Gearing up for the $100 bn 'Battle of Outsourcing'

A few days back it was reported that Indian IT companies are all set for a battle of outsourcing deals worth $100B. Lots of high value deals are up for renewal and a major chunk of it is to come from Europe.

The Norway Post deal with Capgemini and TCS is the latest addition to the list. A contract worth $43M each. But other than the number of dollars that poured in, we look at a few broader outsourcing trends that get reflected in this deal and what does it mean for IT service providers in the offshore battle.

Long term deals are still alive
At a time when long term deals seem to be fading out, the six-year deal with Norway Post is an indication that enterprises are still keen on getting into long-term partnerships. The contract includes outsourcing of central applications, such as ERP and data warehousing.
"We are both humble and proud that Norway Post, with whom we've build a long-standing relationship, has entrusted us with this important delivery project", says Ola Furu, CEO at Capgemini Norge AS in the company press release.
Onshore presence is important
Outsourcing service providers that have onshore operations will have a clear advantage in dealing with global clients. In this case, both Capgemini and TCS have strong Nordic operations. Capgemini has around 103 Nordic customers and around 4500 employees in the region. TCS too has the experience of serving Nordic clients like Nokia, Ericsson, TDC, ABB, Telenor and so on.
Multisourcing is the way to go
An increasing number of outsourcing companies are looking at a multisourcing approach. Although this carries extra effort of dealing with multiple service providers, companies find it a relatively safer option as they are wary of putting all their eggs in the same basket.
Through this contract Norway post will be implementing a multisourcing model to support their integrated business strategy in the region. In this case, apart from delivering application services across core postal value chains, TCS will also be coordinating and driving the overall transition and transformation programme across multiple vendors". This is another opportunity that service providers can make use of.

The article was first published in Globalservicesmedia.com