Time magazine’s recent list of the 100 world’s most influential people includes Nandan Nilekani.

The Indian outsourcing industry has been getting a lot of bad press recently, especially after Ramalinga Raju admitted having inflated Satyam’s profits by around $1 billion.

Nilekani is a co-founder and former CEO of outsourcing giant Infosys.

He is one of the key visionaries of the Indian IT industry, whose remarkable vision and ability to deliver have enabled the Indian industry to grow from traditional software outsourcing to business process outsourcing and finally to global solution delivery. It is for people like Nilekani that the Indian major players are now challenging IBM, Accenture and HP.

That said, most of the small to mid size Indian companies are left behind, living on an outdated model defined in the 80’s. They are the companies that largely contribute to the growing bad press Indian suppliers are getting in the IT world.

New leaders need to rise up and provide these many small providers with a revivified vision for the role they can play on an outsourcing market that has become increasingly global, with countries fancying a better infrastructure, a similarly vast pool of talents, lower attrition rates, and lower prices.

Some food for thoughts for NASSCOM, the National association of Indian outsourcing industry, a prominent body co-founded by … Nandan Nilekani.

Remi
www.vsisoft.com

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I just finished Robert Kennedy’s ”The Services Shift”, a book on the globalization of services, with an emphasis on Information Technology.

Kennedy is a Professor at Michigan’s Ross School of Business. He also runs the William Davidson Institute — a fairly prominent think-tank that focuses on business and policy issues in developing countries.

This book is a goldmine:

• IT managers will find very detailed and clear information on what, when, where and how to offshore
• Outsourcing vendors will find relevant and not-so-well-known information on industry trends.

But hold on, there is more. Because the book goes far beyond the technicalities of services offshoring, literally everybody would benefit tremendously from reading its sections 1, 2, 6, and 7.

In fact, if you think the book is of no concern to you, consider one mind-blowing statistics shown in it: in the USA, services represent a staggering 83% of the country’s GDP.

The author managed to stay away from politics and partisanship. The book carries nothing like Lou Dobbs’ low-level propaganda or Thomas Friedman’s provocative views.

Kennedy sticks to the facts, and demonstrates brilliantly why the globalization of services is an unstoppable trend, at least for any foreseeable future.

Consider “The Services Shift” a wake up call. A new economy has emerged, and it is a global one. Liking or disliking this global order we have created is everyone’s prerogative, ignoring it is just not possible anymore, whatever our role in our society is.

The price to pay for the US to retain global leadership is to acknowledge this situation, accelerate innovation, create disruptive business models, and more importantly prepare our children to live in a world that will be changing at an always faster pace.

I will definitely elaborate on some parts of this book in future posts. In the meantime, do yourself a favor: read it!

Purchase the book on Amazon.com

Remi
www.vsisoft.com

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Outsourcing vendors often use “blended rates” to calculate the monthly / quarterly amounts due by their customers. Simply put, the blended rate is an hourly rate that applies to any single team member, regardless of seniority, from the less experienced developer to the most senior manager, with the possible exception of the top management.

Beware! [Read more]

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Bringing jobs back home is a hot topic nowadays. While offshore is here to stay, no matter what, it certainly does not mean we should support any type and form of offshoring.

Going offshore to circumvent shortage of local talents, insufficient infrastructure, or to accompany International expansion are certainly valid reasons. It becomes highly debatable when going offshore is only dictated by the search of maximizing corporate profit. [Read more]

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A critical phase of appointing a new offshore provider or renewing an existing contract is to get the best price possible.

However, I often noticed that potential customers are trying to go far off limits when it comes to prices. I think this is plain wrong, as too much bargain is very likely to backfire on them.

The worst part of the story is that there are always some vendors willing to accept any conditions to get a contract. [Read more].

Business | 2 Comments »

Many in the software industry are reluctant to outsource the design of their applications, and by design I mean the overall usability (look-and-feel, navigation, user experience, etc.).

I do not have a definite answer, but I have learned one thing: BEWARE! While it makes total sense to have the back-end of the application developed offshore (whether outsourced or not), it is critical to carefully double check, when not triple check what the real design capabilities of your potential offshore provider are.

SMBs usually call existing references before selecting an outsourcing provider. Make sure design capability is one of your “must ask” questions. The reference certainly knows whether your provider has decent design capabilities or not.

You do not necessarily have to write off a potential provider that does not have such experience, but if you choose to keep the design inshore and develop the back-end offshore, do not take for granted that the communication between the teams will go smoothly. In fact, it is unlikely to be the case, unless you spend a fair amount of time making sure communication flows.

According to the Korean Institute of Design Promotion, China has globally better design capabilities than other popular offshore destinations, like India or Brazil. That is another hint for picking a Chinese offshore partner.

The study is not specifically about software design, but I see no reason why their findings would not apply to software too.

Their latest report is available for download here.

Remi
www.vsisoft.com

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Market Wire recently posted an article presenting the outsourcing trends for the IT industry in 2009, according to the IAOP (International Association of Outsourcing Professionals) predictions.

While most points come at no surprise, I have a harder time agreeing with the first one: Outsourcing will stay closer to home. [Read more].

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Over the years, tier-1 Indian suppliers have mastered the art of maximizing their profit on outsourcing agreements, thus enabling their rapid expansion and wealth.

It was not too much of a problem as long as they were dealing with industry giants, which have the capability to closely oversee their offshore contracts and operations. The situation is totally different with SMBs, which cannot afford to see their monthly bills go through the roof, or witness considerable decrease in the quality of the deliverables. [Read more].

Business, China | 3 Comments »