1. Subba Iyer Director – ICT Practice
IT Outsourcing Partnering Clients To Create Innovative Growth Strategies
Subba Iyer
Director – ICT Practice

2. The philosopher and the pragmatist
Being the leanest and meanest
and lowest cost
Better efficiency
Strategic execution
(70:70:70)
Greatly improve the quality of
people who still work for you!
Better effectiveness
Organization’s
philosophy

3. The key models on which outsourcing is based
Operations
focused
Cost driven
From fixed assets into variable costs
Clear operational parameters
Managing the relationship
Knowledge
focused
Skills driven
Ability to infuse new processes
Migration to new environments
Manage the learning and re-learning
Advantage
focused
Specific business advantage
Shared risk and reward mechanism
Harness the collaborative space
Re-invent the organization

4. Costs remain the primary motive for Outsourcing
Source: CIO study 2005

5. Outsourcing relationship models
Trust based
Balanced sourcing
May allow supplier the advantage
Visible metrics takes a backseat
Difficulty in the governance mechanisms
Fully leverages vendor capabilities
Clear locus of decision making
Requires specific and competent relationship managers
Key factors
The primary purpose
The organizational approach
The intended benefits
The governance mechanism
Traditional approach
Focuses on price rather than total cost
Leaves a lot of money on the table
Lack of a long term focus
Maximize gain
Maximize the purchasing power
Create the Win-Lose game
Drive down costs and surrender the future value

6. The Outsourcing maturity roadmap
Currently most Outsourcing relationships are at Level 2 and 3

7. The IT sourcing in perspective
> 550 billion
> 110 billion

8. Cost advantage drives the off shoring wave
In India alone
Top 5 vendors only

9. The top 25 vendors share $ 111 B $ 116 B
The global IT Outsourcing business is worth USD 116 Billion in 2006.
Revenues of Top 25 vendors grew from $ 41 B in 2005 to $ 44 B in 2006.

10. The global players dominate
Constitute 26% share amongst the top 25 vendors
Global IT outsourcing market = $116 billion
Top 25 companies = 37% market share

11. IT From ITO to KPO Knowledge Process Business Process
Animation / Design
Investment Research
Biotech
Legal Services
Patent Research
Knowledge Process
Outsourcing
Global Size: USD$17 Billion
Niche Focus
Skill Sets
Captive Units
Larger Sales Cycle
Industry Dynamics
Customer Care
Claims Processing
Content Development
Payment Services
Outsourcing
Business
Process
Global Size: USD$150 Billion
Industry Dynamics
The new Big 5
Competition from other
countries
Consolidation
Staff Attrition
Infrastructure Issues
Industry Dynamics
Global Delivery Model
Battle of Business Models
India – the Undisputed Leader
Infrastructure Management
Application Support
Application Development IT
Outsourcing
Global Size: USD$150 Billion

12. Our predictions for Next generation Outsourcing
Deal sizes and deal tenure could get lower
From one single vendor to a set of 3-5 vendors
Increased focus on BPO activities (FAO, Customer mgmt, HR)
ADM space will increasingly be dominated by Indian vendors
Global delivery model will be the standard
Increased off shore activity
Productivity and customer satisfaction feedback is cause for concern.
M&A activities between ITO and BPO companies will accelerate
Customers would look beyond labor arbitrage to actual efficiency improvements
Managing outsourcing relationships will become more complex