INTRODUCTION
WELCOME TO THE FUTURE OF GLOBAL SOURCING 5
Sridhar Vedala and Ali Toure | Co-Founder | QS Advisory
INNOVATION WILL DRIVE GROWTH IN OUTSOURCING 7
Dr. Srini Srinivasan | Managing Director | Arthur D. Little India
THE JOURNEY TAKEN AND THE JOURNEY AHEAD
GLOBAL SOURCING: INDIA’S EVOLVING LANDSCAPE 9
Rajendra S. Pawar | Chairman | NIIT Group
ENTREPRENEURSHIP IN IT 13
Kris Gopalakrishnan | Co-Founder | Infosys
REINVENT TO OUTLAST 15
Vineet Nayyar | Executive Vice Chairman | Tech Mahindra
TAKING THE ROAD LESS TRAVELLED 17
Ashok Soota | Executive Chairman and Co-Founder | Happiest Minds
AN INDUSTRY IN TRANSITION
CIOS AND IT PROVIDERS: TRANSFORMING ROLES, TRANSFORMING THE BUSINESS 21 Suresh Vaswani | President | Dell Services
RESPECTING LEGACY, EMBRACING CHANGE 25
TK Kurien | CEO | Wipro
GLOBAL SOURCING: A NEW ERA DAWNS 27
Ashok Vemuri | CEO | IGATE
THE NEXTGEN BUSINESS MODEL 30
Anant Gupta | President and CEO | HCL
CONTENTS
EMBRACING A NEW REALITY
THE RISE OF INTELLIGENT OPERATIONS 35
Tiger Tyagarajan | President and CEO | Genpact
FROM ABILITY TO AGILITY 40
Subroto Bagchi | Co-Founder and Chairman | Mindtree
EXPANDING THE VISION FOR GROWTH 43
R. Srikrishna | CEO | Hexaware
PROVIDER TO PARTNER: ADOPTING AN OUTCOME-BASED MODEL 46
VK Mathews | Executive Chairman | IBS
EXPERT SYSTEMS: THE DAWN OF ANEW ERA 48
Chetan Dube | President and CEO | IPsoft
MANAGING CHANGE THROUGH VOLATILITY 50
P. Srikar Reddy | MD and CEO | Sonata
NURTURING INDIA’S GLOBAL SOURCING ECOSYSTEM
WHEN DAVID MEETS GOLIATH: CREATING INNOVATIVE IT PARTNERSHIPS 53
R. Chandrashekhar | President | NASSCOM
IT’S BRAND INDIA 55
Dr. A. Didar Singh |Secretary General | FICCI
TALKING ABOUT A REVOLUTION 57
Som Mittal | Ex-President | NASSCOM
SKILLING FOR CHANGE 59
Ajit Rangnekar | Dean | Indian School of Business
E-GOVERNANCE: INDIA’S SLEEPING MARKET 62
Milind Deora | Former Minister of State | Ministry of Information Technology and Communications, Government of India
5 Over the past decade, our work and
relationships with business and IT leaders have offered us a unique perspective on the growing influence of technology on business, the changing role of IT organisations, and most crucially, the transformation of the global sourcing industry.
Since its early beginnings, global sourcing has always been seen as a cost-optimising activity. And until recently, the role of an IT organisation within a commercial enterprise was primarily viewed as that of a support function. Its primary focus was to provide the enterprise with stable IT systems at an optimum cost, and its business participation in technology decisions tended to be relatively limited. Global sourcing became a platform for effectively solving IT and business cost preoccupations.
But while cost containment remains important, everything else is changing.
Digital transformation and cloud technologies have turned traditional business models on their heads.
Established companies such as Apple
and Google, and start-ups such as Uber and Airbnb have disrupted traditional business models in ways that were unthinkable a decade ago.
Messaging applications such as WhatsApp and Snapchat have eroded the text messaging revenue streams of large telecommunications operators.
And services run by companies such as AppleTV and Netflix directly challenge the traditional business models of cable companies.
Even the way we shop has been radically transformed by companies such as Amazon, whose perfect aggregation of shops are available at our fingertips. Initially, the impact of aggregated online retail was limited to the music and book publishing industries, but today, its ripple effects can be felt throughout. Taking a page from online retail, most commercial airlines now offer their consumers a single site for flight bookings, car rentals, hotels, and tour packages.
Changing business models have changed consumer expectations, provoking companies to rethink
WELCOME TO THE FUTURE OF
GLOBAL SOURCING
increasingly becoming key priorities for IT service providers.
• The technology services buyer group is extending beyond the IT organisation to include business and marketing units.
• The industrialisation of services, and game-changing productivity tools such as autonomics, must become a part of every global sourcing provider’s DNA.
• As the nature of their partnerships with customers evolve, providers will have to successfully transform themselves in terms of culture, and how services are offered in the marketplace.
These leaders believe that the market for demand and supply of IT services is far from saturated; in fact, disruptive new models will create new opportunities for small and large IT service providers — and customers.
Cost arbitrage will remain an
be the driving factor in an enterprise’s business decision. In order to prevail, global sourcing providers must step up to deliver services that meet their customers’ changing needs.
The global sourcing industry’s growth story has seen many challenges on its journey over the past 25 years, but this period may prove to be its most critical yet. It is certain that the industry will look radically different in five years, and the voices in this book paint a clear vision for its future. In many ways, this is the moment of truth for all players: can they transform and thrive in a landscape of disruptive business and technology?
Sridhar Vedala and Ali Toure Co-Founders
QS Advisory technologies are transforming the way
technology is deployed and consumed.
