Outsourcing Industry - Analyzing Demand Segments

As a sales person in IT, there are some interesting market segments or rather demand segments that i came across and hence thought of putting it on my blog. In later blogs,i will further discuss on different engagement models which customers are demanding and how the industry forces seems to be pushing the industry towards stategic positioning.

In more cases than not, the realization is that the non core IT work can be outsourced to organizations who have larger pool of resources and hence capability to handle risks associated with uncertainity. The simple definition and expectation of this industry has made the startegic differentiation for firms tougher. For this discussion, we will simply elaborate on types of sevices.



Typically the demands to service providers come in following form:
Business As Usual Services - Process is key and Availability of services is critical - Maintenance and Support work. The demand is usually oriented towards technical skills and it is expected that client context will be built over a period of time. However, the project management is core to this work.

Business Process Outsourcing - Ideally this is where maintenance IT services should lead to. This is requirement to overtake the end to end non core processes and their IT infrastrsucture. Invoicing, billing, help desks, document generation etc fall in this bucket and soon there will be more and more processes moving into it.

Development - Requires industry and client context - This kind of work is usually in green field developments. This is usually completely new business process implementations' outcome. This might go beyond the client context. It requires consultative positioning. Brining in the larger context of similar business process in industy and then ability to tweak the solution to client context.

Operational transformation projects - Upgrading infrastructure, bettering databasing, replacing old applications with new or large scale integration and enhancements could be categorized under this bucket. As is visible, this work requires expert technical skills. Technical architects and consusltants form the core to these services and the ability to forecast client business demand and its impact on technical landscape is core to such services.

Product Implementation - Product and client business process specific knowledge - The demand requires niche development technical skills and strong business analysis skills. The combination is priced very high due to scare resources, but comprehensive solution packaging in products.

Pure Play Consulting - Primarily related to PMO, budgeting, IT portfolio budgeting, assisting customers in POCs, vendor assessment or RFP formation form the neutral consulting services which expert offshoring firms can provide. These are trust based services. Firms that understand the client context well and can take on neutral role in effective negotiations of client contracts and budgets settle well in these roles.

IT Driven innovation - Industry and client context - These services require proximity to business to understand its painpoint, larger industry context and larger technology back bone to be able to connect business with technical solutions. This is not a demand driven service. The service requires bringing in stake holders, risk reward based negotations and ability to build a convincing case. Also, vendor has to be high on trust and knowledge side to take on this role.

If you notice, i have knowingly built up my demand segments in a certain fashion. The types of demand that you are generating from industry or account is directly proportional to your ability to understand the industry and relevant IT context for the same. BAU is the lowest form of service sold in this sector. This demands lower cost and higher predictability. NO one will ask you to differentiate on "knowledge" as long as he can vouch for your processes. The real game players will be ones who move up the value pyramid and build the industry IT gap to reach to advisory position. If there is some additional dollar to be made with lesser, probably moving up the value pyramid will be interesting. We will discuss what could be possile hows in next blogs..

The Dying Behemoths!

The perfect org structure for my firm, my unit, my team or even the most basic form of organization "family" has been a debate for long. Most of the firms start small with minimal process, people and technology. As it grows in size the debate on company culture, startegy and roadmap takes its full form. In this blog i want to talk on one of the dillemas as heard of and discussed.
Biotech Firm:
-- Close friends get together in a huddle and raise the organization
-- Market is huge, R&D produces a chemical and it immediately finds the market
-- Marketing department feels that there is a better production which could earn better revenue, but R&D is powerful
-- there is lesser of what to do and what not to do discussion

Welcome to the world of extreme revenue focus, power reaching the hands of who knows to play it well.. But then the firm is too small and its growing.. competition is yet to creep in.. right or wrong money will come.. there is net net control on flowing in of revenue.. no one cares if with limited capability and size, more could come with less with better decision making..

Challenges that this will face:
-- Org will need process to put the right checks in place to focus and channelize energy in right direction
-- Experts shall have to play SME role and healthy friction between various departments will need to be created
-- Someone will have to watch competition, identify the strengths of the firm and start differentiating to sustain in long run
-- More and more people will need to share the vision of the firm to be enabled to take decision



Welcome to the world of perfect organization.. We all read about it right?? Then where does it fail?? Well, if you thought last point was last.. there you are.. a) Large organization do not share the simple vision like "making money and surviving".. b) People know how to run their own department, but they dont know what is it like to run the big jungle with so many diverse wild animals and ambitions because they were never empowered to go, kill or die..

