

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Post your views

idea posted by sumitra dutta Consultant, XYZ

It would be nice if there can be a great session of knowledge sharing.

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“There is no measure of quality distinction offered by IT providers and therefore the only variable left” – No cannot agree with this; there are metrics that can be used to measure.

Now considering the original question on what the alternatives are during this period; why cannot one relook into strengthening the internal process, tools methodologies and the same time focus on domestic market.

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Innovation

idea posted by Mihir Jhaveri, PMP, CSCM Senior Manager/Pre Sales & Solution Lead/SCM/Strategy, Bristlecone India
  • The role of innovation

  • Innovators lead by showing us where our industry is likely to go next.
  • The implication is that your leaders do NOT need to be inside your organization!
  • We already speak of "market leaders" -- so leadership can come from anywhere.
  • Leadership is too often confused with the question of how people in positions of
    AUTHORITY influence employees to pull in the same direction.
  • Why is it then that entrepreneurs do not need (internal) leaders? They look to industry leaders for inspiration and role models to beat.
  • Such leadership is about innovation - not using influence skills to motivate employees.
  • Why develop leaders to be nice instead of fostering real leadership through innovation?
  • Some leaders have good people skills, others are too self-absorbed, too focused on their own ideas or on beating competitors.
  • Who would follow such leaders? Opportunists who know a good thing when they see it, who are ready to jump on a bandwagon with little or no persuasion. People who are likely to be leaders themselves in other words.
  • As knowledge workers become empowered enough to think like entrepreneurs they will look outside for leadership if you can't provide it. But does it matter?
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    Backup Plan

    idea posted by sumitra dutta Consultant, XYZ

    I think IT should try to develop a back up for themselves to sustain both in recession and boom. IT always focuses on few things when there is a lot more to conquer. Different option are thought about only during recession, thats the basic problem with IT. Its high time we learn from our mistake and try to refrain from it in future.

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    Good Leaders are good Stratergists actually

    idea posted by Nanjappa M.G. Legal - Head, Cafe Coffee Day

    Alexander the Great was actually never tall, superbuilt or a master swordsman. Yet he conquered half the world as history says. The main reason being he was a good Leader. All Leaders irrespective of the domain require this quality of being supremely acceptable by the others. In this regard the future of IT leadership will only depend upon the personal capacities of the Leaders in the organisation to bring about the best with their employees and the R&D. The way things are today good Leader do not exist any more. There are only rich leaders and this is the shortfall the industry faces today as most Leaders trade their skills for partly bonuses and salaries, by leaving and joining other companies, rather than give a real value added boost to the Co they are in. The Future looks not so good from my view.     

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