There are many talks on Euro zone and about the predictability of the business from that geography.
The market dynamics is changing every day and Indian IT companies are responding with new/different business and operational models; which focuses on maximizing the total cost of ownership. Customers would love if some vendor comes and tells them how to reduce the cost and give them predictability and sustainability. Unlike earlier demand, which was driven by offshoring and access to large talent pools, today's customer wants solutions that can improve business.
Ok, now lets understand from a CIO perspective, what do they really need?
Let us consider a case, where customer is a telecom major and CIO wanted to outsource, what he/she will expect from the vendor? To list few important expectations,
• Reduce the cost: This has to be on the main agenda of outsourcing, if not why to change the running model? The reduction in the cost of contact could be achieved through offshoring (to gain cost arbitrage), or it could be because of tools/processes/reusable components or productivity gain because of high skilled labor or domain expertise. Indian IT industry has mastered this art of reducing the total cost of ownership by investing in domain expertise, process and tools and skill building.
• Predictability: In changing economical conditions, most of the CIOs need a predictability of spending, on IT budgets. No one wants to have a flexible cost structure which becomes difficult to manage. IT industry has designed fixed cost models to reduce the cost risk and give more predictability.
• Risk Sharing: Today’s customers want solution, for a telecom customer what means is; they need a vendor who can say, I will take care of your wireless business at this price, I will take care of your fixed line business at this price. Meaning, vendor needs to divide customer’s business in to different value chains and take care of IT systems end-to-end with complete ownership to these value chains. Indian IT industry designed a very good SLA regime which aims at sharing the risk with customers; which puts CIOs in more comfort level to share the contract.
• Sustainability: The biggest challenge of IT projects is initial transition to a new vendor and how the change management is managed by that new vendor. Initial few months is where the business users or customer’s customer will feel the difference and vendors must ensure that this transition goes smooth and there are not many teething issues. A well defined plan and approach takes care of such things.
• Understand business: Most important part; vendors must understand customers business and design the solution based on that domain experience. Customers don’t want to waste time in explaining the business needs all the times. Building the domain competency has been one of the core strengths of Indian vendors and they have learnt the art of talking the same language. In this way, its more on moving up in the value chain and becoming more mature in the services they are providing.
Indian IT industry has reached a maturity where they talk about ‘Transformation Projects’ where a business of a customer is transformed by changing the business processes and integrated stake holders. This is a more matured move ahead of being system integrators of the IT systems.
Industry has come a long way now..
The market dynamics is changing every day and Indian IT companies are responding with new/different business and operational models; which focuses on maximizing the total cost of ownership. Customers would love if some vendor comes and tells them how to reduce the cost and give them predictability and sustainability. Unlike earlier demand, which was driven by offshoring and access to large talent pools, today's customer wants solutions that can improve business.
Ok, now lets understand from a CIO perspective, what do they really need?
Let us consider a case, where customer is a telecom major and CIO wanted to outsource, what he/she will expect from the vendor? To list few important expectations,
• Reduce the cost: This has to be on the main agenda of outsourcing, if not why to change the running model? The reduction in the cost of contact could be achieved through offshoring (to gain cost arbitrage), or it could be because of tools/processes/reusable components or productivity gain because of high skilled labor or domain expertise. Indian IT industry has mastered this art of reducing the total cost of ownership by investing in domain expertise, process and tools and skill building.
• Predictability: In changing economical conditions, most of the CIOs need a predictability of spending, on IT budgets. No one wants to have a flexible cost structure which becomes difficult to manage. IT industry has designed fixed cost models to reduce the cost risk and give more predictability.
• Risk Sharing: Today’s customers want solution, for a telecom customer what means is; they need a vendor who can say, I will take care of your wireless business at this price, I will take care of your fixed line business at this price. Meaning, vendor needs to divide customer’s business in to different value chains and take care of IT systems end-to-end with complete ownership to these value chains. Indian IT industry designed a very good SLA regime which aims at sharing the risk with customers; which puts CIOs in more comfort level to share the contract.
• Sustainability: The biggest challenge of IT projects is initial transition to a new vendor and how the change management is managed by that new vendor. Initial few months is where the business users or customer’s customer will feel the difference and vendors must ensure that this transition goes smooth and there are not many teething issues. A well defined plan and approach takes care of such things.
• Understand business: Most important part; vendors must understand customers business and design the solution based on that domain experience. Customers don’t want to waste time in explaining the business needs all the times. Building the domain competency has been one of the core strengths of Indian vendors and they have learnt the art of talking the same language. In this way, its more on moving up in the value chain and becoming more mature in the services they are providing.
Indian IT industry has reached a maturity where they talk about ‘Transformation Projects’ where a business of a customer is transformed by changing the business processes and integrated stake holders. This is a more matured move ahead of being system integrators of the IT systems.
Industry has come a long way now..
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