There are few things which probably are key for an organization when it starts growing:
-- Vision dsnt change in business world, simple "Be among top 3 or die or diversify" -- thats one line vision of GE in a way..
-- Keep the business portfolio moving, know what will die and who will be the next star contributor.. INVEST in NEW, DIVEST from OLD.. Take a give and take approach, too much greed and emotional attachment to old is suicidal
-- Decision making and ownership should be embedded in DNA of a firm as thats the only way to survive the behemoth -- "You are the CEO of your sector and the firm" "You die if your department dies AND if my net value of firm dies"
-- No matter how much you codify, some people are core to business, they need to have resons to stick on and that has to be empowerment and ownership and not just money
-- Nourish the weaker child ( read new opportunties with future business) till it stands on its feet.. it will have to replace the older ones when they lose their feet

The organizations that stop growing are ones which get too emotional about returns, stop investing in newer opportunities and have a set of zillions of people who have never seen the real decision making in centuries spent in the organization .. In the end business is about survival, it will always be about that basic sacrifice you made on your minimal bank savings to set the foundations.. A growing firm is a set of smaller entrepreneurial sets which now run under one umbrella.. if you dont change, empower and invest you will die.. it was never meant to be constant and it always needed that "sacrifice" on your profits, that "risk taking" zeal you had to begin with..

N=1 .. Does it work across the world?

In an interesting discussion with a friend of mine during this week, came an interesting thought. I was explaning about what i really appreciate in England.
-- N=1, customer and his requirement are heard to and marketing is core to this economy
-- Innovation for comfort and luxury has had a huge market
-- Educating people on products, process and invention is their way of honest branding
-- Quality is of extreme importance
-- All pros and cons are well thought through and incorported
-- Customer Service might not be high, but enabling customer is on higher side

I was generally quite impressed by the feel good factor that this consumer driven economy brings to people. It is so structured towards what will make one spend more. The success of business in here lay in the amount of populist support the product gains due to its features and mapping to direct consumers. Look at iPad, Europe is alway the first to experience and finds market instantaneously.

I started discussing on how this kind of market is now picking up in India and aiming at young earners and middle class. I was convinced about the focus of moving to N=1, but i wasnt convinced if it was as detailed as that in England and if Quality matched. This thought led me and my friend to enter into a new debate which proved that India is a unique market, sheer variety of customer, number of customers, culture, efficiency and negotiation power of even 2 year old kid.

-- Population and culture of India does not demand N=1
-- The market with all its increasing consumerism is still looking at balance in prices
-- People in India still like the "human" touch to services, a large population is still not educated or even if it is, reading does not excite many
-- India is a real tough market with a mix of all kinds of customers and buying cultures
-- Between volume and margin, volume at this stage is an easier target. The difference in revenue earned by targetting volume sales and premium margin sales, is high enough to justify volume market
-- BOP is a huge market in volume game and interestingly will grow in magin way by product differentiation



We concluded that marketing, business innovation and entrepreneurship in consumer driven products is very local.. strategies for GTM and hence even the product features weightage should vary for different geographies. The word Glocal made perfect sense.. processes, material producrement, management experience, may be labour and production can be leveraged across geographies, but ideas and innovation have to happen locally.. The Tata Nano, Zandu balm, Hero cycles.. they are all there to stay till someone nails the mindset of value vs price negotiation power of Indians.. :) So, if you are the marketing guy, you know India will challenge all your principles and learnings, as there are mutiple sizes that might fit one, but one size might not fit all..

Brand Beauty

It was a nice lazy friday evening.. i started back from office at 5 PM.. on my way back, i wanted to pick up something exotic to start my weekend.. i entered into the super mart and started checking out the shelves for something nice and soothing to eat or drink.. something in tea section attracted me.. it was a very attractive pack of tea.. i went closer to check on what was it.. this was tea with various flavors which is quite a big market in europe.. but this was something new, targetting the "organic and healhty" crowd.. as i held the pack in my hand, i could smell strong cardamom and liquorice.. i had picked up a detox pack.. retail being my passion, i went on hunting a bit more within the section.. i saw that this tea was priced almost 50% higher than the normal green tea that i buy.. but i just wanted it.. the marginal price difference did not look too much for a month's consumption..
Curious, i picked the pack, as i wanted to try this diffuser tea.. The curiousity has proven to be good, i guess.. i have a learning..
Here is what i saw how brands and commodities separate themselves out:
-- Certification from USDA Organic, Organic soil association and Kosher Parve
-- Detailed information on how i am different from other teas
-- Unique combination of ingredients
-- Elegant , soothing colors and packaging



This is "Pukka" detox tea for you.. It is an Indian sourced tea, marketed extensively in Europe and i must say, if you have it once, you would just want to try more of it.. its perception, attention to details and keeping eyes on niche markets.. they say your love and passion shows in everything you do.. looking at their product and then further into website and details, i feel entrepreneurship is about finding your passion and getting started to build it brick by brick.. in the end either you will find your way or you would have been through a journey which you shall never regret.. Not to forget India comes back to me in so many ways.. The old fashioned, un sophisticated farming is now a brand "organic".. its all about how you turn around the ideas to scarce practices in world.. :)