The Survival Mantra for Indian IT/ITES industry in the Flat World is Global Delivery and not delivering from India ??

There might be many definitions of the Flat World, the one that I connect to most is “a flat world is a place, where goods and services are produced in location(s) where its cheapest and most efficient to produce and sold in locations which are most profitable…”. This definition would be the one that the Indian IT/ITES industry would be happiest about…after all we continue to be a low cost producer of IT and BPO services .

However there is a twist to the definition, ….as an Indian you might want to believe that offshoring to India will continue unabated because of the labor arbitrage.......unless we pay heed to the latest trends in the BPO sector . The research done by Sujay Chohan and Robert H Brown of Gartner opines that the distinction between onshore (services delivered in the country where the contract is signed) and offshore (services delivered from a country other than the country where the contract was signed) is increasingly becoming irrelevant as “offshore providers” move outside their home countries and set up global delivery centers and as “onshore providers” set up centers in low-wage countries. This trend is also driven by the need to outsource increasingly complex processes that are end to end, encompass several countries and touch the client's various locations. This would mean that the relevance of India as the best offshore location automatically comes down and the shift from offshoring to India to global delivery is distinct and is borne out by data. Indian service providers like Wipro , WNS, Infosys BPO(formerly Progeon) , HCL , TCS, Genepact, Hinduja -TMT and Transworks have acquired or set up delivery centers in several countries to serve their clients onshore and offshore . The Aditya Birla Group's take over of Minacs and consolidating its ITES business as a combination of Transworks-Minacs gives it an automatic global delivery footprint (Minacs had many non-US delivery locations)

According to Gartner by 2008, most successful BPO service producers will have service delivery centers (not just sales offices) in at least 3 countries

a)An onshore location (typically where the contract is signed)
b)An offshore location (country where the company is headquartered)
c)An additional delivery location independent of these two categories

Now that I have put the offshore versus Global delivery in some perspective, I would like to draw your attention to the parallels in the IT services space. Infosys takes pride in its Global Delivery Model (GDM) , which was for many years delivery out it's various Development centers in India , till it set up some small PDC’s (or Proximity Development Centers) in UK , New Jersey and Canada. This was pretty much the trend till 2004 (delivery primarily out of India , with a few PDC’s onshore ) ,but with the setting up of Infosys China which has a significant workforce is also a strong step in the direction of the “true GDM” . What is happening in the BPO space is also being replicated in the IT Services sector albeit a bit slow. Therefore it would be safe to say that the flat world is not a place where an Indian service provider can survive by delivering from offshore …it is time to go global ….. . The process of going global requires developing new mindsets and new skills …the automatic question is what are these? ….I did not have answers till I chanced upon a speech at IIM-B given by the leader whom I admire most ,Nandan Nilekani . In his speech at IIM-B,Nandan talks about the a new hybrid manager – the ‘Versatilist’.

I am not saying that this post is a wake up call for the Indian IT/ITES industry but I would like to leave my reader with a thought that global delivery is indeed a reality and it is imperative to look at it with a heightened sense of urgency and not be satisfied by servicing customers from Indian locations alone......