Posts Tagged ‘Outsourcing’
Outsourcing 2.0
Friday, July 2nd, 2010‘A Blessing in disguise’ – This is exactly what the IT/ITeS industry has to say about the recent recession. The 2008-2009 recession, followed by the collapse of the financial services bellwether, Lehman Brothers, has transformed the total dynamics of the industry. New business models evolved as customers squeezed their IT spend and demanded more work. They were perhaps right; the credit crunch had hit hard on their businesses and they were left with no choices apart from shoe-string budgets for IT-ITES needs. Vendors or outsourcing providers also responded in a similar fashion. But, the employees felt the heat most. Salaries were reduced, lot of employees were laid off and company budgets were reduced across the globe. By adopting such life-saving measures, most businesses were able to withstand the pressure. However, life hasn’t been the same ever since.
Multiple Leadership and Vendor Consolidation – The Recession Special
Monday, September 14th, 2009There were several eyebrows raised, when Wipro appointed Suresh Vaswani and Girish Paranjpe as the joint CEO of Wipro. The new model was proposed by the chairman Mr. Azim Premji, who was the stand-in CEO after Vivek Paul resigned from the company. Amid recession, Wipro outperformed its rivals by an increase of 11.78% in its Q1 revenue that proved the proposed model a big hit!
By this pioneered model, Wipro has reduced the workload at the helm and helped both CEO’s to concentrate on the business verticals that they are responsible for. They have shared the responsibility and integrated all their technology business under a single umbrella. Though the companies would have an extra burden, this model helps them to focus on the business more carefully rather than one executive handling myriad business.
Vendor consolidation has been the norm of the big shots in the recession. Most of the big companies in Europe and America, irrespective of the industry have 100-150 vendors, which include 60-100 vendors handling the pivotal IT support. The current trend is the trimming of the vendors to 5-10%. This will help the Big IT vendors to stay afloat in the recession as 2-3 bulk projects can the turn the game for them.
The outsourcing world has been quite skeptical about Barrack Obama’s ‘Protectionism’, however, if we go by the new consolidation trend, most of the big players in US and Europe will go for vendor consolidation, which can reduce their cost by another 10-15%. The main advantage of this trend is that, if there are fewer vendors, then the access to the sensitive data and the accountability of that can also be restricted to a few, which in turn de-risks data-theft.
As big players hold the benefit in this model, the small players will face the hard side. Companies look for a broader portfolio when they select vendors. This puts small players out of the race. Small players should aggressively bid for small projects and increase the number of deals, as they have to compromise on the margin due to the recession.
-
Powered by Sociable!
