Patni's success defines a new theory, which proves the proportional relationship between capability and revenue
by Shyamanuja Das Global Services
The rewards for developing capability in engineering services at a time when most offshore service providers were scaling up application development and maintenance services have come to Patni in the form of consistent growth. The last three years have seen the contribution of this business grow consistently — from 4.6% in 2004 to close to 11% in the first three quarters of 2006. This does not include the revenue from software product development and testing services targeted at the independent software vendors.
While Patni targets multiple verticals within product engineering services, medical electronics segment remains its largest segment, with clients such as St. Jude Medical and Toshiba. Patni has stepped up its thrust on consumer electronics and ASICs, having acquired ZaiQ Technologies, a design and verification company, to enhance its capability in this area. Patni has invested in developing domain expertise in most verticals. For example, it employs doctors to train its development and solution teams working on medical electronics. It has also invested in developing tools in areas where open standards are available (such as consumer electronics), thus shortening product development lifecycles and saving cost.
Product engineering is a high margin, fast growing area and the company’s early leadership heralds well for it. The company’s rationale of treating commercial software engineering as a separate service line will be watched carefully by its competitors and customers.
Top 5
1.
Patni Computer Systems
2.
HCL Technologies
3.
Tata Consultancy Services
4.
Infosys Technologies
5.
Headstrong
S T A T S
CEO: N. K. Patni
Skill set: System, board, ASIC, electro-mechanical, applications and embedded software design, quality, compliance and regulatory testing, prototyping
Verticals: Medical and consumer electronics, industrial automation, semiconductors
Customers: St. Jude Medical, Toshiba, Hitachi, Emerson
Delivery centers: India, U.S., U.K.
Employees: 13,500
Revenue: $575,000,000 (est. 2006)
Year founded: 1978
Website: www.patni.com
1/31/2007
Top 10 Specialty Application Development Providers — Winner Polaris
Polaris has been able to grab the top position for the second time as well
by Juhi Bhambal Global Services
This is Polaris’ second consecutive Global Services 100 win in the specialty applications development category. What did the company do right in the last year to retain its top spot?
It sought to specialize itself further by setting up delivery centers focusing on investment banking (Hyderabad, India), retail banking (Mumbai, India) and corporate banking (Chennai, India). The 2,000 staff at Hyderabad is already servicing seven of the top ten global investment banks. Because of its specialization strategy, Polaris commands 10%–15% premium on its services compared to competition.
Moreover, unlike most other Indian service providers in the financial domain that service primarily U.S. customers, Polaris has a global portfolio. While the industry averages 60% U.S.-based clients, Polaris has only 40%. It brings in an additional 30% each from Europe and Asia-pacific.
The company has also worked to expand its client portfolio. Until last year it had a heavy dependence on the Citi Group, with 60% of its revenues coming from it. This year that has come down to approximately 45%.
Going forward, acquisition is ruled out because of the super-specialty nature of the company, and growth will have to come organically. With the IT budget of its client portfolio being $40 billion and the company’s revenue at $200 million, Polaris is confident that it will.
Top 10
1.
Polaris
2.
Softtek
3.
Darwin Suzsoft
4.
i-flex solutions
5.
I.T. UNITED
6.
Scicom (MSC) Berhad
7.
Etech
8.
Globant
9.
ITC Infotech
10.
Zensar Technologies
S T A T S
CEO: Arun Jain
Skill set: Applications development
Verticals: Banking, financial services
Customers: Citi Group, GE, Bear Stearns
Delivery centers: India
Employees: 6,500 (approx.)
Revenue: $179,520,000 (est. 2006)
Year founded: 1993
Website: www.polaris-america.com
by Juhi Bhambal Global Services
This is Polaris’ second consecutive Global Services 100 win in the specialty applications development category. What did the company do right in the last year to retain its top spot?
It sought to specialize itself further by setting up delivery centers focusing on investment banking (Hyderabad, India), retail banking (Mumbai, India) and corporate banking (Chennai, India). The 2,000 staff at Hyderabad is already servicing seven of the top ten global investment banks. Because of its specialization strategy, Polaris commands 10%–15% premium on its services compared to competition.
Moreover, unlike most other Indian service providers in the financial domain that service primarily U.S. customers, Polaris has a global portfolio. While the industry averages 60% U.S.-based clients, Polaris has only 40%. It brings in an additional 30% each from Europe and Asia-pacific.
The company has also worked to expand its client portfolio. Until last year it had a heavy dependence on the Citi Group, with 60% of its revenues coming from it. This year that has come down to approximately 45%.
Going forward, acquisition is ruled out because of the super-specialty nature of the company, and growth will have to come organically. With the IT budget of its client portfolio being $40 billion and the company’s revenue at $200 million, Polaris is confident that it will.
Top 10
1.
Polaris
2.
Softtek
3.
Darwin Suzsoft
4.
i-flex solutions
5.
I.T. UNITED
6.
Scicom (MSC) Berhad
7.
Etech
8.
Globant
9.
ITC Infotech
10.
Zensar Technologies
S T A T S
CEO: Arun Jain
Skill set: Applications development
Verticals: Banking, financial services
Customers: Citi Group, GE, Bear Stearns
Delivery centers: India
Employees: 6,500 (approx.)
