Source: www.thehindubusinessline.com

Tech players are getting more than what they bid for in deals — call it compromise or value-addition. Looks like the ‘era’ of ‘vanilla responses’ from clients is over.

Plain vanilla cone or chocolate sundae? Depends on how hungry one is. Information technology (IT) companies in the last year have been developing an appetite for deals that do not resemble the plain vanilla ones they used to bid for in the past.

Cognizant bagged a seven-year-deal with Rabo Bank through Netherlands-based local vendor Ordina. Ordina is believed to have had to pay Rabo Bank $21 million to sub-contract the deal to Cognizant. While bagging the Kimberly-Clark deal, Cognizant also signed up to co-manage Kimberley-Clark’s one-year old ‘captive’ operation in Buenos Aires with plans to expand operations there.

Tech Mahindra won a $1-billion deal from British Telecom encompassing more than the regular software development and maintenance work. Wipro bagged the two-year Credit Suisse deal after committing to a ‘quasi’ build-operate-transfer (BOT) structure, where the former would run a captive operation for Credit Suisse in its Pune facility.

Infosys Technologies structured its seven-year $250 million deal with Royal Philips Electronics (Philips) as an acquisition and paid about $28 million upfront to take on board 1,400 employees of Philips across Poland, Thailand and India. Further, Infosys BPO will provide finance and accounting services and processing of purchase orders to Philips.

Some refer to these as compromise deals (as vendors end up receiving more than what they bid for), others call them value-added deals or simply large deals. Though the finer aspects of each deal structure may differ, it is interesting to note that transfer of client assets is common to them all.

Is this the way forward for future deals in the Indian IT space?

Life partner rather than vendor

“The era of submitting a ‘vanilla response’ is now obsolete,” says Sanjeev Nikore, Corporate Vice-President and Global Head (Sales & Marketing), HCL Technologies. “All clients look for innovative price models, which may mean co-investment or sharing risk and rewards,” he says.

Cost savings is just one of the parameters while evaluating large deals. Management of risks (say, through manpower transfer), value-added services and the ability of the partner to continuously innovate and visualise the client’s changing business are more important than a pure price play, he says.

HCL has bagged large deals in the past with clients such as Teradyne in the US (a $70-million multi service outsourcing deal where HCL took over the entire IT operations and all IT employees), UK-based DSG Group (a five-year $333 million total outsourcing deal involving acquisition of 350 DSG employees) and Skandia Group (a $250 million five-year deal that involved acquiring 250 Skandia employees.

“The philosophy in large deals is to choose a life partner rather than a vendor and the bid must reflect that spirit and maturity,” says Nikore.

Building compelling value

Such deals are in line with traditional outsourcing deals in mature markets such as the US and Europe, says Gaurav Gupta, Country Head, India, Everest Group, a research and consulting firm. “Indian companies have so far done project-based work and not developed end-to-end capability. Now they are trying to build a compelling value proposition by offering offshore, on shore and near shore options. To do this, they will need to forge alliances with local companies or centres set up by the client,” he says.

Read More

Source: www2.ljworld.com

The United States no longer is simply sending jobs overseas — now the country is sending its knowledge, too.

Next year, Kansas University aims to deliver masters-level courses in pharmaceutical chemistry to professionals in India, where demand for such education at the professional level is stressing the country’s own universities.

While welcoming foreign students to Lawrence for school is nothing new, the concept of beaming KU professors’ lesson plans, projects and lectures into areas that have become increasingly popular as outsourcing sites for U.S. companies is a whole new facet for the ever-expanding global economy.

Some money from India might actually make its way back to Mount Oread.

“The world is ‘flat’ in all directions,” said Val Stella, a KU distinguished professor of pharmaceutical chemistry, whose course in pharmacokinetics went to a dozen students at four remote U.S. sites via the Internet this past semester. “The water doesn’t only flow to India and China. There is flow back to this country: They need the things that we do well, and we can use the things that they do well.

“We tend to think of it only as a one-way street, but it isn’t that way.”

As pharmaceutical companies overseas scramble to give their own employees solid benefits and added expertise — often by hiring professors away from academia to provide classes, offer training and conduct research — some companies are looking elsewhere to meet their needs.

Enter KU, with what Christian Schöneich describes as “reverse outsourcing.”

“There really is no limit,” said Schöneich, chairman of KU’s department of pharmaceutical chemistry. “For a reasonable investment, this project will go.”

The department launched its distance-learning master’s program this past fall, an effort started with a grant from Amgen. The program has a dozen students who watch live lectures from four remote U.S. sites.

KU has yet to secure formal arrangements with foreign companies, but officials are optimistic. Two companies, all with KU graduates in positions to influence decisions, have contacted the department about offering courses.

KU officials also have been to China to discuss possibilities.

For a department with 80 doctoral and post-doctoral students in Lawrence, leaders are looking forward to extending the program’s reach.

Howard Rytting, developer and director of the distance-learning master’s program, expects more than 50 students to be taking part in the three-year program within as little as five years. As the global economy evolves, Rytting said, KU will continue its work to meet the demand for top-tier pharmaceutical education, using distance technology to make new connections.

“We want to be visible and as much on the forefront of educating people as we can be,” he said.