Some experts are of the opinion that rising rupee and increasing costs in Indian metros is impacting BPO and IT industry. The market is clearly moving towards a state of equilibrium with increasing competition from different geographies and a fast depleting pool of qualified resources.
What is the future of corporations like TCS, WIPRO, Infosys? Will they continue to have an India centric operations strategy with these changing times? Will the Indian government take note of the challenges faced by these behemoths and take some action. Countries like China and Japan have kept their currencies at a particular level to retain the competitiveness of there enterprises. This is not really a strategy that I would recommend for the India based enterprises as this portrays protectionism, but there is a need of a well thought of action plan to help these enterprises.
Indian corporations are trying to tackle the issue by various mechanisms:
a) Opening up development centers at onshore or near shore locations, recent decision of Wipro to open a center in Georgia is a step in this direction.
b) Utilizing financial tools like hedging to safeguard there margins.
c) Moving up the value chain where price is not the only key differentiator but domain knowledge that would help enterprises in reducing costs is, Infosys starting up a consulting arm is a step in this direction.
d) Starting development centers in feeder centers like Chandigarh, Hyderabad, and Noida within India where the cost of resources is lesser than in Metros like Bangalore.
Monday, October 15, 2007
Thursday, August 16, 2007
How to move beyond a transaction based relationship
Many service providers highlight the cost arbitrage as a major reason for corporations to offshore work. This is was a good approach when the industry was just initiating the offshore practice.
But even then if we go back in history we can observe that outsourcing really took off after the y2k scare, and at that point in time as well, cost was not a major concern but ability to rapidly convert legacy system to become compatible to the changed scenario was the key motivator.
So providers in present times with major cost focus are not portraying any key differentiator. As cost even in normal days would be key only in the first year of off-shoring operations as after a certain period when the cost saving starts getting reflected in the balance sheet stakeholders would want to look at continued cost saving and this can be achieved only by business process reengineering.
But even then if we go back in history we can observe that outsourcing really took off after the y2k scare, and at that point in time as well, cost was not a major concern but ability to rapidly convert legacy system to become compatible to the changed scenario was the key motivator.
So providers in present times with major cost focus are not portraying any key differentiator. As cost even in normal days would be key only in the first year of off-shoring operations as after a certain period when the cost saving starts getting reflected in the balance sheet stakeholders would want to look at continued cost saving and this can be achieved only by business process reengineering.
Tuesday, November 08, 2005
Thought Leadership
Where is the future of Indian software companies
In a recent artice that I read in Businessworld it was mentioned that the future of software companies who are in the middle rung of the market will be in jeopardy. The prime reason behind this assumption to me lies in a very old fact of Economic Value added, most of the work that is happening in India because of its generic nature does not result in adding as much value, for example the per employee revenue of Infosys is nearlly a tenth of Microsoft.
If this is the state of affairs in one of the India's leading player in the software industry what would be the scenario in other middle to lower rung software companies.
It is sometimes said that Indians lack innovativeness, but if this is the scene how is it that the same Indians when working in the development labs of Microsoft and Oracles of this world produce world class softwares.
Where is the future of Indian software companies
In a recent artice that I read in Businessworld it was mentioned that the future of software companies who are in the middle rung of the market will be in jeopardy. The prime reason behind this assumption to me lies in a very old fact of Economic Value added, most of the work that is happening in India because of its generic nature does not result in adding as much value, for example the per employee revenue of Infosys is nearlly a tenth of Microsoft.
If this is the state of affairs in one of the India's leading player in the software industry what would be the scenario in other middle to lower rung software companies.
It is sometimes said that Indians lack innovativeness, but if this is the scene how is it that the same Indians when working in the development labs of Microsoft and Oracles of this world produce world class softwares
In a recent artice that I read in Businessworld it was mentioned that the future of software companies who are in the middle rung of the market will be in jeopardy. The prime reason behind this assumption to me lies in a very old fact of Economic Value added, most of the work that is happening in India because of its generic nature does not result in adding as much value, for example the per employee revenue of Infosys is nearlly a tenth of Microsoft.
