Next Generation Outsourcing

Last week I attended a TIE event titled “Next Generation Outsourcing And Coming Wave in India”. The panelists included Pramod Haque of Norwest Venture Partners, John Hagel, author and “business guru” and S. Ramadorai, CEO of Tata Consultancy Services – India’s highest valued and largest services Company.

Here is what I learned……

The Big Picture Perspective:

The IT and Business Process Outsourcing Industry is slated to reach $60B by 2010. As commoditization of technology continues and price pressure keep up, companies are forced to change their cost structure. Thus outsourcing becomes an attractive opportunity. Moreover, this means that the “unbundling” of business processes break apart the high volume routine processes, customer relationship management, and productization processes. The enterprise will now be have to connected “outside in” rather than “inside out” to connect and collaborate with business partners across other enterprises. New, supporting IT architectures will also need to be created to connect people as they collaborate across these boundaries.

India is “Moving Up the Stack”:

The first wave of outsourcing to India started with the Y2K issue with Indian companies namely Tata Consultancy Services and Wipro taking the lead. The second wave was when ISVs started using Indian talent for product development. Pramod mentioned that he has invested in some 18 companies in India. Product Management and Customer Intimacy related jobs are not being outsourced. The third wave will be about product germination in India.

Challenges and Opportunities

Today India provides 28% of the talent pool and therefore talent development, attraction and retention will be key. Mr. Ramadorai also mentioned that infrastructure issues including roads and integrated townships will need to be addressed. Moreover, India’s domestic market of 640 million consumers will be using technology themselves and may become the early adopters of technology. Very interesting?

I left the talk thinking change is the only constant, the world is indeed flat, and India is definitely HOT!