March 31, 2016 10:58 am | Updated 1 year ago.
By Arup Gupta
Having been intimately associated with the Outsourcing Industry since its inception over the last 20 years, in my roles as President of TCS America and then President of Polaris and then CEO of Birlasoft, I have been able to study the trends in offshore outsourcing as it progressed through the years.
Over the first few years in the early 90’s, the offshore vendors had to prove that they can truly deliver software from offshore delivery centers using the onsite-offshore model without too much of risk and more importantly without having to add too much of program management responsibility on the customer.
Once this was done and the offshore processes matured, then the customers wanted to reduce their IT costs further and the focus shifted to moving more and more work offshore to leverage labor arbitrage. The coming of “Y2K” accelerated this process. While in the earlier phase the focus was to have 70% of the headcount offshore, the pressure now was to move 90% of the headcount to offshore.
With the advent of the digital age, however, there are significant changes taking place now in the offshore outsourcing model to manage the customer expectations.
The Top 5 trends that we are seeing are:
- Smaller deal size: Customers are no longer willing to pay for hundreds of engineers to develop or maintain applications, which used to be the norm with applications developed using legacy technology. The deal sizes today are in order of magnitude smaller as there are many reusable components available on the cloud that can easily be integrated to put together a comprehensive solution.
- Rapid application deployment: Customers are no longer willing to wait for years that used to be the norm to develop and deploy applications using legacy technology. Today we are seeing complex applications being put together and rolled out in months or even weeks.
- Incremental delivery of functionality rather than big bang roll outs: Most applications today are being developed using Agile or some similar methodology that enables functionality to be delivered to the customer in live environment on incremental basis.
- Integration of best of breed applications rather than custom development of monolithic code base: This is the age of integrating best of breed solutions to develop comprehensive applications rather than developing applications ground up.
- Last but not the least, getting it “first time right”. With the increased ease and flexibility experienced by the customers in putting together complex applications, their tolerance for level of defects has decreased dramatically. Application downtime, for whatever reason is no longer an acceptable phenomenon.
About the author: Arup started his career with TCS in 1979 and was responsible for setting up the GE ODC with TCS in 1995 which till today continues to be the largest GE ODC. Arup then took up positions of President TCS America, President Polaris and CEO Birlasoft. Arup is currently running two companies D2E Consulting and Makeitdeals.