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Outsmarting in 2010

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DQI Bureau
New Update

Making predictions is dangerous these days. Non linear trends seem to

be all-pervasive to the extent that whatever one thought as a construct

prior to href="http://dqindia.ciol.com/content/cio_handbook2008/">2008,

needs to validate the same in present context.  However let me

take the risk and share some thoughts of what could shape the business

landscape in 2010.  To start with, this year will be a

portentous start to the new decade.






As organizations across the world dig in their heels and prepare to
bounce back, a new equilibrium characterizes IT. Market demands,

evolving technologies and creative competition are set to redefine the

industry and rewrite the rules.

Faster, Cheaper, Better — these have been raison d` etre of

the service industry. In href="http://dqindia.ciol.com/content/editorial/2010/110010701.asp">2010,

add Smarter to the list. As the market matures and customers become

increasingly discerning, the demand for predictable results and outcome

certainty overwhelmingly influence the modus operandi of service. Here

are a few thoughts on the key drivers in 2010.






Faster




Divide
and Rule:
The worst

recession since the start of the new millennium has changed the href="http://dqindia.ciol.com/content/industrymarket/focus/2009/109040708.asp">RD

outsourcing market.  Rather than input-based or talent-based

models, there are more componentized, functional services in

R&D. With increasing need for reusability of software, the

'assembly line' will gain ground in the software

world. Clients, especially ISVs, are looking forward to the

industrialization of software. The advent of challenging processes and

methodology required to transform software components into an assembly

will enable the production of more competitive software. It will also

spawn niche players like those focused solely on QA or UI or

new-generation technical documentation and user reach, etc.  






Only
the Innovative Survive:
In

the outsourcing market, concepts that will assume a lot more importance

will include model-based development/ componentization, greater

ownership of these components by providers and IP-driven outsourcing.

Companies which have made innovation a habit will definitely thrive in

better health. This innovation could be in business models, products,

frameworks all adding up to the creation of IP's which add

disproportionate value to clients. The days of transactions based on

labor arbitrage as the crux of deals are over.






Cheaper


Scaling
the Great Wall:
India will

emerge as the undisputed leader for R&D expansion. Larger

companies will get more invested in the Hub and Spoke model, whereby

the captive plays the role of the hub and works with the partner

'spokes' . Smaller players will continue to be

challenged on productivity, hence they will need to reconsider whether

they want to set up a captive or want to work with partners.






While the India vs. China debate will abate temporarily, it could be
back should the rupee appreciate again. Companies have also realized

that offshoring to China is not a tactical decision, it's a

strategic one. It's a decision for survival.  In

smaller companies, decisions of outsourcing now involve the boards and

not just CXO level executives.  Look at the evolving markets,

say automotive. India is outstripping China in terms of R&D in

the automotive sector. Nissan and Honda will build their small cars for

the global market in India. Such a scenario builds opportunities for

India in engineering design services, electronics and IT related to

automotives.






Health
is wealth:
The other industry

which promises to growth is Healthcare, thanks to the impending

healthcare policy changes in the US and the increasing awakening in

India towards organized healthcare. The medical tourism market is

similarly growing across the globe. There are definite opportunities

across all the micro-segments of this market.






Being
in Currency:
The impact of

the dollar on the industry - in Japan, China, US and Europe has been

very heterogeneous. The dollar's appreciation against the

rupee and depreciation against the yen yields a lot more inherent

productivity enhancements. But despite the enhancements, the fact

remains that businesses are still looking to liquidate and monetize

their assets. And of course the threat of the impending economic cycles

with the proverbial “what-goes-up-must-come-down”

and vice versa lesson.






Better


The
Simmering Cutlet on the CIO's Plate:
What

are the technologies of the future? href="http://dqindia.ciol.com/content/dqtop20_09/BPO/2009/109072537.asp">Cloud

computing, SaaS, Virtualization,

Social Networking Technologies, On-Demand Services are the hottest

technologies in the market, driven to maturity by increasing enterprise

demand. Over the next three years most enterprises will use a mix of

public and private cloud computing, with more money being spent on

private cloud computing, as it requires investment in new equipment and

infrastructure. These evolving technologies impact the service industry

and enable functionalities that service providers wouldn't

have attempted in the past. For instance, the Amazon Cloud enables you

to actually build a lab in the cloud.  On-demand services

emanate from that. With social networking going mainstream,

organizations are mandating the addition of a social dimension to their

conventional web site or applications. It seems prudent to adopt a

social platform sooner, rather than later, because the greatest risk

lies in the failure to engage and thereby, left mute in a dialogue

where your voice must be heard.






Charity
and IT Business Begin at Home:


A burgeoning India market will challenge service providers with its

different dynamics. Expected to grow to 5 times its size as of today in

the next 5 years, the India market will need to be managed differently

because of its acute price and value sensitivity. The iPhone, for

instance, is a global rage but has not made more than a whimper in

India, primarily because of the price points involved. What a Samsung

Corby is doing to the Smartphone is what the Lexus has done to the BMW

or Merc. You define the service and then deliver it at a particular

price point. That's how outsourcing will have to transform

itself.



Smarter





The
World is truly flat:


Businesses, today, are looking for the best resources for the job,

regardless of traditional outsourcing preferences, like say India or

China. Outsourcing will only become more holistic and definitely,

global. This is only a reinforcement of the point made earlier that the

Boards of companies are getting involved in outsourcing decisions in

order to achieve strategic objectives. The emphasis on outcome

certainty and guaranteed results is only to be expected. Customers want

predictability to costs, schedules and the quality of the outsourced

software engineering process. Naturally, the onus is on service

providers to attain greater efficiency, offer better costing and more

conscious investment in improvements across their

processes.    






Say “Clean” - Some industry needs, like the need
for clean energy, accentuated by the recent deliberations at href="http://dqindia.ciol.com/content/GreenIT/2010/110010702.asp">Copenhagen,

and the increasing focus on healthcare, will assume greater importance.

Spurred by the explosive demand on diminishing natural resources by

countries around the world, clean-energy technologies are the next

power engine for economic growth. Investments in clean technologies

have grown substantially since coming into the spotlight at the turn of

the century. Competition in the high stakes race to dominate the clean

technology industry will only trigger 'cleaner'

products and services and build the jobs of tomorrow. Similarly, the

adoption and use of healthcare IT to reduce costs will be in focus in

2010.  This will not just result in technology and

telecommunication players aggressively pursuing a share in the

healthcare business but it will also result in creation of greater

value in the healthcare system.






Learn
Thyself:
Finally, people will

need to be multi-skilled in the demand-driven market and take greater

ownership for their learning. It was a common refrain amongst employees

to think that training and development were the tasks of the

organization they worked with. While the organization can provide a

strong ecosystem: formal training, peer reviews, academia interactions

and networking opportunities with industry counterparts, the employee

of the 2010's will need to take lot more initiative to and

investing in learning more on their own.






style="font-weight: bold; font-style: italic;">Amitava
Roy is the Chief Operating Officer of Symphony Service Corp.




















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