Yesterday IT News published that the business process outsourcing market is set to undergo more consolidation among the mid-sized tier-two providers. But this is not applicable to the BPO market alone. About a year ago, at the Baltic Innovation Forum in Gdansk Indian and Eastern European IT providers already came to similar conclusions. No longer can we divide the world into us and them. Cooperation will be needed to become successful.
IT News claims the outsourcing market is ripe for consolidation according to cited analysts. They claim that till today this did not happen too often due to financial fears. In my opinion looking for the advantages is a more stimulating way of cooperation. Especially because the advantages are clear. Last year we concluded that cooperation between Western and Indian providers is especially useful because of the following main reasons:
1. Local presence
The Western providers have the advantage that they are located close to the clients. They understand the local needs, speak the local language, understand the legal situation and know the cultural differences.
2. Advantage of scale
The Indian providers have the advantage of scale. Both companies in the US and Europe are rather limited in growth due to the lack of sufficient qualified people. This advantage of scale results in a better time to market performance and still it offers a reduced cost level. If you join these advantages you will be able to establish a powerful combination.
Cooperation will increase the success rate of projects
Among others due to the lack of local knowledge still too many projects are not as successful as they could be. In my opinion, the West should not blame the Indian providers. Partly we should blame ourselves. In most cases all together we just didn’t invest enough time in really understanding each other. This can be improved when a local Western provider or “front-office” specify the client’s needs. After client approval the front-office can translate the specifications into a technical design that will be understood by the Indian providers. The Indian providers will deliver a tested solution in close cooperation with the front-office. The front-office should be heavily involved when it comes to functional and usability testing. The front-office will show the (interim) solutions to the client and will gather client’s feedback. This feedback will be translated into technical change requests for the Indian developers. Besides, the front-office will be responsible for client instruction, after sales and first line support.
Hybrid ways of cooperation will become more common
In the upcoming time we will see this “hybrid” way of cooperation more often. Independent Indian and Western providers will create (temporarily) joint ventures and some of them will result in closer cooperation. Also Indian providers will start looking for opportunities to buy a local front office like a consultancy firm or a local IT provider. The bigger providers will establish their own local office (if they didn’t yet). Of course there will be Western providers who buy or start a development location in India as well, although most of the providers who are able to do this, are already present in India.
Joining our efforts will increase client’s trust
I think the West should be prepared for an Indian invasion, but I don’t think this is a bad thing. By joining our efforts we will perform better towards our clients, which will increase their trust in the outsourcing market and client’s trust is really needed as I wrote before.
Please share your opinion below by leaving a comment, I would love to discuss with you about this subject. Feel free to discuss on Twitter as well: @GOYELLO.
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