Collaborative outsourcing may be the way to go
The key theme of industry researcher Gartner's conference in London earlier this year was “Strategic Multisourcing” or the ability to work with multiple vendors for undertaking all the contextual work that that is better left to third party providers, while a company focuses on what is truly core to its own operations.
For many of the Fortune 1000 and FTSE 100 companies, this is not a new theme, for some of them have developed and sustained outsourcing relationships with half-a-dozen or more partners, most of them from India, for over a decade now.
One question that has dominated discussions in the past and becomes even more relevant for smaller firms and even many firms in India seeking to outsource for the first time is the choice between multiple partners and building a wide and deep relationship with a single trusted source.
The logic for multisourcing is compelling the ability to work with best of breed providers in each specific segment, the commercial advantage of “keeping the vendor honest” by always having multiple mature options, and having the flexibility to move work from internal departments to vendors and even across providers whenever the need arises.
One of our Fortune 100 clients is always proud of their relationship with four of the top vendors in India because it enables them to access leading edge solutions and benefit from best practices that may have been implemented first for another client in an entirely different domain.
The flip side to this advantage is of course the time and effort is takes to develop mature relationships with multiple sources. For some of our retail clients in the US, UK, Dubai and India, the feeling has been that effective development and deployment of merchandise management or point of sale systems is so key to their competitive advantage that it would be counter-productive to build trusted relationships with more than one partner!
Recent trends in technology too have made it beneficial to invest a lot in the initial selection process and draw up mutually agreed service-level agreements and productivity improvement plans and then focus on building a truly collaborative single source outsourcing relationship.
The new centres that we are setting up in Hyderabad, Gdansk (Poland) and Sao Paolo (Brazil) will deploy a new framework that enables the work done for clients to be distributed, with analyses of requirements done at the client’s premises, architecting and designing of solutions at one of the three new centres, development of the applications at full-service facilities in Pune or Shenzhen using generative techniques rather then "brute force programming," and testing of applications at one or more locations as seen most appropriate by the client.
This approach leverages the power of the Internet to perform work where it makes most sense, keeping in mind the proximity desired by any client at the analysis and testing stages and the cost and robust quality processes available at large offshore centres in actual system development.
The debate will continue but the message is clear outsourcing is becoming more and more key to the business fortunes of any firm and the more strategic and collaborative it can be, the better!
Ganesh Natarajan is Deputy Chairman & MD of Zensar Technologies and Vice Chairman of NASSCOM, the software industry association.