Infrastructure Efficiency : Unlocking the Outsourcing Conundrum

The Dataquest CIO Summit Managed Services India 2009organized at Chennai,
Mumbai, and Delhi served as a platform for solution providers and user
organizations to share some of the best practices and other challenges related
to IT infrastructure.

Business Value of Outsourcing

The proceedings at Chennai focused on the business metrics of outsourcing.
Moderated by Malli J Sivakumar, CEO, Sundaram Infotech, the panelists included
Nanditha Krishna, industry analyst, ICT Practice at Frost & Sullivan; Clynton
Almeida, CIO, Redington India; and Chandrasekharan N, head, IT, Ashok
Leyland.The moot question to the panelist was whether the Indian IT industry is
ahead in adopting the outsourcing model and infrastructure management. Says
Krishna, "As enterprises expand, the complexities also increase, and therefore
it makes sense to outsource the complete system or at least some of the task to
the third party provider." According to Almeida, outsourcing is pioneered by the
US and the UK businesses. The cost of outsourcing is cheap. in the current
scenario. "The Indian CXOs have seen significant benefits of outsourcing. It is
the right time now to go for outsourcing." Adds Chandrasekharan, "Outsourcing is
not for people, it is for skills; secondly it is not for cost, it is for value;
and thirdly it is not for visualizing what you have, but for optimizing what you
need to do." These are the reasons why one should go for outsourcing, and why
outsourcing is keeping pace in India, he feels.

Malli J Sivakumar, Sundaram Infotech; Nanditha Krishna, Frost & Sullivan; Clynton Almeida, Redington India, and Chandrasekharan N, Ashok Leyland deliberate on the business metrics of outsourcing metrics in Chennai	Atul Kumar, Ispat Technologies; Safir Adeni, Eknovate; Nischal Khorana, Frost & Sullivan; and Amit Mukherjee, Spencers (RPG Group) discussed the merits of selective and flexible sourcing in the Mumbai discussion

 

Shyamanuja Das, Editor, Dataquest at the Delhi Event

 

Chennai Session: From L-R Alagapan N of Spencers Retail, Bobby Verghese of CSS Slash Support; Ranjit Pisharoty of Sutherland Global; V. Vishwanathan of iGate; and Mahesh Manchi of Mahindra Holidays.

Selective and Flexible Sourcing

In Mumbai, the panelists included Safir Adeni, CEO and MD of Eknovate; Amit
Mukherjee, group CIO of RPG Group and Spencers; Nischal Khorana, program
manager, ICT practice, Frost & Sullivan; and Atul Kumar, CIO, Ispat Industries.
Adeni believes that it is important to think about the tactical and strategic
aspects of outsourcing. "How do we leverage various experts in the field to add
more business value and increase from a revenue generation viewpoint?"

Adds Atul Kumar, "Body shopping has, over a period of time evolved into
outsourcing, onshoring, near-shoring and offshoring; and today we are talking
about managed services. India is very advanced in managed services." The concept
of outsourcing has been pioneered in India, thanks to TCS which had pioneered
this concept as their business model way back in 1978-79."

Outsourcing does not have a fixed structure, it keeps on evolving. It depends
on how the needs of service providers get expanded. Agrees Khorana, "Outsourcing
is not a new concept. The need for information and data has increased. We have
realized a lot of maturity which comes in while making strategic decisions,
leveraging skills and expertise of service providers. What defines value is when
we look at what part of business process is being outsourced (mission critical,
tactical, or purely operational)." "What to outsource, the way we look at it is
a function of the industry, and also a function of what are the growth plans of
that particular organization. A key thing we did in our organization was that we
outsourced the activity and not the responsibility. So the responsibility still
remained with us, and if you drive the engagement keeping this in mind you can
get the desired results," adds Mukherjee. "CIOs are looking for scalability,
best practices, flexibility, and minimizing challenges while managing large
people organizations. A good way to do this is to manage performance and focus
on SLAs," was Adenis summing up statement. A very important thing is
innovation, so partners who bring innovation from technology and business needs
would have competitive advantage in the marketplace. CIOs will also be looking
for convergence of all technologies and business models.

The panelists also debated on which vertical today is the most ahead in the
outsourcing maturity curve, and, more importantly, what were the drivers that
contributed to that growth? According to Kumar, "IT companies are the most
structured today which provide a ready-made and good launching platform for
outsourcing to succeed. Adds Khorana, "The scope of managed services is large,
and we have to look at what managed services companies are adopting. Whether
they are looking for data centers, networks, desktop applications, and hosted
models. Agrees Amit, "Any industry that is going through high growth and which
has a technology to back it, needs to have an expert who knows how to manage
it."

Another discussion focused on models, challenges, and governance of
outsourcing involving Prince Azariah, an independent Consultant; Vivek Sharma,
country head, Sales, Compuware; and moderated by Sudesh Prasad, associate
editor, Dataquest.

Business Model Innovation

The event in Delhi focused on a clear need for a business model innovation
for which one has to constantly think about customers, prices, costs, margins,
sensitivity, and core competencies.

According to Shyamanuja Das, editor, Dataquest, users in the US and western
European companies focused always on efficiency, optimization, and cost savings
during outsourcing. But CIOs in India believed in scalability and growth.

That managed services and outsourcing can go hand-in-hand was elucidated by
Dr Jai Menon, director, technology and customer services, Bharti Airtel. Since
2002, the journey has been of creating some very innovative outsourcing models.
In 2005, Bharti started getting into the business of offering managed services
and outsourcing models to their customers. The large domains they look at is
network deployment and BPO. Simultaneously, the network outsourcing journey
began in 2004, and BPO journey began in 2005. The key abstracts that the company
derived include three fundamental steps also called Outsourcing 2.0.

The panel discussion at Delhi consisting of Asmita Junnarkar, CIO, Voltas
India; Anoop Handa, CIO, Fullerton Securities & Wealth Advisors; Rupinder Goel,
CIO, Bharti Airtel; Sandeep Mehta, head infrastructure technologies, Aviva Life
Insurance; and Mohammed Saif, director, consulting, ICT practice, Frost &
Sullivan; and moderated by independent consultant Ashok Wahi discussed business
outsourcing DNA. That DNA could be best tested by ensuring that an appropriate
interlock can fire across all levels of organization. When it comes to fiscal
model generation, the first and simple principle is to create your own long term
financial plan. There is a need to have a bit of financial engineering to ensure
that the fiscal plan and models are built very well.

Another discussion at Delhi involving Salil Agrawal, head, ICT practice, PwC;
Vikram Tulli, group CIO, Mafoi & Randstand; Sandeep Thaney, director, technology
& operations, Honeywell; and moderated by Shyamanuja Das, editor, Dataquest
deliberated on outsourcing models in India and the West. Most of todays
outsourcing models and metrics benefit the bigger western companies that follow
a more efficienct and cost driven model as opposed to a more innovation and
growth driven model followed by Indian organizations. Moreover, these metrics
are not suited for smaller Indian organizations and they get further confused by
the tech vendors. The panelists offered certain tips to smaller organizations to
encounter these challenges.

PC Suraj

surajp@cybermedia.co.in