Revenue: $179,520,000 (est. 2006)
Year founded: 1993
Website: www.polaris-america.com
Top 10 Best Performing IT Service Providers — Winner Tata Consultancy Services
This year the fourth largest IT-services company in the world jumps astoundingly — from the seventh position to the top position — and comes out as a best performing IT-services provider
by Juhi Bhambal Global Services
TCS, which aspires to top 10 status among the world’s leading service providers, is on the verge of reaching its goal. It is already the fourth largest IT-services company in the world terms of market cap, fifth largest in terms of profits, sixth largest in terms of employees and 12th largest in terms of revenue, according to company sources.
Its focus on large deals and entering the non-U.S. market is likely to take this Indian company further still. While large deals have come to be considered relatively less profitable because of lower margins, TCS derives strategic advantage out of them. It uses its IT-services offerings in large deals to cross sell its other offerings — consulting, BPO, engineering and infrastructure.
On the non-U.S. front, TCS is establishing its presence in Europe, with 2005’s $244 million ABN Amro deal being one of its biggest wins on the Continent. Realizing that Europe is not one, but several, markets, TCS follows a strong localization strategy there. TCS is also one of the few IT services companies that is actively working to address Japan — the second largest IT market by spend after the U.S. It has set up a center dedicated in the Indian city of Calcutta to servicing Japanese customers. The center is already servicing 12 Japanese clients. The company’s latest non-U.S. win has come from Banco Pichincha, Ecuador’s largest private bank. This is a $140 million deal for five years.
Top 10
1.
Tata Consultancy Services
2.
Cognizant Technology Solutions
3.
Infosys Technologies
4.
HCL Technologies
5.
Neoris
6.
Patni Computer Systems
7.
MindTree Consulting
8.
Politec
9.
Satyam Computer Services
10.
Wipro Technologies
S T A T S
CEO: S. Ramadorai
Skill set: Applications development, business-process transformation
Verticals: Banking, financial services, manufacturing, telecom
Customers: ABN Amro, American Express, Verizon Data Services
Delivery centers: India, China, U.S., U.K., South Africa, Latin America, Europe, Japan
Employees: 83,500
Revenue: $3 billion (est. 2006)
Year founded: 1968
Website: www.tcs.com
by Juhi Bhambal Global Services
TCS, which aspires to top 10 status among the world’s leading service providers, is on the verge of reaching its goal. It is already the fourth largest IT-services company in the world terms of market cap, fifth largest in terms of profits, sixth largest in terms of employees and 12th largest in terms of revenue, according to company sources.
Its focus on large deals and entering the non-U.S. market is likely to take this Indian company further still. While large deals have come to be considered relatively less profitable because of lower margins, TCS derives strategic advantage out of them. It uses its IT-services offerings in large deals to cross sell its other offerings — consulting, BPO, engineering and infrastructure.
On the non-U.S. front, TCS is establishing its presence in Europe, with 2005’s $244 million ABN Amro deal being one of its biggest wins on the Continent. Realizing that Europe is not one, but several, markets, TCS follows a strong localization strategy there. TCS is also one of the few IT services companies that is actively working to address Japan — the second largest IT market by spend after the U.S. It has set up a center dedicated in the Indian city of Calcutta to servicing Japanese customers. The center is already servicing 12 Japanese clients. The company’s latest non-U.S. win has come from Banco Pichincha, Ecuador’s largest private bank. This is a $140 million deal for five years.
Top 10
1.
Tata Consultancy Services
2.
Cognizant Technology Solutions
3.
Infosys Technologies
4.
HCL Technologies
5.
Neoris
6.
Patni Computer Systems
7.
MindTree Consulting
8.
Politec
9.
Satyam Computer Services
10.
Wipro Technologies
S T A T S
CEO: S. Ramadorai
Skill set: Applications development, business-process transformation
Verticals: Banking, financial services, manufacturing, telecom
Customers: ABN Amro, American Express, Verizon Data Services
Delivery centers: India, China, U.S., U.K., South Africa, Latin America, Europe, Japan
Employees: 83,500
Revenue: $3 billion (est. 2006)
Year founded: 1968
Website: www.tcs.com
Top 10 Best Performing Managed Services Providers — Winner Affiliated Computer Services
Last year ACS was in the news due to bagging a large number of renewed contracts, and this year, which's just started, the company now makes the news by winning the title of "Best Performing Managed Services Provider"
by Shyamanuja Das Global Services
The fact that ACS has quickly ramped up global delivery capability by building a large India center and acquiring companies in this space has gone in its favor. This, along with customer intimacy and a depth of execution, helped the company win the highest number of new and renewal contracts than any other company in this segment lasr year.
These include contracts from major corporations such as Burger King, Genworth Financial, General Motors, Hallmark, Ingram Micro, McDonald’s and Miller Brewing.
Unlike in application development and consulting engagements, which are project based and are awarded on the basis of many non-delivery factors, managed services are almost always decided on responsiveness and the ability to execute at ground level. So even while private-equity players targeted ACS for a buyout in early 2006 and when a backdating probe forced its then CEO Mark King and a few other senior officers to resign, it never affected the companys’ business performance.
ACS has ITIL-based methodologies that have earned it the ISO 20000 certification, a governance model that fits both single and multi-source agreements. While ACS’ total base of managed services customers stands at more than 300, the company needs to improve in terms of flexibility, market reach (it is still U.S-centered) and a more decentralized global delivery like IBM and Accenture.
