Upload
others
View
1
Download
0
Embed Size (px)
Citation preview
Dr. Randhir MishraRegional DirectorCentral and Eastern EuropeSatyam Computer Services [email protected]
The International ICT Sourcing EcosystemThe International ICT Sourcing EcosystemKey value enablers…Key value enablers…
Agenda
The ICT value enablers Defining the EcosystemUnderstanding the key playersThe underlying economicsSome lessons from IndiaSatyam & international ICT sourcing
ICT international sourcing: Challenges
Offshore outsourcing is costing local jobs. There's a stigma to offshore outsourcing. The cost benefits of outsourcing are overstated. It's a buyer's market for IT workers right now anyway. There are huge cultural barriers. What about the other risks of outsourcing? The ROI of outsourcing hasn't been proved.
How it started: 2001 ICT Sourcing Worldscape
$ 550 Bn Total IT market
International Sourcing: 2003 ScenarioIndia• ITO :$ 9.5 b• BPO : $ 3.1 b
China• ITO :$700m• BPO : $ 210m
Philippines• ITO :$300m• BPO : $ 600m
Russia• ITO:$475m
Czech Republic• ITO :$26 m• BPO : $ 15 m
Hungary• ITO :$22 m• BPO : $ 10m
Canada• ITO:$ 8.0 b• BPO: $ 7.0 b
Mexico• ITO :$150m• BPO : $ 80m
LeadersLeaders
ContendersContendersChallengersChallengers
What does the market look like?
What has changed?
Better Prospects?Normal part of global trade (still controversial)
Controversial topic of public debate
Broader ConfidenceBetter understood and managedRisky
Better focusQuality and competence drivenCost driven
Broader baseLarge and SMBMainly Global 2000 enterprises
Broader acceptanceAcross geographiesMainly US focussed
Broader outlookMultiple location including developed economiesSourced from India
Global standards and acceptance
Multiple including the main consulting firms
Offered mainly by Indian firms
Mainstream activityMore diverse and complicated tasks
Plain application development
Hype to ROISustained value addShort term edge
Risk mitigation and closer controlRange of optionsBinary choice
(onsite/offshore)
Broader canvasGlobal sourcingOffshoreImplicationsPresentPast
CollaborateCollaborate
ConsolidateConsolidate
Y2K validates offshore sourcing
Global Expansion of local playersMove to United States/ EuropeGain “mind share”
New independent Service Providersg Move up IT Value chaing Look to acquire International Firmsg Become global end-to-end playersg Invest in new low-cost countries
Global players use international laborCreate subsidiaries offshoreTie-up with service providers in
Cross-country collaborationDevelopment of offshore BPOGrowth in offshore contact centers ReactReact
ExpandExpand
ValidateValidate
1995 – 1998 2005
Source :Gartner
International Sourcing Comes of Age
The ICT Value Enablers : Key location aspects
Offshore centers Offshore centers ActiOnActiOn sitesite Offsite / NearshoreOffsite / Nearshore
PlanningPlanningPrototypingPrototypingProject ManagementProject ManagementLocalizationLocalizationLanguage and Language and Culture Culture Business continuityBusiness continuity
Requirements Requirements Gathering & Gathering & PrioritizationPrioritizationStatement of Statement of WorkWorkImplementation Implementation signsign--off & off & Launch ApprovalLaunch ApprovalOnsite testingOnsite testingImplementationImplementation
Post implementationPost implementationHelp DeskHelp DeskSystem. Admin.System. Admin.MaintenanceMaintenanceIntegrationIntegration
Project ManagementProject ManagementTechnical DesignTechnical DesignBuild / ProgrammingBuild / ProgrammingUnit/Assembly TeUnit/Assembly TestingstingDocumentationDocumentation
Post Implementation Post Implementation SupportSupport
The answer: Source the service from the right location…
Nearshore:Nearshore:gEasier travelgCultural similaritiesgTime zone
Offshore:Offshore:gLower costsgTime to marketgResourcesgQuality
Onsite/Offsite
Nearshore:Mexico
Nearshore:Canada
Offshore:Ireland
Offshore:India
Offshore:Russia
Offshore:China
Current PrioritiesLonger-Term Prospects
Offshore:Philippines/Malaysia
Source :Gartner
Nearshore:East. EU
… Where It Makes Economic Sense
IndiaIndia• Application
Outsourcing• IT Services• BPO• Product Dev.• Contact Centers
CanadaCanada• Application Dev.• BPO• Contact Centers
IrelandIreland• Packaged Applications• Localization• Product Dev.
IsraelIsrael• High-End Software• Learning Systems
Philippines / Philippines / Malaysia :Malaysia :• BPO• Contact Centers• Animation• Application Dev.
