Source: www.earthtimes.org

Singapore - Developing a strong global sourcing and delivery strategy is the top concern of IT executives in the Asia-Pacific region this year, according to a study published on Monday. Research agency IDC said global delivery includes functions such as business process outsourcing, IT outsourcing and project-based services.

“It’s important for companies because it allows them to benefit from cost arbitrage and economies of scale,” The Business Times quoted IDC’s Philip Carter as saying. “It allows companies to achieve optimal business outcomes without the restriction of geographic boundaries.”

Domestic markets could be slow to gather momentum, particularly in developing nations, said Jenna Griffin, IDC senior analyst.

“Having service providers capable of offering both onshore and offshore services generates a stronger growth trajectory within the domestic market as a whole,” she said.

Some of the key challenges that companies face embarking on global sourcing strategies centre around service levels, and ensuring that the desired business outcomes are met, IDC said.

“This makes the selection of both global delivery players and locations vital to the success of the project,” Carter, IDC’s Asia-Pacific’s associate director, told the newspaper.

“The region represents a pot of gold for innovative vendors, but there are also significant pitfalls to trip those who fail to deliver on customer satisfaction and cost efficiency,” Griffin added.

Source: www.financialexpress.com

India is clearly key to IBM’s managed business process portfolio. As its general manager, Erich Clementi takes clients beyond the traditional ‘lift and shift’ outsourcing model, Daksh operations acquired in 2004 are crucial to its vast global network. Employing 20,000 people at last count, Daksh today boasts of a network of 17 delivery centres spread across seven cities in India and Philippines. Armed with its global delivery network of 36 BTO centres across the world, Clementi calls the Indian offshoring giants “formidable”, but is confident they “can’t match up IBM’s global delivery network”. General manager of IBM system’s Z division till 2003, he has more recently started leading small and midmarket accounts of the business systems segment. In an interview with Pragati Verma, he describes the changing landscape of the business transformation services and the future of India as an offshoring location. Excerpts:

Changing business environment seems to be morphing the way BPO and BTO (business transformation) services are delivered. How is it impacting your business?

The approach today is very different as we are not just taking over their process but transforming their business. Companies are burdened with inefficiently high pain points, increasing costs and pressure to deliver differentiated business value. As the pressures increase, traditional business process outsourcing that relies on labour arbitrage is not enough. Businesses are looking to derive a new kind of value from their service providers. Organisations are seeking a partner who can help them rethink their business models and business operations, optimise those operations and drive new innovative kinds of business processes. They want continuous strategic change to transform existing processes. Clearly, the traditional BPO approach of lift and shift is over. Our value proposition is much more than labour arbitrage. We run our client’s process to transform their operations. We bring in our experience of doing it for multiple clients. Our strategy of providing higher value services is resonating with clients as they seek a partner to help them solve these complex business requirements.

This strategic focus in our services practice is paying off. In the third quarter for instance, IBM’s total global services revenue grew 14%, the highest in four years. And we had a strong performance in all geographies and business sectors. IBM’s managed business process services (MBPS) efforts are unique in that they are designed to bring together all our capabilities for our clients—consulting, business processes

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Source: www.hindustantimes.com

Indian firms came first in four out of 10 information technology service categories in a global survey that selects the 100 best IT services providers. US-headquartered IT firms topped in four other categories and one firm each from Mexico and China took the other prizes in the 4th Cybermedia Global IT Services Survey.

Overall, the survey affirmed India’s standing as a major outsourcing centre. India also led the way as the global delivery centre for IT service companies, with many non-Indian firms clearly favouring India. However, the survey also revealed that the rising rupee was the number one concern for many such firms.

Tata Consultancy Services was rated the best performing IT services company. HCL Technologies was rated the best performing infrastructure service provider. Genpact was rated the best performing BPO provider and WNS Global Services was the rated the best performing FAO provider.

The US firms were EDS, Sitel, EPAM Systems and Computer Sciences Corporation – all of whom have a footprint in India as well. Mexican and Chinese firms won in categories that were region specific. India is rated the number one hub for global delivery of IT services. Fifty-seven per cent of IT service employees working in delivery centres, says the survey, were located in India. Only 18 per cent were based in the US. This reflects how many non-Indian firms keep their delivery centres in India.

In the listing of the 100 best IT services firms, Indian companies trailed those in the US but were well ahead of any other country. Forty-three US-headquartered firms dominated the 100 best firms. There were 29 firms in the list. There were four Chinese companies, four from Malaysia, three from Russia and three from Brazil. There a scattering of other firms in countries ranging from Argentina to the Ukraine. The survey said these “were a gentle reminder” of the presence of other countries that could become outsourcing rivals to India.

