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..
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