Celebrating 20 years of NASSCOM

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IS IT COST OR QUALITY OR INNOVATION?
SUDIN APTE FORRESTER RESEARCH
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AGENDA
Table Of Contents - CHANGING OFFSHORE
DYNAMICS - END OF TRADITIONAL VALUE
PROPOSITION - NEW OFFSHORE VALUE EQUATION
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THE CHANGING OFFSHORE ENVIRONMENT

• The Increasing Complexity Of Offshore
• Users Want To Ramp Services More Quickly
• New Competitive Threats
• Polarization Of Market Place
• US Financial Services Meltdown

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IS IT COST OR QUALITY OR INNOVATION?

• Age Old Offshore Differentiation Is Vanishing

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HOW WOULD YOU COMPARE OFFSHORE PROVIDERS WITH
LARGE ONSHORE SERVICES FIRMS?
On-time delivery
TCS
INFOSYS
SATYAM
HCL
COG
WIPRO
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HOW WOULD YOU COMPARE OFFSHORE PROVIDERS WITH
LARGE ONSHORE SERVICES FIRMS?
Value for money
TCS
INFOSYS
SATYAM
HCL
COG
WIPRO
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BEING OFFSHORE IS NOT A DIFFERENTIATOR ANYMORE
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THREE ESSENTIAL ELEMENTS OF OFFSHORE IT SERVICE
DELIVERY
Labor arbitrage
Process improvement
Value-added IP
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SHIFTING OFFSHORE VALUE EQUATION
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1980-2002 Point-to-point offshore model
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2010 Full global delivery model
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GDM key requirements
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WHY CLIENTS DONT THINK OF OFFSHORE PROVIDERS FOR
INNOVATION?

• Historic Value Proposition Around Cost Arbitrage
• Primary Capability Around Technology And Delivery
  Processes
• None To Low End Skills On Business Domain Side
• Typical Offshore Teams Include Mostly Army Of
  Juniors
• Offshore Providers Transition Work On As Is
  Where Is Basis
• No Business Transformation Experience In Past
• Most Innovation Initiatives Are In Technology
  Side, As Against Business Side

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INNOVATION NEEDS BETTER ALIGNED WITH CLIENT NEEDS
Above the line
Strategic Value Competitive Market Share
Business
IT
Below the line
Cost cutting / Productivity / Quality /
Predictability
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IS IT COST OR QUALITY OR INNOVATION?

• Clients See Cost and Quality Focused Initiatives
  of Less Value As Compared To Business / Product
  Side Innovation

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INNOVATION VALUE CHANGES BASED ON GOAL
Value
Business strategy innovation
IT cost saving innovation
Project delivery / implementation conformity
innovation
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BUILDING STRATEGIC INNOVATION NEEDS CONCERTED
EFFORTS
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SUMMARY

• New Global Delivery Dynamics Evolve
• Offshore Value Proposition Is Changing
• Cost And Quality Alone Do Not Suffice To Win Over
  The New Competition
• IT Focused, Not BT Focused Innovation Has Limited
  Value
• Successful Players Will Build Business Side,
  Strategic Innovation Governance

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Is IT Cost Or Quality Or Innovation?

• Thank you,
• Sudin Apte
• Forrester Research
• 91 20 4014 7728
• sapte_at_forrester.com
• www.forrester.com