If this is the state of affairs in one of the India's leading player in the software industry what would be the scenario in other middle to lower rung software companies.
It is sometimes said that Indians lack innovativeness, but if this is the scene how is it that the same Indians when working in the development labs of Microsoft and Oracles of this world produce world class softwares.
Where is the future of Indian software companies
In a recent artice that I read in Businessworld it was mentioned that the future of software companies who are in the middle rung of the market will be in jeopardy. The prime reason behind this assumption to me lies in a very old fact of Economic Value added, most of the work that is happening in India because of its generic nature does not result in adding as much value, for example the per employee revenue of Infosys is nearlly a tenth of Microsoft.
If this is the state of affairs in one of the India's leading player in the software industry what would be the scenario in other middle to lower rung software companies.
It is sometimes said that Indians lack innovativeness, but if this is the scene how is it that the same Indians when working in the development labs of Microsoft and Oracles of this world produce world class softwares
Wednesday, June 15, 2005
Where is the future of Indian software companies
In a recent artice that I read in Businessworld it was mentioned that the future of software companies who are in the middle rung of the market will be in jeopardy. The prime reason behind this assumption to me lies in a very old fact of Economic Value added, most of the work that is happening in India because of its generic nature does not result in adding as much value, for example the per employee revenue of Infosys is nearlly a tenth of Microsoft.
If this is the state of affairs in one of the India's leading player in the software industry what would be the scenario in other middle to lower rung software companies.
It is sometimes said that Indians lack innovativeness, but if this is the scene how is it that the same Indians when working in the development labs of Microsoft and Oracles of this world produce world class softwares.
If this is the state of affairs in one of the India's leading player in the software industry what would be the scenario in other middle to lower rung software companies.
It is sometimes said that Indians lack innovativeness, but if this is the scene how is it that the same Indians when working in the development labs of Microsoft and Oracles of this world produce world class softwares.
Friday, June 10, 2005
What is the future of Indian Software Companies?
In the era when the likes of Infosyses, Wipro’s and Satyam’s of this world started doing business in India, they had one proposition that was unique top them, it being cost were American corporations concerned during the Y2K era whether Satyam knew there business vertical or not? No they were not, to them what was important was there system should be ready for the year 2000 problem that was facing them on there face.
This situation remained for some time, post 2000 when the dot com era was at its boom there was a spate of requirement of professionals within the U.S economy which could not have been fulfilled by the people within U.S, this created a spate of H1B’S and also encouraged corporations to look for resources elsewhere in the world, there came the role of these Indian software corporations, who were there augmenting the requirement onsite for critical onsite work and when there people became conversant with the development platform by taking the work offshore adding further value to a corporation.
But the question arises what now? Is this growth of Indian software enterprises sustainable, is India only about cost arbitrage, if Rupee strengthens against the dollar will we be still able to export our services?
In the era when the likes of Infosyses, Wipro’s and Satyam’s of this world started doing business in India, they had one proposition that was unique top them, it being cost were American corporations concerned during the Y2K era whether Satyam knew there business vertical or not? No they were not, to them what was important was there system should be ready for the year 2000 problem that was facing them on there face.
This situation remained for some time, post 2000 when the dot com era was at its boom there was a spate of requirement of professionals within the U.S economy which could not have been fulfilled by the people within U.S, this created a spate of H1B’S and also encouraged corporations to look for resources elsewhere in the world, there came the role of these Indian software corporations, who were there augmenting the requirement onsite for critical onsite work and when there people became conversant with the development platform by taking the work offshore adding further value to a corporation.
But the question arises what now? Is this growth of Indian software enterprises sustainable, is India only about cost arbitrage, if Rupee strengthens against the dollar will we be still able to export our services?
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