Top 10
1.
Affiliated Computer Services
2.
Sutherland Global Services
3.
Tata Consultancy Services
4.
Perot Systems
5.
Infosys Technologies
6.
HCL Technologies
7.
Neoris
8.
Cognizant Technology Solutions
9.
Ness Technologies
10.
Microland
S T A T S
CEO: Lynn Blodgett
Skill set: Business-process transformation, infrastructure, hosting
Verticals: Government, health care, banking, financial Services
Customers: MeadWestvaco, GlaxoSmith-Kline, Hallmark, McDonald's, WellPoint
Delivery centers: U.S., India, Mexico, Ghana
Employees: 55,000
Revenue: $1.4 billion (est. 2006)
Year founded: 1988
Website: www.acs-inc.com
by Shyamanuja Das Global Services
The fact that ACS has quickly ramped up global delivery capability by building a large India center and acquiring companies in this space has gone in its favor. This, along with customer intimacy and a depth of execution, helped the company win the highest number of new and renewal contracts than any other company in this segment lasr year.
These include contracts from major corporations such as Burger King, Genworth Financial, General Motors, Hallmark, Ingram Micro, McDonald’s and Miller Brewing.
Unlike in application development and consulting engagements, which are project based and are awarded on the basis of many non-delivery factors, managed services are almost always decided on responsiveness and the ability to execute at ground level. So even while private-equity players targeted ACS for a buyout in early 2006 and when a backdating probe forced its then CEO Mark King and a few other senior officers to resign, it never affected the companys’ business performance.
ACS has ITIL-based methodologies that have earned it the ISO 20000 certification, a governance model that fits both single and multi-source agreements. While ACS’ total base of managed services customers stands at more than 300, the company needs to improve in terms of flexibility, market reach (it is still U.S-centered) and a more decentralized global delivery like IBM and Accenture.
Top 10
1.
Affiliated Computer Services
2.
Sutherland Global Services
3.
Tata Consultancy Services
4.
Perot Systems
5.
Infosys Technologies
6.
HCL Technologies
7.
Neoris
8.
Cognizant Technology Solutions
9.
Ness Technologies
10.
Microland
S T A T S
CEO: Lynn Blodgett
Skill set: Business-process transformation, infrastructure, hosting
Verticals: Government, health care, banking, financial Services
Customers: MeadWestvaco, GlaxoSmith-Kline, Hallmark, McDonald's, WellPoint
Delivery centers: U.S., India, Mexico, Ghana
Employees: 55,000
Revenue: $1.4 billion (est. 2006)
Year founded: 1988
Website: www.acs-inc.com
Meet the 2007 Global Services 100
ourcing the world's most innovative providers of business and technology services starts with our executive annual listing of the top 100 — prepared in conjunction with neoIT — that identifies leaders in 11 service-delivery areas spanning business process outsourcing, IT outsourcing, engineering and customer care
by Rusty Weston
The burgeoning practice of global services — distributing business and Information Technology (IT) work beyond your country’s borders — is beginning to mature. The signs aren’t quite as obvious — or awkward — as puberty, but the industry is evidently hitting its stride. David Bass, Manager, Application Development and Maintenance, Time Warner Customer Service, notes that “The roles of internal employees have changed,” as a result of his company’s global initiatives.
“We encourage our employees to enhance their knowledge of cutting-edge technology,” says David Bass. “We need employees to be system analysts, business analysts and architects and not to do software coding any more.” Apparently the companies Time Warner hires to handle that load are more than happy to accommodate the work.
Increased market competition is also evident. “The globalization of services is at a torrid pace with focus on greater value generation,” says Atul Vashistha, CEO, neoIT, a services globalization consultancy.
While high margin, transformational consulting work is where most service providers aspire to go, the lure of steady hosting and maintenance initiatives, back-office paperwork and customer contact centers is money that is rarely left on the table. While no consensus exists about industry consolidation in 2007, there’s widespread evidence that executives with global sourcing experience will be much in demand by organizations looking to exploit its enormous potential.
Apparently customers are pleased. A recent report by Capgemini and IDC titled From Transactional to Strategic Business Process Outsourcing (BPO), finds that:
• 85% of companies are saving at least as much as they invest in outsourcing
• 63% of companies are investing the savings back into the organization to improve operational performance, drive innovation or support growth
• 44% of businesses surveyed said the most important criterion in selecting a BPO provider is its ability to deliver transformational services.
Not surprisingly, service providers are sanguine about 2007. N. Chandrasekaran, Tata Consulting Group’s EVP and Head of Global Operations, expresses optimism about the industry’s prospects this year. Chandrasekaran cites a Forrester Research estimate that U.S. purchases of IT goods and services will grow by five percent this year, reaching $1.55 trillion. While such numbers are tricky to substantiate, one look at TCS’ financial statement speaks volumes about the rapid growth of this industry.
“In our most recent quarterly earnings (Q3 FY 2007), we added more than 7,800 employees, bringing our total strength to 83,500 employees, coming from 60 different nationalities,” boasts Tata Consulting Group’s Chandrasekaran.
More impressively, perhaps, TCS was the first Indian service provider to generate one billion dollars in a quarter. And the company has doubled in size every 30 months, he adds.
Yet Chandrasekaran ventures a bit too far with his assertion that their customers are consolidating their IT-services providers. As we have seen and reported in the past year, multisourcing deals are now quite common.
