CXO

Outsourcing: Nasscom 2011 kicks off with focus on growth

Political crisis in Egypt hardly even whispered in the conference hall in Mumbai...

As Indian IT trade association Nasscom's annual conference begins in Mumbai, any thought that the world of global IT services would be preoccupied by the political crisis in Egypt has proved unfounded, says Mark Kobayashi-Hillary.

Today marked the beginning of trade association Nasscom's annual conference in Mumbai. Nasscom represents everything hi-tech in India. Although its annual conference used to be dominated by Indian technology suppliers, and therefore be all about offshoring, these days there are representatives from more than 35 countries, all talking up the IT business in their corner of the world.

When I arrived at the event, I thought the world of global IT services had two key issues: the sluggish return to growth in many developed economies where customers of IT firms have traditionally been found, and the political crisis in Egypt.

With countries such as Egypt and Tunisia struggling to maintain political and civic stability, they are not going to be top of the list for any future CIOs thinking of where to locate their offshore team.

But I was wrong. Egypt has hardly even been whispered in the conference hall, apart from when I met one of the team tasked with making Egypt look like an attractive proposition, and we enjoyed a chat about the issues faced by North Africa and the Middle East.

Talk at Mumbai's Nasscom annual conference is focused on confidence about growth and real contracts on the table now

Talk at Mumbai's Nasscom annual conference is focused on confidence about growth and real contracts on the table now
Photo: Shutterstock

Don't get me wrong. I'm all for popular uprisings that challenge dictators, but in this context I'm thinking about multinational companies locating facilities around the world. It seems to me as if we have reduced the weighting of political risk when selecting countries to work in. But if I am honest, no one wanted to talk about that subject at Nasscom today.

I interviewed a large number of people today - including several chief executives - and the topics concerning them are:

  • There was a strong pipeline recovery in 2010. It's not just confidence about growth, there are real contracts on the table now, but business-process outsourcing is growing a lot more slowly than IT outsourcing.
  • All the service providers are talking about offering platforms, not projects, to their customers. They want to offer a complete business solution, not just a piece of kit and some software.
  • Senior executives disagree violently about the impact of the cloud, with some thinking it has no impact on their business at all - generally where they are in customer services employing a lot of people - and some thinking it will revolutionise services.
  • There is a clear focus on multinational delivery sites - real globalisation of services, rather than just offshoring IT to the lowest cost location. Locations pitching for contracts have to demonstrate a value add to the business beyond just a lower price these days.
  • The quote of the day was probably from CEO of NIIT Technologies, Arvind Thakur, who said the IT services industry is moving from a lift-and-shift model to one where these companies innovate and serve. That view nicely summarises the move away from offshoring.

It's true that the industry itself is maturing. IT firms have realised how vital they are to the survival of their clients and their combined business, and IT expertise is now a crucial market differentiator. As Thakur indicated, an IT firm can no longer just hack together one project after another, they need to be a trusted partner actually suggesting new ways of doing business because of IT developments.

There are two more days to go. I have about a dozen interviews lined up tomorrow and I'm going to meet some country representatives to hear what different regions around the world can offer - and what they have that India doesn't.

I still think the question of political risk will come up when I talk to these executives tomorrow. When a government cuts the internet and telephone lines, and when senior executives disappear, it's time to start revising those guidelines on who offers the best combination of expertise, stability and price.

Mark Kobayashi-Hillary is the author of Who Moved my Job? and Global Services. He lectures at London South Bank University.

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