World dominated by the word ‘IT Outsourcing’Tuesday, January 03, 2006
IT outsourcing is well on its way to becoming a mega trend that is going too poised by reshape global business in a significant way. The theme plays out for the second year in a multi-year Offshoring battle between Indian and multinational vendors from whole world. The research agency has examined three key trends that are likely to dominate the software landscape in year 2006
IT Outsourcing Trends by unbundled deals:
The trend of moving away from a single vendor to multiple-vendor relationships will truly take hold in year 2006.
The structural change will involve fresh mega billion-dollar contracts, or rebinding of existing contracts, which is likely to take shape in the global services arena of Software Outsourcing. It opens up the market for greater participation by offshore vendors in the years to come because there is no means heralds that demise the billion-dollar deals.
Players such as Wipro and Satyam are priming their sales engine to capitalise on this business opportunity. Look at that $2.2-billion ABN AMRO deal signed in early September of last year has ushered in the era. TCS and Infosys walked away with $400 million of application maintenance contracts and emerged as two of the five vendors along with IBM, Accenture and Patni contesting for application development.
However, this will not detract the domestic Software Outsourcing companies from working on their time-tested formula of customer mining by building the existing customer pipeline in different brackets, say from $1, 5 or 10 million to upwards of $50 million.
Broad-basing IT Outsourcing service:
The ability of IT Outsourcing Software majors to sustain the momentum logged in new services such as infrastructure management, testing, engineering services and business process management and consulting will be watched closely in the year 2006. In the past couple of years there is a sudden proliferation in new service offerings, each one of which is touted as a multibillion-dollar business opportunity. It has also made a foray into the platform BPO market.
The first to broad base its revenue streams among all is Wipro, it will be aiming to capitalize on its early foray in the field of infrastructure management and widen its presence in the R&D.
Software Offshoring services contracts will continue to be predominantly structured on a time and material basis and to a certain extent on fixed price. Some of the top Information Technology companies, however, will also start to slowly dabble with new service offerings based on risk-rewards outcomes or transaction/output based pricing in year 2006. Probably this will be the year when IT firms worldwide will be more open to debate on its merits in greater detail.
IT Outsourcing Development may be triggered off not necessarily by multinational or Indian vendors, but also by private equity firms, if the pricing is attractive in coming years