Are Offshore Players Ready to Deliver on New Demands?

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


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


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%
N = 76, Source – Offshore Insights

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

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


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.

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

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

“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
N = 26 Source – Offshore Insights 0 5 10 15 20 25

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

… 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


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

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