Keen to dispel the image that India is only a ‘faster, cheaper, better’ offshoring option, a delegation of Indian software companies arrived in Australia this week touting a new way of doing business that is based on innovative partnerships.
Aiming to redefine the outsourcing landscape by through partnerships, India’s National Association of Software and Services Companies (Nasscom) claims it has a new offshoring model that will change the direction of future deals with Australian companies.
It is a two-part strategy that Nasscom Australia chairman and Zensar Technologies Australia and New Zealand manager Sudhir Mathur says will “put a better face on our industry” and demonstrates how India has matured, it isn’t just a cheap programming option.
Part one of the strategy is the partnership model. Nasscom has identified 90 companies to partner with across the globe including 18 in Australia. Rather than simply setting up shop in Australia or going down the acquisition path, Nasscom Innovation Forum chairman and Zensar Technologies CEO Ganesh Natarajan said partnerships allow Indian companies to leverage local knowledge and domain expertise.
For example, Natarajan identified knowledge management and e-learning as two areas where solutions can be developed with Australian partners and then pitched to the local education sector.
“E-learning is ripe for opportunity because our partners understand the local education market and they can use our frameworks and templates that are already developed. They also get to take advantage of our global footprint; this isn’t a one-way relationship,” he said.
“The goal is to eventually go global, we want to take our Australian partners to places like China which potentially has the biggest market for e-learning in the world.
“We already have partnership models operating in the US, Japan and Switzerland. Because of our size we don’t really need to partner, but we want to add value to local industry here. Our Australian partners are relatively small, typically up to 200 staff.”
Part two of the strategy, he said, involves the introduction of a more innovative, outsourcing model that has a smaller offshoring component.
It reflects a shift in customer preferences toward selective sourcing and a move away from simply using outsourcing just to reduce cost.
Not surprisingly, IT services providers are adjusting their offerings accordingly to position themselves for a new wave of outsourcing contracts up for grabs over the next 12 months.
Natarajan said it is about finding the right mix and trying to achieve transformation.
“Often customers can do the design, architecture and analysis here, there is no need to send an entire system overseas,” he said, adding that the local skills shortage is also contributing to the demand for outsourcing.
Managing realistic expectations is also important, Natarajan said, pointing out that customers who achieve a 30 percent cost saving in the first year are lucky.
“A more realistic figure is 20 to 25 percent and 10 percent every year after that,” he added.
Zensar’s Mathur said the Nasscom delegation also met with a number of federal government agencies, because “we want them to consider us for business”.
“We also want to dispel the myth that we only stand for taking jobs,” he said.
Drawing on the Aussie maxim of a “fair go”, Mathur said India isn’t just a cheaper software development option.
“The Indian software industry has matured, we are moving up the value chain,” he said pointing out that the delegation of 13 Indian companies that arrived in Australia last week had all achieved CMM level 3.
“We want to be a mature and sustainable industry; India is not just about cost, we want to be about innovation.”
Mathur claims industry and jobs have grown in Australia as a result of offshoring.
“The money Australian companies save is re-invested locally to fuel growth; we are committed to this country,” he said.
Referring to its IT services rival IBM, Mathur said it doesn’t have the same perception problems, which “isn’t fair”.
“Admittedly [IBM] has been here for a long time but it gets a much easier ride,” he said.