by Christopher Andrews, analyst at Forrester
I am just back from the whirlwind that is Nasscom India Leadership Forum 2013 in Mumbai, India. The Nasscom event is the premier event for the Indian IT services marketplace. Besides meeting great people, eating too much wonderful Indian food, and seeing action star and local legend Amitabh Bachchan inperson, the event provides a chance to check the pulse of the most important geographic hub for the IT services marketplace.
Here are some of my key findings from the trip:
CIOs are thinking well beyond outsourcing for low costs
I had the pleasure of hosting a panel with senior leadership from Dell, Verizon Communications, CA Technologies, and Capgemini India. During the session, we discussed topics related to strategic partnerships, innovation, digital “co-creation,” and services orchestration (not bad for an hour-long panel). These leaders were thinking about their IT services partners not simply as low-cost outsourcers, but as integral parts of their strategic business capabilities. As Roger Gurnani, VP and CIO at Verizon, told me, “What we are finding is that having a global IT organization really helps in our innovation capabilities. It’s not as much about just accessing low-cost labor these days. It’s about running a global business that serves the Indian marketplace and develops new business opportunities. We need great domain knowledge and relationships with service providers to do that.” Forrester has written extensively about innovation in IT services, from working on contractual terms to selecting a partner to managing innovation ecosystems to new IT services offerings related to business intelligence and mobility.
CMOs are the new strategic technology buyer
I asked many IT services customers about who, beyond the CIO, is becoming the most strategic technology buyer. The overwhelming response was “The CMO.” This is an important shift for anyone in the IT services marketplace, as it affects who buys, how they buy, and what they buy. Recent campaigns from IBM and Deloitte (IBM Interactive, Deloitte Digital) highlight the fact that leading services players are investing in solutions that bridge this CMO/CIO relationship. This trend will create challenges and new opportunities for an Indian outsourcing marketplace that has historically owned IT, but – generally speaking – has less been less adept at leading business professionals. See my former colleague Stephanie Moore’s important Business Transformation Wave, which highlights this opportunity. Forrester also has extensive coverage of IT/ marketing dynamics, including analyst James McQuivey’s recently published book about Digital Disruption.
Asset based IT-services will become a game changer
For several years, industry leaders (and Forrester analysts) have been writing about the effect of software platforms, solution accelerators, and other forms of re-usable IP on the IT services marketplace. We are now moving past the initial Phase I of “development & trials” of these assets — into a critical Phase II — in which customers will recognize the value of these assets, seek out providers with the best assets, and become more skilled at purchasing the assets. Most industry players now have solutions (TCS’s MasterCraft offerings and Infosys’s Edge offerings stand out), but over the next five years we’ll see clear winners and losers based on the ability of providers to commercialize solution portfolios (as opposed to simply creating software products). Almost everyone in the market believes this will be a game changer, and I see some companies are clearly pulling ahead. If you want to read up on this topic, I highly recommend research and blog posts from my colleague Fred Giron.
Companies with differentiated value propositions stand out
At the event and in other travels, I got to speak with several innovative companies such as Mu Sigma, Bizosys, Yodlee, and [x]cubeLabs.
These companies vary in size, scope, maturity and geographic coverage — but what stood out to me were their differentiated value propositions — focused on hot trends like analytics, decision support, big data, and mobile app design. This differentiation is something we haven’t seen much of in the global IT services marketplace over the past decade and aligns with the changes we expect to see taking center-stage during the next decade of IT services growth.
In short, the Indian IT Services marketplace has seen a decade of relative stability, but changes are coming. Who’s going to keep up with the trends? Smart sourcing professionals will read up on these trends, consider the effect on their sourcing strategy, and look for more research on these important topics.