What’s rare is to hear a large corporate customer putting all of its proverbial eggs (IT projects) into one provider’s basket.
But while the industry itself is rapidly maturing there are a fair amount of mergers and acquisitions in the services field. But the long-expected consolidation of service providers has not come to pass.
What Margins Indicate
Outsourcing has moved past early adoption to mainstream acceptance asserts James Friedman, a senior analyst covering business services at Susquehanna Financial Group, an institutional research, brokerage and trading firm. One reason is that there is “significant acceleration in SMBs [Small and Mid sized business] outsourcing, though as a rule SMBs are more inclined to outsource onshore.”
And there are several subtle drivers as well, he notes, ones that don’t get talked about very much in public. “Customers are increasingly aware that their competitors are outsourcing,” says Friedman. And this: “Customers are also aware that the dollar continues to slide against the Indian Rupee, the Philippine Peso and even the Canadian Dollar (long term).
The demand for services is so healthy, he says, that “Offshore vendors have been able to raise prices in the last six months thanks to the high quality and perceived value of their work.” On his list of service providers with escalating prices are perennial Global Services 100 leaders such as Infosys, Patni, Satyam, Cognizant and Ness among others.
But not all market analysts see the world through rose-colored lenses. Rick Saia, Research Analyst/IT Services at Aberdeen Group, expects just the opposite to occur. “With the market for outsourced IT services more global in nature, a buyer’s market looms in 2007 since the broader competitive field will create downward pressure on prices,” predicts Saia. “Providers in other parts of the world, particularly Eastern Europe, are finding better seats in the IT services arena.”
Yet Saia believes that an escalating percentage of IT work will go nearshore rather than offshore. “This will not only improve communication between buyer and provider, but also serve as a help to IT organizations that outsource in order to access superior expertise,” he adds.
While Canada has come to be synonymous with “nearshore” in the United States, increasingly, Mexican companies are competing for work that might have gone north — or all the way to Asia. Alejandro Camino, VP, Marketing and Communications at Softtek, a services provider in Mexico, believes that he understands why Mexico is finally getting more attention. “In a nutshell,” he explains, “nearness plus world-class efficient quality, as simple and as complex as that.”
While there are many ways for service providers to separate themselves from the pack, a good customer reputation is a can’t-miss proposition. Affiliated Computer Systems (ACS), a pace-setter in our annual Global Services 100 study, strives for customer intimacy despite its colossal size and global presence. Al Denis, VP, Solutions Architecture, says, “We adapt to our [customer’s] way of doing business, which translates differently for each client, such as: Offering services in the global regions where they need us; offering pricing terms that are variable, fixed or transactional based on their business; being agnostic in terms of hardware platforms supported; or working in a multi-provider setting.”
Eleven Envelopes, Please
In a typical scenario of companies tapping the global-labor market, the driver has been cost savings or an operational expansion into a new region. In 2007 the more common justification is a lack of available skills. As you might expect, the vast majority of companies prefer to outsource rather than invest in an offshore delivery center with high fixed costs, tax and liability issues. Risk avoidance doesn’t grab the headlines, but it’s also contributing factor in the use of third-party services, even outside of the country.
Yet, even for resource-rich companies, tracking the world market for business and technology service providers is a complicated and expensive undertaking. Only a minority of organizations approach global sourcing in a systematic way with a formal program-management team sending scouts to far-flung destinations.
In this spirit we teamed up with neoIT for the third consecutive year to field an in-depth study of service providers spanning four continents. We vetted the providers much the way a program management office engages in an request for proposals, and selected winners in 11 categories based upon the strengths of the information they provided us, plus what we were able to glean from customers and industry analysts. We organized the winners into three basic categories: Customer and Business Process Awards; Regional and Emerging Provider Awards; and Tech-
Delivery Awards.
What makes these firms more special than the ones that ranked just behind them or those that finished out of the running in our respective categories? These firms demonstrated a pattern of market leadership, innovation and outstanding customer service. If and when your organization conducts a similar program to select service providers in a category such as engineering services, you can almost be certain that your results will vary — no two customer’s weighting systems are the same because everyone has different biases and priorities.
Sourcing the 2007 GS100
During the course of the Global Services 100 study, fielded in conjunction with neoIT, a consulting firm specializing in services globalization, we collected over 250 data points from 147 respondents. The Global Services 100 includes large multinational service providers, emerging BPO providers, vertical specialists and leading customer-service firms.
The data points were clustered into four categories that included operations, services, client data and human-resource policies. Essays also play a significant role in helping us understand providers’ strategies and accomplishments. Respondents to the study included firms from 18 countries, representing the most popular service-delivery destinations such as India, China, the Philippines, Malaysia and Mexico.
Rather than rank each company from one to 100, the approach used in this study is intended to provide users a head start in the quest to maintain updated ‘short lists’ of the leading providers of globally delivered services, ranging from BPO and ITO to regions and emerging leaders. The methodology employed by the study to arrive at each Top List is based on a rigorous frequency analysis followed by a proprietary weighting system allocated amongst the four major categories. The weighting system considers the client’s perspective during the buying process. Sample weights for the IT, BPO and call center lists are presented in the figure below. This year, in addition to the Top Lists categories from previous years, we have added an engineering list to reflect the growing trend and interest in leveraging global talent for these types of services.
