Offshoring, Outsourcing and a crisis

Check out Phil’s blog at

I agree with some of your observations. However, let me present the entire recommendation set and then see if you need anything more:

a. Consolidation: A lot more captives who have been in the market would reach a deal price targeted by cash rich outsourcers. However, I am still a votary of Captives so I lean towards more of the joint investment captives. After all, if these were efficient and good sources of Cash for a sale you can do better in a multi-step sale so some will definitely hang on to a part of their investment in the captive for a “better tomorrow”

b. People Sensitive Processes may not be Offshored: I see a lot of positive noise for Obama and he is likely to use the “long winter” till mid 2010 to bring in the tax benefits for the mid market companies looking for cost savings. A couple of HRO deals have already gone back and this may set a precedent ( It happened after the Halifax – Bank of Scotland merger as well ) for some more to take preventive proclamations to avoid outsourcing of visible departments.

c. IT Budgets will ensure that the downturn leads to more applications and RIM outsourcing as possible ( No servers, but no IT departments onsite please – it’s too expensive)

d. Financial Services space seems to have left the discussion table on Outsourcing topics, but this is likely to remain a mirage for Outsourcing baiters as Financial Services Companies still have stable outsourcing models ( Captive, third party, challenger, Virtual Captives) No additional business is likely to go back from already outsourced projects, processes or departments

e. Axon deal will set a precedent for further “upcountry” and “upsizing” moves but only for pioneers like HCL and maybe Infosys

f. Vendor Map – IBM and Accenture will continue to do well with existing business but vanilla outsourcing is likely to remain the flavour for most companies and thus there will unlikely be any significant evolution in the vendor map this year with outsourcers continuing focus on keeping it private and uninviting transformation or other “experiments”, Ys that would enable pure scale plays. So will platforms. However, new platforms are unlikely to make any headway and the IT BPO combinations would stay with players with an established product and no need to price it to 90%

g. (And unfortunately the toughest one) Sales and Marketing budgets of Outsourcing vendors are unlikely to see many dollars in 2009. Thus, overall buyers would have to depend on what they already know from the public space to make their decisions. This will thus continue to have repercussions on the no. of deals that are seen as successful in execution.

h. I am afraid I can’t see how retail and logistics will convert their plans for cost savings from Offshore this year unless they are already planned and ready with the processes and the platforms that will move.

i. Entertainment outsourcing is likely to come out strong with maybe even a ten-fold increase ( on the current small base) within the year.

j. Process standardisation drives at Fortune 100 companies are likely to stay away from the limelight and unavailable for vendor participation.

Best Regards


About zyakaira

Investment Banker, 40s, Bangalore This Biopic and this web recreates how one point of view, one person can impact a tremendous economic engine that the world thrives and mis-thrives on. This one has the knowledge and the civil sense , the art of conversation and some good writing to mentor others as powerful and help global managers develop and fine tune their approach on US markets, China, India and the world. Read on here, and let me know what you need. It can be a race for TRPs, a race for new markets and a race to do what is right. I have the pulse of the crisis, the recovery and the market direction and can help you build and refine your strategy as i have helped thousands of managers and multiple global corporations. Of course, it’s more fun if you talk to me. I am in favor of leading this moving of the economic crisis and will partner with you in a soft and subtle way, just the way we both ride to the top. But you can write with us, opine and just reply with aplomb and shine on Twitter , 4 square , Facebook and any other social “choupal” of choice via zyaadakairaada Profile & Portfolio - SocialPicks Different flavours at:

Posted on December 16, 2008, in GDOW, Global, US and tagged , , . Bookmark the permalink. Leave a comment.

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