Friday, March 23, 2007

Going offshore -lessons for Indian IT services industry

I accidentally came across a Gartner blogpost written by Partha Iyengar and Rolf Jester in 2004 which was interesting reading .... The blog is a summary of a management update which talks about 8 factors that companies need to keep in mind before before going offshore , however in the post the authors talk about Cost , IP protection and Cross cultural orientation (if you want to know about all the 8 factors , you will have to shell out approx USD 100 to Gartner .......) . These were true in 2004 , and its applicability is only going to increase as the outsourcing deals become larger in size and more complex to execute .

I thought that it might be worthwhile to examine these 3 broad elements and its possible implications on the IT services industry in India

Cost :The authors advise their clients to be acutely aware of the total cost of the move ,which is going beyond the labour arbitrage that Indian IT service companies provide. In spite and despite all our claims about moving up the value chain in terms of IT solutions and providing strategic sourcing options to the clients , the real value proposition of our industry is still cost arbitrage . The questions to ask is: With a rising wage bill how do we manage the cost attractiveness ???........I would believe that the answer lies in superior knowledge management processes . I am aware that Infosys has a strong enough KM initiative lead by my good friend Dr JK Suresh (JKS) , but i am not sure if the KM function measures its effectiveness in the context of overall cost management for the firm (to put it simplistically better knowledge capture would lead to the re-use of knowledge and hence improve per unit productivity thereby reducing costs...) ...I am no expert in the field , its a thought for the experts like JKS to ponder about ......

Intellectual Property : I would go beyond the author's concern for IP re-transfer and would say that as a country our sensitivity to IP issues is really low . I have seen proprietary manuals being photocopied and transfered to people and calling the methodologies as our own...does it sound familiar ....???. It's time we grew out of the copying syndrome and respect somebody else's work and give due credit to IP

Cross Cultural Orientation - I could probably write a thesis on the subject , but would stop at saying that cultural orientation is far beyond etiquette tips ...hope the Learning Manager in the Wipro's , Infy's and TCS 's of the world are listening .........

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