Two years ago the same survey listed 36 Indian firms and 32 US firms in the top 100. This shift to US-headquartered firms may reflect both the fact many Indian firms are being bought up by US firms and a consolidation in the upper end of the Indian IT services industry.

However, 47 per cent of the respondents, including many from India, said a falling dollar and rising local currency was their “most critical business concern.” The survey says “Indian service providers who derive between two-thirds to three-fourths of their revenues from the US are back to the drawing board to consider non-US avenues.” Firms in the Philippines and Canada also listed currency problems as their main business headache.

Source: www.thehindubusinessline.com

Tata Consultancy Services has bagged an over $40 million (Rs 160 crore) transformational engagement from New India Assurance for implementing its core insurance platform across the latter’s 1,100 branch network in the country.

The turnkey engagement – which is spread over a period of eight years — is the first major engagement for TCS in the non-life insurance space, a company spokesperson told Business Line.

As part of the deal, the company will deploy and maintain its insurance suite, TCS BaNCS Insurance.

It will also enable integration of enterprise solutions pertaining to human resources, customer relationship management and business intelligence into the core insurance product, the spokesperson added.

With about 1.5 crore policy holders in the country, New India Assurance is currently the largest non-life insurance company in India.

Revenues from the deal will start kicking in for TCS from the current quarter itself, the company spokesperson added.

IT outsourcing is expected to make the insurance major more productive, so that it can take on increased competition in the space.

Public sector non-life insurance companies have been steadily losing market share in the past few years. In 2006-07, the share dropped to 65 per cent, against 73 per cent in the previous year.

Even though margins in the domestic business have been a cause of concern for IT companies, perceptions of a global slowdown in discretionary spending coupled with the growing IT maturity in India have resulted in the domestic market gaining a lot of importance.

According to a Gartner report, the domestic IT services market is pegged to grow to $10.73 billion by 2011 at a five-year CAGR of 23.2 per cent. Though Indian firms have been laggards in the domestic space, overseas IT companies such as IBM and Accenture have been picking large deals in India.

TCS is now aggressively looking at the domestic IT space.

In an earlier interaction with Business Line, Mr N. Chandrasekaran, Chief Operating Officer of TCS, had said that TCS was pursuing five IT outsourcing deals from Indian firms.

TCS BaNCS Insurance is a part of TCS BaNCS, which was spun off in May last year as a dedicated product company within the TCS fold.

Source: www.itnews.com.au

Outsourcing in Asia Pacific saw its second consecutive year of strong growth and showed an increase in demand across all measures. Although the number of contracts signed in 2007 grew by just four percent, the total contract value increased 30 percent year over year from US$9.9B to US$12.8B, said TPI, a division of information service provider, Information Services Group.

According to TPI, annual revenues showed a 13 percent increase, nearly double that of the global average. Asia Pacific was the only geography to show an increase across all of these measures.

Arno Franz, partner and managing director, TPI Asia Pacific, said the outsourcing market in Asia Pacific grew substantially in 2007, fuelled primarily by increased demand from corporations based in India, stated TPI.

The average value of outsourcing contracts in Asia Pacific increased by 25 percent from US$141M to US$176M, due largely to increased mega relationship activity in the region, especially in the last quarter of 2007. The region showed particular strength in mega relationships with nine signed in 2007 at a total value of US$1.5B.

“This represents one third of the mega relationships globally and contrasts sharply with the region’s overall share of one-sixth of the global outsourcing market. Larger contracts have become popular among companies based in Asia,” he said.

Outsourcing growth in Asia Pacific was largely driven by corporations in India and China - countries traditionally known for their provision of outsourced resources are becoming buyers of outsourcing. India has seen stepped up outsourcing activity within the Telecommunications and Financial Services sectors, whereas growth in China has been strongly influenced by a single telecommunications mega deal, said Franz.

According to TPI’s research, although Australia, India and Japan top the list of countries buying outsourcing services, in 2007 India led the pack by almost doubling the value of its outsourcing work year on year.

“It appears that, fuelled by a booming economy, Indian industry in particular has found outsourcing to be a viable tool to improve performance and drive growth in market share. With increased competition among Indian corporations and the potential privatisation of public sector organisations in the next few years, we expect to see this level of activity continue through 2008 and beyond,” Franz said.

Alongside increased domestic demand for outsourcing, the India-heritage service providers’ share of global contracts continued to expand in 2007, up from a six percent share in 2006 to nine percent in 2007.

According to Franz, no other category of service provider increased market share at such a pace. Their share of the regional market also increased strongly, from 11 percent to 16 percent.