Outsourcing: Parameters CIO Should Look For

Alok Sinha, President, Global Application & Engineering Services, Xchanging, feels specialisation is the key to truly benefit from outsourcing. In an interaction with Yashvendra Singh, he discusses the challenges and opportunities in the IT outsourcing space.

What are the challenges and opportunities for IT/ ITeS providers?

Increased adoption of IT by domestic clients has strong prospects of driving new growth areas for India’s $100 billion software industry. Figures reported by technology advisory firm Zinnov suggest a surge of 15-18 percent in the domestic market in 2013.

In the future, the market is expected to see efficiency and enhancement-based deals in sectors such as energy and utilities, transportation, education and parts of government bodies. There would also be more transformation deals in banking and insurance, telecom, retail and government. In addition, Big Data also has the potential to impact the market in analytics software and computational platforms and services.

From an operational stand point, demand for IT services will be driven by smaller cities as well due to rise of SMBs in these locations and their propensity to look for cost optimization.

Leveraging Tier 2 and Tier 3 cities, along with mainstay tier 1 operations will provide a fillip in terms of cost savings and managing attrition.

As global markets improve in 2013 and resume growth, Asia Pacific will continue to grow in both areas—delivery capabilities and as a consumer of IT services. In the coming years, new business models and confluence of emerging technologies will gain traction in the region.

What are the top three IT outsourcing trends in India?

The Indian IT sector is making several transformations to stay current with the changing customer needs. They are moving away from traditional ADM (application, development and maintenance) model that has delivered substantial growth in the past to a new model which involves innovations such as outcome-based billing and using technology to solve / mitigate critical business challenges and risks that customers face.

With technology becoming a critical backbone of all business operations (more so for companies operating across varied geographies), IT service providers are looking to upgrade or integrate their existing technologies with newer, leading-edge solutions and processes. Outsourcing companies in India, are leveraging disruptive technologies such as cloud computing, analytics, and mobility to move up the innovation curve and provide greater value on the customer’s spending. More importantly, technology is now becoming a key enabler for the business process services that we offer at Xchanging to our clients. 

How can an enterprise technology decision maker leverage outsourcing for their enterprise’s growth?

Over the past few decades, organizations have been outsourcing parts of their IT function for better budget flexibility and control. However, IT service providers are now moving beyond merely offering cost advantages to focus on their client’s business objectives.

At Xchanging for example, we are leveraging our technology and business process expertise to support a leading global real estate services company to consolidating their business operations across 10 countries in order to streamline the processes and unlock value for the business.

Technologies/trends such as cloud computing, analytics and mobility are rapidly gaining ground in corporates. What is their significance in IT services delivery?

The bottom line is that if these technologies matter to the customer, they matter to the service providers. According to NASSCOM, the Indian IT industry is estimated to collectively rake in over $225 billion in revenue by 2020 by leveraging emerging technologies and new innovations.

Across the industry, service providers today are speedily prioritizing cloud, analytics, mobility and social media (SMAC) computing strategies to ensure they are able to stay current and meet their customers’ business needs. At Xchanging we are continuously leveraging the SMAC stack to reorganize our customers’ core business processes, and become more innovative, adaptive and collaborative.

What are the most important parameters that a CIO should look at before going in for outsourcing?

For years IT outsourcing has been the key to success for CIOs to meet the challenges around IT services. However, to be able to truly benefit from outsourcing, CIOs need to keep few fundamentals in mind.

Specialisation is the key. After having identified the business imperatives, outline the processes that need to be outsourced and look for a partner who brings specialisation in that function. Also important to consider the benefits they realize beyond just low-cost services—that is table stakes now. The real benefit that a CIO can realise is the value addition the service provider brings to the table (because of the domain knowledge and technology skills they possess), and the competitive advantage that the business can gain due to that.

What is your strategy for the Indian market?

With India being among one of the fast growing economies, Xchanging continues to work with clients in this market to support them in their business growth. In the India market, we primarily work with customers in the Banking, Financial Services, Insurance, Manufacturing and Automotive space supporting them in end-to-end IT Services, Engineering and PLM and BPO services. At the same time, our teams in India are also supporting our global customers across the US and European regions.

Xchanging is deeply committed to India and is leveraging differentiating business models such as increased footprint in tier 3 towns to control costs and attrition.

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