Specialization by Niche in the EcosystemEastern EuropeEastern Europe• Software Engineering / App Dev.• BPO / Contact Centres
ChinaChina• Embedded Software• Hardware Services• Localization• Application Dev.
Source :Gartner
Satellite Based Communication
Near Shore BenefitsNear Shore BenefitsProximity ComfortLocal Language Easy Buy-in
OffshoreNearshore
Satyam Rightsourcing Model The approach:• Optimum mix between onsite,
nearshore, and off-shore • Use of dedicated development
centers around the world• “24 X 7” delivery model
Onsite / Client Location
Value propositionValue propositionBrings the customer the most suitable and optimal combination of Onsite, Offshore and Nearshore delivery capabilities to provide the best cost and time advantage.
A Case – India
Source: Mckinsey Interviews
• Established methodologies and processes being rapidly adopted for better performance
• Well defined quantifiable metrics for quality and process
• Access to highly qualified – skilled pool
• Faster turnaround time • Time zone difference • 24X7 service
• Learning curve effect, given increased activity across companies and increased centralization within company
• 40%-60% cost reduction for offshored process • Differential in wages from the US 0r UK parent location at
approx 70%-80%.• Interaction costs increase 10%-20% bcoz of India being a
remote location….thus net savings of 40%-60%• Labor cost arbitrage, the reason for cost savings likely to exist for
next 20-30 years
QualityQuality ProductivityProductivity
CostCost
Key value Key value propositionproposition
World class quality
Shorter development cycles
Innovative, phased and tailored
approach
Ability to offer Solutions across
the Globe
Expertise and talent across the
globe
Local Language flexibility
Ability to execute strategic
partnership
…Not merely lower cost but also...
How the benefits accrue
Other Sources of Advantage for Buyers
Experience/
Speed
Experience/
Speed
Technology platform* conversions and renewalsProcess standardization and innovationOperations and people management
Access to FinancingAccess to Financing
Ability to variablize fixed costs and smooth out up front expensesAbility to operate with lower costs of capital by leveraging debt financing against cash flows from long term agreements
Proprietary Systems &
Tools
Proprietary Systems &
Tools
Custom applications, tools, and interfaces to increase efficiency
Drivers of Cost Advantage for Buyers
Transaction Volume
Cos
t Per
Tra
nsac
tion
(Inde
x)
58
68
85
100 Impact ofDomain expertiseSig-Sigma process excellenceTechnology infrastructure“Lean and mean” operationsProcess and overhead scale
Impact ofLower labor ratesOffset by higher communication costsRationalized management costs
Client Volume Outsourcer Volume
Client Today
Client With Shared
Services
U.S. Outsourcer
Outsourcer With international
sourcing Capabilities
15%
-25%
10%
-20%
+
* When sourcing business processes, I/T components are also included
Government Role: Laws and RegulationMaking the existing laws more Industry friendly Giving tax exemption for exporting IT enabled software outsourcing services Deregulation & liberalization policiesRemoved restrictions on investment and easier investment processEnactment of Cyber Legislation Developing a stronger data protection and privacy law with industry participationReduced licensing requirements and import subsidies to make foreign technology accessible.All policies are custom made, keeping in mind the need to achieve maximum benefit to the outsourcing industry
Key focus area for industry stimulationInvestments
InfrastructureEducation including vocational trainingGovernment IT usage
PolicyIndustry facilitating tax and regulationSupporting new technologyResearch and DevelopmentEncourage travel
Increase CompetitionOpen foreign tradeEasy immigration and labour movementState level international forums and tie-upsInternational tendering for state-projects
Country level benefitsOverall economic gain
Increased exports and export oriented growthJob creation due to new roles and activitiesEfficiency and productivity gains
Positive and negative impact of IT skills redistributionBalanced human capital developmentEnhanced local skill levelsAccess to new labour marketsAccess to latest technology and process competencies
Global citizens due to IT automation v/s distant IT workersBetter world with enhanced sensitivitiesBetter quality of life
Pioneers in the concept of IT services remoting…
About Us…
21,000 people 47 countries, 20 development centres
Youngest of the pack
Fastest growing 47% + from 1997
Serves 6 of global 10 &104 of F-500
325 plus clients, long standing relationships
Strong learning culture; domain focus
Process innovator (CMU) and quality leader
Multiple national and international recognition
20 development centers spread across the globe Operations in 45 countries across 6 continents and across approximately 25 time zones
Globalization : Infrastructure to support a global delivery model
Dr. Randhir MishraRegional DirectorCentral and Eastern EuropeSatyam Computer Services [email protected]
Thanks…
Your comments:
Still needs much nurturing…Still needs much nurturing…