Similar to an request for information process, companies that took the time to thoroughly complete entry forms and essays tended to score higher than those that did not. Through the data-collection process, the study aims to assess not just the actual responses but also how companies respond as an indicator of their ability to do so in actual client situations. The judges also paid particular attention to the quality and messaging of respondents’ essays on a range of subjects including competitive differentiation, client satisfaction and human development.
— By Eugene Kublanov, neoIT and
Rusty Weston, Global Services
While high margin, transformational consulting work is where most service providers aspire to go, the lure of steady hosting and maintenance initiatives, back-office paperwork and customer contact centers is money that is rarely left on the table.
Global Services 100 Award 2007: Top 100 Companies
Meet the Global Services 100
Company CEO URL
24/7 Customer P.V. Kannan www.247customer.com
Accenture Bill Green www.accenture.com
Affiliated Computer Services Mark A. King www.acs-inc.com
Augmentum Leonard Liu www.augmentum.com
Auriga Alexis Sukharev www.auriga.com
Bleum Eric Rongley www.bleum.com
Caliber Point Ashok Bildikar www.caliberpoint.com
Cambridge Solutions Chris Sinclair www.cambridgeworldwide.com
Capgemini Paul Hermelin www.capgemini.com
CGI Group Michael E. Roach www.cgi.com
ClientLogic David Garner www.clientlogic.com
Cognizant Technology Solutions Francisco D'Souza www.cognizant.com
Convergys James F. Orr www.convergys.com
Covansys Rajendra B. Vattikuti www.covansys.com
CPM Antonio Carlos Rego Gil www.cpminternational.com
Darwin Suzsoft James Tong www.darwinsuzsoft.com
DataArt Michael Zaitsev www.dataart.com
DBA Danilo Meth www.dba.com.br
Dextra Technologies Daniel Chavez www.dextratech.com
e4e Somshankar Das www.e4e.com
ea Consulting Asia Pacific Chin King Wong www.eacap.com
EDS Michael H. Jordan www.eds.com
EPAM Systems Arkadiy Dobkin www.epam.com
Etech Dilip Barot www.etechinc.com
ExlService Holdings Vikram Talwar www.exlservice.com
FCG Software Services Subramaniam Ramachandran www.fcg.com
Freeborders John Cestar www.freeborders.com
Genpact Pramod Bhasin www.genpact.com
Globant Martin Migoya www.globant.com
HCL Technologies Shiv Nadar www.hcltech.com
Headstrong Arjun Malhotra www.headstrong.com
Hispanic Teleservices Alberto Fernandez www.htc.to
HTC Global Services Madhava Reddy www.htcinc.com
Hinduja TMT Partha D Sarkar www.hindujatmt.com
I.T. United Cyrill Eltschinger www.ituc.com
IBA Group Sergei Levteev www.iba-it-group.com
IBM Samuel J. Palmisano www.ibm.com
ICT Group John J. Brennan www.ictgroup.com
i-flex solutions Deepak Ghaisas www.iflexsolutions.com
Infinite Computer Solutions Upinder Zutshi www.infics.com
Informatica Integral Empresarial Antonio Velasco www.sinersys.com.mx
Infosys Technologies Nandan M Nilekani www.infosys.com
Innominds Software Rao Vemula www.innominds.com
Intelenet Global Services Susir Kumar www.intelenetglobal.com
Intetics Boris Kontsevoi www.intetics.com
ITC Infotech Sanjiv Puri www.itcinfotech.com
Kepler - Rominfo Petrisor Guta www.kepler-rominfo.com
Knoah Solutions Myneni www.knoah.com
Lason Ronald D. Risher www.lason.com
Lohika Systems Daniel Dargham www.lohika.com
Longtop Eric Liang www.longtopinternational.com
Luxoft Dmitry Loschinin www.luxoft.com
marketRx Jaswinder S. Chadha www.marketrx.com
Mastek Sudhakar Ram www.mastek.com
MERA Networks Dmitry M. Ponomarev www.meranetworks.com
Microland Pradeep Kar www.microland.com
MindTree Consulting Ashok Soota www.mindtree.com
Mistral Software Anees Ahmed www.mistralsoftware.com
Motif John Coker www.motifinc.com
MphasiS Jaithirth Rao www.mphasis.com
NCO Group Michael Barrist www.ncogroup.com
Neoris Claudio Muruzabal www.neoris.com
Ness Technologies Raviv Zoller www.ness.com
Neusoft Group Jiren Liu www.neusoft.com
NIIT SmartServe Paul Barrow www.niitsmartserve.com
Objectiva Software Solutions Douglas Winter www.objectivasoftware.com
Ocwen Financial William C. Erbey www.ocwen.com
OfficeTiger Randolph Altschuler and Joseph Sigelman www.officetiger.com
Outsource Partners International Clarence T. Schmitz www.opiglobal.com
Patni Computer Systems N.K. Patni www.patni.com
Perot Systems Peter Atlabef www.perotsystems.com
Polaris Arun Jain www.polaris-america.com
Politec HÉlio Oliveira www.politec.com
Promantra Synergy Solutions Praveen Vadlamudi www.promantra.net
QuEST Ajit A. Prabhu www.quest-global.com
Sapient Jerry Greenberg www.sapient.com
Satyam Computer Services B. Rama Raju www.satyam.com
Scicom (MSC) Berhad Leo Ariyanayakam www.scicom-intl.com
Sierra Atlantic Raju Reddy www.SierraAtlantic.com
Sinapsis Technologies Gerardo Rodriguez www.sinapsis.com
SnT Global David Wong www.sntglobal.com
SoftServe Taras Kytsmey www.softservecom.com
Softtek Blanca TreviÑo www.softtek.com
Sonata Software B. Ramaswamy www.sonata-software.com
SPI Technologies Ernest Cu www.spi-bpo.com
StarSoft Development Labs Nick Puntikov www.starsoftlabs.com
Stream Toni Portmann www.stream.com
Summit HR Worldwide Ranjan Sinha www.summithrww.com
Sutherland Global Services Dilip R. Vellodi www.suth.com
Symphony Services Gordon Brooks www.symphonysv.com
Syntel Bharat Desai www.syntelinc.com
Tata Consultancy Services S. Ramadorai www.tcs.com
TransWorks Information Services Atul Kunwar www.transworks.com
