Wednesday, February 23, 2011

Outsourcing: the next generation

Will India remain the outsourcing hub as CIOs seek value-added partnerships?

CIOs are re-assessing their relationships with providers of technology and services and in particular their relationships with outsource service providers. Analysts and CIOs have explained to CIO UK the changing ­nature of their operations and why this is in turn changing the demands they place on the outsourcing community.

“We as leaders of the industry now look at growth opportunities in the next 18 months,” says Myron Hrycyk, CIO at Severn­ Trent Water. “Our sourcing plans now have to include capabilities that let us scale, adapt, be agile, flexible and deliver­ rapidly.” In the recent past an outsourcing deal was expected to deliver results within a timescale of two to three years, Hrycyk says.

Cost is still a big component for the utilities CIO, but it now comes second to the forward thinking he wants an outsourcer to provide his company.

Hrycyk says that smaller, shorter-dur­ation selective outsourcing deals secure both best of breed and greater commercial flexibility for the organization.

“It also injects a degree of competition between their sourcing partners. More ­importantly, it allows the CIO the flexibility to keep pace with the changing business demands, make changes in the delivery or commercial arrangements or include new technologies, which may not have existed at the start of the engagement,” he says.

Duncan Aitchison, President and Partner at outsourcing advisers TPI says that the more mature outsourcing markets in the US and UK have led the move towards this multisourcing model. This, he says, is in direct response to the perceived limit­ations of the earlier large, bundled, single vendor IT outsourcing agreements.

The Indian service providers, with their access to a scalable workforce, are well placed to answer the latest demands of the CIO, says Ian Marriott, Research Vice President at Gartner.

Recent analysis of the major outsourcing players in India suggests they are performing well and continue to win deals from with western IT leaders.

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