Indian IT-BPO Industry: NASSCOM Analysis

http://www.nasscom.in/upload/5216/IT%20Industry%20Factsheet-Aug%202008.doc

IDC survey - 2008 - UAE Managed Services

IDC conducted a survey of 300 organisation of all sizes across 9 industries in the United Arab Emirates from December 2007 through March 2008. The study found the popularity of managed services varies with the size of company, with the biggest enterprises least inclined to outsource their IT. The most popular areas of outsourcing include those that require more advanced technological skills, such as managed business continuity services and application management services, while the least popular category involves basic desktop management services. 40% of the organisation in UAE site security as the most important or second most important reason for outsourcing. For moe than 25% of the respondents, cost reduction played the biggest or second biggest role, while more than 22% decide to outsource some part of their IT in order to be able to concentrate on their core business. Depending on the managed services 34% to 54% respondents are open to or are planning to hire a 3rd party to provide IT services.. At the same time , however they express concern about lack of flexibility in delivery, loss of control and insufficient understanding by providers of clients real needs. All of these highlight the necessity to carefully manage expectatios in order to establish real win-win partnerships.

HP + EDS story

Hewlett-Packard Co. has agreed to buy Electronic Data Systems Corp. for about $12.6 billion to build a technology-services company that could challenge IBM. The sale is expected to close in the second half of this year and more than double HP's revenue from services, which was $16.6 billion in 2007. EDS had $22.13 billion in revenue last year. The combined services business would have 210,000 employees -- although some analysts expect HP would trim jobs -- and operations in more than 80 countries. HP said the business would be based at EDS' headquarters in Plano, Texas, and led by EDS chairman and Chief Executive Ronald A. Rittenmeyer.

1. While Hewlett-Packard has over time built up its own outsourcing practice, this clearly is a move to challenge IBM in the services area.

2. Together HP and EDS would have roughly $39.4 billion in services revenue, compared with IBM's $54.1 billion last year.

3. HP gains a very strong No. 2 position in total services market share and professional services market share behind IBM.

4. If EDS were to remain independent it would have a tough time holding on to its number 2 slot in IT services market.

5. EDS brings to HP a strong base in infrastructure outsourcing. But neither HP nor EDS is strong in high-end consulting, which is a strong suit for IBM.... So unless HP has some synergies where they can dramatically impact earnings growth of EDS there is still some speculation on why would they want to buy it.
6. The underlying motive is to have a Bigger Services and IT Outsourcing company using common and pooled client base . Use EDS expertise in services (hence the EDS based leadership) ,add HP services , and cross sell based on HP hardware.

7. EDS brings the consulting skills while HP provides the hardware. Consulting services are much more profitable than hardware. Like IBM, HP/EDS can now provide end-to-end solutions. They can essentially give away the hardware at cost and make money on the consulting and servicing.

Managed services project

Managed services project worth over AED20M floated by Department of Health & Medical SErvices - Dubai (DOHMS) awarded to Intertec Systems

360* feedback from Linkedin users

Advise to outsource service provider

• Would ask my outsourcing/off-shoring service provider to ensure that a governance process is put in place in the contract that will establish
  - Baseline productivity and quality of deliverables
  - Measure against the baseline over the life of the engagement. The responsibility of getting metrics data would not just be with the service provider but also with the buyer company. Establishing a governance process helps the buyer and seller of services measure the success factors resulting in a win-win situation.


• A contact centre that is not only efficient and professional but can also caters to the key languages spoken in the business world. Mandarin, English, French, Business Japanese, Spanish, German, Cantonese, etc


• When in the beginning a service is outsourced, the motive is cost advantage. Once the monetary gains start becoming evident then the companies start wanting more from the provider in terms of quality, service, and innovation. So the one thing that the service providers need to do today is bring 'innovation' into their culture. this is what will make the clients stick with them and sustain offshoring in years to come.


• A key factor in the growth of outsourcing/partnering is to have the providers add value to the project beyond the cost differential. By adding and assisting the business logic aspect of any project the provider enhances opportunity for success for that project. this is where smaller more nimble players can gain tactical advantage
  

7 benefits of managed services

•Skills: Simple and timely access to specialist skills and knowledge.
•Delivery: Greater control of service levels and performance.
•Quality: Project outputs enhanced by specialist resources.
•ROI: Tighter cost control and clarity on the RoI.
•Control: Refined budget and implementation management.
•Efficiency: Make best use of staff for specialist and core tasks.
•Risk: Transfer the risk for achieving high service outputs.

war of managed services in UAE

Managed services; outsourcing has become hot buzzword in UAE. Many service providers have entered into the market; numerous existing IT solution providers have moulded their business model to provide services. On the flip side many businesses have outsourced part of their business processes and many are evaluating strategies to outsource business processes. This phenomena seems prevalent primarily in the banking and government verticals and the multinationals as part of their global strategy.
In the recent past the services activities have heated up with setting up of Injazat a joint venture between EDS and Mubadala in early 2005. It is claimed Injazat has signed up business worth over USD $ 1.4 billion within 2 years of its inception and lions share comes from Abu Dhabi government departments. In March 2008 ‘Etisalat announced setting up managed services in three areas. Managed Managed WAN service; Managed Firewall and Managed Secure VPN solution. Other service providers are ASP Gulf; ehosting Datafort and the new entrant Majal that is focusing on helping RAK emirate develop an IT infrastructure, which will cover e-government, business and residential services, over the next five to 10 years. The company expects to spend between $180 to $300 million over a five-six year period to build up the emirate's IT infrastructure.

The competition has heated with presence of Satyam; Wipro; Perot and other sub- continent IT giants Then UAE has many local companies like Raqmiyat; CNS; Seven Seas; Intertec systems; Emirates computers; Alpha Data, MDS who are proposing managed services to their local clientale and winning business on trust relations and local presence.
Dubai government has put in an initiative, “Dubai Outsource zone” to set up first free zone in the world dedicated to the outsourcing industry. It will serves as a centre for off-shore disaster recovery facilities and cater to off-shoring requirements from Europe, the US and the region. DOZ's custom-made facilities, includes next-generation telecom infrastructure, office space in intelligent buildings, and facilities management, enable outsourcing companies to set up efficient operations. Dubai Outsource Zone will create the outsourcing industry in MENA. DOZ’s claims to become the leading outsourcing destination in MENA, and one of the top 10 in the world

IDC has reported that the IT outsourcing industry in the UAE is expected to grow by 16 per cent in 2007, topping USD 94.54 million from USD 81.27 million in 2006. Over a five-year period until 2011, the industry is expected to achieve a healthy compound annual growth rate (CAGR) of 13.2 per cent.