Enterprises are no longer required to own infrastructure assets, but can instead consume services based on a subscription model. The number of applications offered on cloud grow rapidly, while the cost of services constantly diminishes as more users get on board. This, in turn, means less in-house development and less reliance on resources, and therefore presents both opportunities and threats to the global sourcing industry.
In this context, A Future in the Cloud draws together perspectives from leaders in the global sourcing industry, reflecting on a transforming sourcing eco-system. The essays illuminate the following key themes:
• The traditional global sourcing business model, based on cost optimisation and long-term contracts, is slowly waning.
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Administrative Service, and later, in the IT industry, he led several organisations across industries, creating high performance teams and successful businesses. Vineet was founding Chairman and Managing Director of the state-owned Gas Authority of India, Managing Director of HCL Corporation Ltd., Vice Chairman of HCL Technologies Ltd., and co-founder and Chief Executive Officer of HCL Perot Systems. Vineet also holds principal directorships on the boards of several organisations in the IT, finance, education, and non-profit sectors. He has a master’s degree in development economics from Williams College, Massachusetts. In 2013, Vineet was awarded Ernst and Young’s 'Entrepreneur of the Year' for leadership in management.
Pundits are debating whether India’s IT industry has outlived its time in the global sourcing market, and if growth is on the decline. My answer to these questions is simple: we are in a service industry, and paint on a very wide canvas. All we need to do is constantly reinvent ourselves to stay relevant.
Opportunity will always knock, especially when we are talking about a landscape stretching beyond specific industries to areas relevant to humanity as a whole. The urgency lies in staking our claim before new players emerge.
While technology enables us to improve productivity on the one hand, it also enables us to stretch the canvas of its application beyond imagination.
The way technology has permeated our lives today was unthinkable even as little as a decade ago. Cross connectivity and greater linkages have led to a wider pool of data being processed, synthesised, and packaged into deceptively simple forms for the end user. A few years ago, the term
"end user" meant a select group or targeted individuals, but the term has now acquired a more universal shape,
encompassing a wider audience who can, as a whole, directly influence the trajectory of business.
For example, look at the way consumer reviews impact the overall strategy and performance of companies today.
Big Data and analytics have already brought about a great deal of change, but the best is yet to come. Diverse industries, such as engineering, media, medicine, and finance are likely to witness momentous changes — and become even more ubiquitous than what we see today, for example, in the power of technology to democratise media. Unforeseen demand will crop up in unlikely places. So, the growth of the IT business itself is not in question;
the challenge is in how to cope with a rapidly evolving industry.
Despite an exponential increase in productivity for the IT industry, the demand for services is growing at an even faster rate. Innovative applications, developed for other engineering disciplines and industries, have created a sunrise sector within the IT industry, and India should rightfully be at the epicentre. As a top level Increasing competition
from other global sourcing destinations has raised concerns about India’s primacy as an outsourcing destination. But opportunities abound for India’s IT industry to reinvent itself, channel its talent, and keep growing.
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convinced that there is no other country to match India in terms of its skilled IT talent, and the scale and quality that we have achieved, supported further by our future demographics. If we look at the breadth of the technology industry, including multinationals such as Accenture, IBM, and Google, all these companies have a significant presence in India — and a significant Indian presence in their ranks abroad.
Nevertheless, resting too long on our laurels could make us complacent, and complacency is the enemy of innovation and entrepreneurship. As our global footprint grows bigger, and opportunities increase and diversify, we must expand both the range of services we offer, as well as the customers we serve.
A major challenge for the industry today is how to attract skilled talent, especially at the management level. At Tech Mahindra, our overall vision and outlook is global, while our operational tactic is local. We seek out talent that is global in outlook, at ease working with customers and colleagues globally, and at the same time, is fully entrenched in the local environment. We firmly believe that hiring the right local talent is an absolute must as we globalise.
For example, about 95 per cent of our operations in Africa are managed by
inevitably ends up hiring Indian talent and sending them to global locations.
Hiring and exporting Indian talent is in many respects an easier solution when entering a new market; however, it begs the question as to whether or not Indian companies are sincerely open to localising their operations. But this, too, ends up drawing attention from the real task at hand: to find the right talent, irrespective of whether a company localises itself or not.
Some of the requirements we have for our new job profiles include an academic background in engineering, IT services experience, familiarity with the workings of India’s industry, and the mind set to work in a dynamic environment. With such specifics, it is not surprising that Indian IT companies typically end up hiring Indians. As a result, one rarely finds too many non-Indians in senior management positions at these companies. The challenge ahead is clear: to attract and groom local talent as we grow, in order to seamlessly and simultaneously create a global, Indian, and local organisation. In the long run, globalisation of talent is critical to the industry’s survival. In my view, technology-related challenges can be overcome, but cultural integration is more difficult to achieve. However, I
until the sector matures and new players emerge. This maturity has happened more rapidly in the IT sector than in any other established sector in history. During the first phase of growth of offshoring, procuring business was relatively easy. Companies that had little competition in the market at the time, offered specific high quality services at a highly competitive rates, with a new delivery model. There was no pressure — or need, for that matter — for IT companies to invest in extensive marketing and branding initiatives, other than to attract talent in India. Today, however, services need to be more precise, with a more effectively communicated value proposition, and product and service differentiation. As the industry further matures, consolidation is bound to happen. The smart companies that thrive will be those who can manage change and adopt management best practices.
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ABOUT QS ADVISORY
QS Advisory is a sourcing advisory firm with a distinct focus on global sourcing.
Our consultants bring a unique combination of global sourcing consulting and hands-on delivery experience. These skills have been honed over the years by supporting clients in Europe and past experience at some of the leading service providers in Europe and Asia Pac.
We enable our clients to implement complex outsourcing initiatives to bring about transformation by achieving sustained cost savings and improved productivity.
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