Unisys Joseph W. McGrath www.unisys.com
vCustomer Sanjay Kumar www.vcustomer.com
Vee Technologies Chocko Valliappa www.veetechnologies.com
Vsource Asia Jack Cantillon www.vsourceasia.com
Wipro Technologies Azim H. Premji www.wipro.com
WNS Neeraj Bhargava www.wnsgs.com
Zensar Technologies Ganesh Natarajan www.zensar.com
by Rusty Weston
The burgeoning practice of global services — distributing business and Information Technology (IT) work beyond your country’s borders — is beginning to mature. The signs aren’t quite as obvious — or awkward — as puberty, but the industry is evidently hitting its stride. David Bass, Manager, Application Development and Maintenance, Time Warner Customer Service, notes that “The roles of internal employees have changed,” as a result of his company’s global initiatives.
“We encourage our employees to enhance their knowledge of cutting-edge technology,” says David Bass. “We need employees to be system analysts, business analysts and architects and not to do software coding any more.” Apparently the companies Time Warner hires to handle that load are more than happy to accommodate the work.
Increased market competition is also evident. “The globalization of services is at a torrid pace with focus on greater value generation,” says Atul Vashistha, CEO, neoIT, a services globalization consultancy.
While high margin, transformational consulting work is where most service providers aspire to go, the lure of steady hosting and maintenance initiatives, back-office paperwork and customer contact centers is money that is rarely left on the table. While no consensus exists about industry consolidation in 2007, there’s widespread evidence that executives with global sourcing experience will be much in demand by organizations looking to exploit its enormous potential.
Apparently customers are pleased. A recent report by Capgemini and IDC titled From Transactional to Strategic Business Process Outsourcing (BPO), finds that:
• 85% of companies are saving at least as much as they invest in outsourcing
• 63% of companies are investing the savings back into the organization to improve operational performance, drive innovation or support growth
• 44% of businesses surveyed said the most important criterion in selecting a BPO provider is its ability to deliver transformational services.
Not surprisingly, service providers are sanguine about 2007. N. Chandrasekaran, Tata Consulting Group’s EVP and Head of Global Operations, expresses optimism about the industry’s prospects this year. Chandrasekaran cites a Forrester Research estimate that U.S. purchases of IT goods and services will grow by five percent this year, reaching $1.55 trillion. While such numbers are tricky to substantiate, one look at TCS’ financial statement speaks volumes about the rapid growth of this industry.
“In our most recent quarterly earnings (Q3 FY 2007), we added more than 7,800 employees, bringing our total strength to 83,500 employees, coming from 60 different nationalities,” boasts Tata Consulting Group’s Chandrasekaran.
More impressively, perhaps, TCS was the first Indian service provider to generate one billion dollars in a quarter. And the company has doubled in size every 30 months, he adds.
Yet Chandrasekaran ventures a bit too far with his assertion that their customers are consolidating their IT-services providers. As we have seen and reported in the past year, multisourcing deals are now quite common.
What’s rare is to hear a large corporate customer putting all of its proverbial eggs (IT projects) into one provider’s basket.
But while the industry itself is rapidly maturing there are a fair amount of mergers and acquisitions in the services field. But the long-expected consolidation of service providers has not come to pass.
What Margins Indicate
Outsourcing has moved past early adoption to mainstream acceptance asserts James Friedman, a senior analyst covering business services at Susquehanna Financial Group, an institutional research, brokerage and trading firm. One reason is that there is “significant acceleration in SMBs [Small and Mid sized business] outsourcing, though as a rule SMBs are more inclined to outsource onshore.”
And there are several subtle drivers as well, he notes, ones that don’t get talked about very much in public. “Customers are increasingly aware that their competitors are outsourcing,” says Friedman. And this: “Customers are also aware that the dollar continues to slide against the Indian Rupee, the Philippine Peso and even the Canadian Dollar (long term).
The demand for services is so healthy, he says, that “Offshore vendors have been able to raise prices in the last six months thanks to the high quality and perceived value of their work.” On his list of service providers with escalating prices are perennial Global Services 100 leaders such as Infosys, Patni, Satyam, Cognizant and Ness among others.
But not all market analysts see the world through rose-colored lenses. Rick Saia, Research Analyst/IT Services at Aberdeen Group, expects just the opposite to occur. “With the market for outsourced IT services more global in nature, a buyer’s market looms in 2007 since the broader competitive field will create downward pressure on prices,” predicts Saia. “Providers in other parts of the world, particularly Eastern Europe, are finding better seats in the IT services arena.”
