Labor Arbitrage is no more a differentiator in IT outsourcing
Labor arbitrage is a global economic phenomenon where jobs move to nations; where labor and the cost of doing business is inexpensive.
But, in current scenario, IT service providers are expected to offer more than just cost benefits. Clients expectation is very different as it was couple of years ago.
They expect IT service providers to:
- do much more with less; as technology budget is shrinking over the years
- transform rapidly; as current environment is much more disruptive
- move away from traditional service model and adapt to outcome based model (as a service)
- strengthen their capabilities in emerging technology and futuristic areas of technology innovation.
Hence discussion is NO more around headcount; but it is about business outcome which is customer-centric. In a fast changing marketplace we all are into; we don’t have the luxury of moving slower. So SPEED and AGILITY are the key.
Another visible trend among large corporation surfacing clearly is “Insourcing”. Large organisations have started realizing that their IT services providers are not able to change as market demands. Traditional IT vendors are slow and find difficult to drive change in their organization. Clients are looking for flexible contracts, pay as you go, no lock-up period, easy termination policy etc..
Hence, large organizations want to have their innovations plays delivered out of their ‘in house’ team; where they have more control.
An IT initiative should take self course corrections as it moves from conceptual stage to implementation stage. This kind of market drivers create demands for PaaS (Platform as a Service) services. Platform like IBM’s Bluemix and Force.com provide a ready to use environment for end users to build quick PoC, test the market and launch product in couple of week time.
More and more organizations are preferring to use these kind of platforms which bring features quick with minimum development effort to beat the competition. These kind of ‘fast mover’ organizations no more look at cost savings but they focus on ‘Time to Market’ to stay ahead of their competition. This strategy may not work with IT vendors doing product development for them.
Please leave your comments.
Author:
Ashis Panigrahi: a Business Process Management and Automation Expert
(in.linkedin.com/in/ashispanigrahi/)