Yet Saia believes that an escalating percentage of IT work will go nearshore rather than offshore. “This will not only improve communication between buyer and provider, but also serve as a help to IT organizations that outsource in order to access superior expertise,” he adds.
While Canada has come to be synonymous with “nearshore” in the United States, increasingly, Mexican companies are competing for work that might have gone north — or all the way to Asia. Alejandro Camino, VP, Marketing and Communications at Softtek, a services provider in Mexico, believes that he understands why Mexico is finally getting more attention. “In a nutshell,” he explains, “nearness plus world-class efficient quality, as simple and as complex as that.”
While there are many ways for service providers to separate themselves from the pack, a good customer reputation is a can’t-miss proposition. Affiliated Computer Systems (ACS), a pace-setter in our annual Global Services 100 study, strives for customer intimacy despite its colossal size and global presence. Al Denis, VP, Solutions Architecture, says, “We adapt to our [customer’s] way of doing business, which translates differently for each client, such as: Offering services in the global regions where they need us; offering pricing terms that are variable, fixed or transactional based on their business; being agnostic in terms of hardware platforms supported; or working in a multi-provider setting.”
Eleven Envelopes, Please
In a typical scenario of companies tapping the global-labor market, the driver has been cost savings or an operational expansion into a new region. In 2007 the more common justification is a lack of available skills. As you might expect, the vast majority of companies prefer to outsource rather than invest in an offshore delivery center with high fixed costs, tax and liability issues. Risk avoidance doesn’t grab the headlines, but it’s also contributing factor in the use of third-party services, even outside of the country.
Yet, even for resource-rich companies, tracking the world market for business and technology service providers is a complicated and expensive undertaking. Only a minority of organizations approach global sourcing in a systematic way with a formal program-management team sending scouts to far-flung destinations.
In this spirit we teamed up with neoIT for the third consecutive year to field an in-depth study of service providers spanning four continents. We vetted the providers much the way a program management office engages in an request for proposals, and selected winners in 11 categories based upon the strengths of the information they provided us, plus what we were able to glean from customers and industry analysts. We organized the winners into three basic categories: Customer and Business Process Awards; Regional and Emerging Provider Awards; and Tech-
Delivery Awards.
What makes these firms more special than the ones that ranked just behind them or those that finished out of the running in our respective categories? These firms demonstrated a pattern of market leadership, innovation and outstanding customer service. If and when your organization conducts a similar program to select service providers in a category such as engineering services, you can almost be certain that your results will vary — no two customer’s weighting systems are the same because everyone has different biases and priorities.
Sourcing the 2007 GS100
During the course of the Global Services 100 study, fielded in conjunction with neoIT, a consulting firm specializing in services globalization, we collected over 250 data points from 147 respondents. The Global Services 100 includes large multinational service providers, emerging BPO providers, vertical specialists and leading customer-service firms.
The data points were clustered into four categories that included operations, services, client data and human-resource policies. Essays also play a significant role in helping us understand providers’ strategies and accomplishments. Respondents to the study included firms from 18 countries, representing the most popular service-delivery destinations such as India, China, the Philippines, Malaysia and Mexico.
Rather than rank each company from one to 100, the approach used in this study is intended to provide users a head start in the quest to maintain updated ‘short lists’ of the leading providers of globally delivered services, ranging from BPO and ITO to regions and emerging leaders. The methodology employed by the study to arrive at each Top List is based on a rigorous frequency analysis followed by a proprietary weighting system allocated amongst the four major categories. The weighting system considers the client’s perspective during the buying process. Sample weights for the IT, BPO and call center lists are presented in the figure below. This year, in addition to the Top Lists categories from previous years, we have added an engineering list to reflect the growing trend and interest in leveraging global talent for these types of services.
Similar to an request for information process, companies that took the time to thoroughly complete entry forms and essays tended to score higher than those that did not. Through the data-collection process, the study aims to assess not just the actual responses but also how companies respond as an indicator of their ability to do so in actual client situations. The judges also paid particular attention to the quality and messaging of respondents’ essays on a range of subjects including competitive differentiation, client satisfaction and human development.
— By Eugene Kublanov, neoIT and
Rusty Weston, Global Services
While high margin, transformational consulting work is where most service providers aspire to go, the lure of steady hosting and maintenance initiatives, back-office paperwork and customer contact centers is money that is rarely left on the table.
Global Services 100 Award 2007: Top 100 Companies
Meet the Global Services 100
Company CEO URL
24/7 Customer P.V. Kannan www.247customer.com
Accenture Bill Green www.accenture.com
Affiliated Computer Services Mark A. King www.acs-inc.com
Augmentum Leonard Liu www.augmentum.com
Auriga Alexis Sukharev www.auriga.com
Bleum Eric Rongley www.bleum.com
Caliber Point Ashok Bildikar www.caliberpoint.com
Cambridge Solutions Chris Sinclair www.cambridgeworldwide.com
Capgemini Paul Hermelin www.capgemini.com
CGI Group Michael E. Roach www.cgi.com
ClientLogic David Garner www.clientlogic.com
Cognizant Technology Solutions Francisco D'Souza www.cognizant.com
Convergys James F. Orr www.convergys.com
Covansys Rajendra B. Vattikuti www.covansys.com
CPM Antonio Carlos Rego Gil www.cpminternational.com
Darwin Suzsoft James Tong www.darwinsuzsoft.com
DataArt Michael Zaitsev www.dataart.com
DBA Danilo Meth www.dba.com.br
Dextra Technologies Daniel Chavez www.dextratech.com
e4e Somshankar Das www.e4e.com
ea Consulting Asia Pacific Chin King Wong www.eacap.com
EDS Michael H. Jordan www.eds.com
EPAM Systems Arkadiy Dobkin www.epam.com
Etech Dilip Barot www.etechinc.com
ExlService Holdings Vikram Talwar www.exlservice.com
FCG Software Services Subramaniam Ramachandran www.fcg.com
Freeborders John Cestar www.freeborders.com
Genpact Pramod Bhasin www.genpact.com
Globant Martin Migoya www.globant.com
HCL Technologies Shiv Nadar www.hcltech.com
Headstrong Arjun Malhotra www.headstrong.com
Hispanic Teleservices Alberto Fernandez www.htc.to
HTC Global Services Madhava Reddy www.htcinc.com
Hinduja TMT Partha D Sarkar www.hindujatmt.com
I.T. United Cyrill Eltschinger www.ituc.com
IBA Group Sergei Levteev www.iba-it-group.com
IBM Samuel J. Palmisano www.ibm.com
ICT Group John J. Brennan www.ictgroup.com
i-flex solutions Deepak Ghaisas www.iflexsolutions.com
Infinite Computer Solutions Upinder Zutshi www.infics.com
Informatica Integral Empresarial Antonio Velasco www.sinersys.com.mx
Infosys Technologies Nandan M Nilekani www.infosys.com
Innominds Software Rao Vemula www.innominds.com
Intelenet Global Services Susir Kumar www.intelenetglobal.com
Intetics Boris Kontsevoi www.intetics.com
ITC Infotech Sanjiv Puri www.itcinfotech.com
Kepler - Rominfo Petrisor Guta www.kepler-rominfo.com
Knoah Solutions Myneni www.knoah.com
Lason Ronald D. Risher www.lason.com
Lohika Systems Daniel Dargham www.lohika.com
Longtop Eric Liang www.longtopinternational.com
Luxoft Dmitry Loschinin www.luxoft.com
marketRx Jaswinder S. Chadha www.marketrx.com
Mastek Sudhakar Ram www.mastek.com
MERA Networks Dmitry M. Ponomarev www.meranetworks.com
Microland Pradeep Kar www.microland.com
MindTree Consulting Ashok Soota www.mindtree.com
Mistral Software Anees Ahmed www.mistralsoftware.com
Motif John Coker www.motifinc.com
MphasiS Jaithirth Rao www.mphasis.com
NCO Group Michael Barrist www.ncogroup.com
Neoris Claudio Muruzabal www.neoris.com
Ness Technologies Raviv Zoller www.ness.com
Neusoft Group Jiren Liu www.neusoft.com
NIIT SmartServe Paul Barrow www.niitsmartserve.com
Objectiva Software Solutions Douglas Winter www.objectivasoftware.com
Ocwen Financial William C. Erbey www.ocwen.com
OfficeTiger Randolph Altschuler and Joseph Sigelman www.officetiger.com
Outsource Partners International Clarence T. Schmitz www.opiglobal.com
Patni Computer Systems N.K. Patni www.patni.com
Perot Systems Peter Atlabef www.perotsystems.com
Polaris Arun Jain www.polaris-america.com
Politec HÉlio Oliveira www.politec.com
Promantra Synergy Solutions Praveen Vadlamudi www.promantra.net
QuEST Ajit A. Prabhu www.quest-global.com
Sapient Jerry Greenberg www.sapient.com
Satyam Computer Services B. Rama Raju www.satyam.com
Scicom (MSC) Berhad Leo Ariyanayakam www.scicom-intl.com
Sierra Atlantic Raju Reddy www.SierraAtlantic.com
Sinapsis Technologies Gerardo Rodriguez www.sinapsis.com
SnT Global David Wong www.sntglobal.com
SoftServe Taras Kytsmey www.softservecom.com
Softtek Blanca TreviÑo www.softtek.com
Sonata Software B. Ramaswamy www.sonata-software.com
SPI Technologies Ernest Cu www.spi-bpo.com
StarSoft Development Labs Nick Puntikov www.starsoftlabs.com
Stream Toni Portmann www.stream.com
Summit HR Worldwide Ranjan Sinha www.summithrww.com
Sutherland Global Services Dilip R. Vellodi www.suth.com
Symphony Services Gordon Brooks www.symphonysv.com
Syntel Bharat Desai www.syntelinc.com
Tata Consultancy Services S. Ramadorai www.tcs.com
TransWorks Information Services Atul Kunwar www.transworks.com
Unisys Joseph W. McGrath www.unisys.com
vCustomer Sanjay Kumar www.vcustomer.com
Vee Technologies Chocko Valliappa www.veetechnologies.com
Vsource Asia Jack Cantillon www.vsourceasia.com
Wipro Technologies Azim H. Premji www.wipro.com
WNS Neeraj Bhargava www.wnsgs.com
Zensar Technologies Ganesh Natarajan www.zensar.com
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