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Prioritisation: CIOs will clearly have to identify the most critical projects that are aligned to the organisation·s business goals; those will need to stay on track and others might have to be deferred or de-prioritised. 2. Cost rationalisation: IT managers will reassess costs: power utilization, real-estate impacts, bandwidth, software/hardware license costs, staffing, exploration of lease versus buy options, optimization of outside services spend and identification of what works best in terms of returnon-investment and total cost of ownership 3. Emphasis on efficiency will compel CIOs to realign and streamline IT resources, people and processes. Re-alignment of computing resources almost becomes a way of life. 4. More for less: Business leaders will expect IT leaders and managers to be more creative and innovative with the IT investments as budgets reduce. 5. Data centre consolidation: This will be high on every leader·s agenda to ensure optimal utilisation of existing resources and assets. Virtualisation will play a big role in the near future as IT organisations morph into more and more of a services management framework. 6. Regulatory compliance will continue to be key especially as organisations continue to globalise; operating in different geographies and eco-systems will place a lot of emphasis on doing the right thing and on meeting localisation needs. 7. Quality assurance: Business will expect high standards of quality as usual; and despite strains on IT resources, quality cannot be compromised. Operational excellence is even more vital in environments such as what we have now. tough economic 8. Green IT: Going green marries corporate social responsibility with cost management. CIOs will need to closely assess the cost benefits associated with green practices so they are justified and stay on course. 9. Infrastructure resilience and security: These are priorities for any CIO but managing and planning for this in tough times will be a challenge. Physical security is also a priority apart from data security. 10. Legacy systems management: Integrating legacy applications and making them work with new systems has always been and will continue to be a challenge. In environments such as what as what we are facing now, retiring unwanted and under-utilized-legacy applications is a big cost saving for organisations.
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Business productivity and cost reduction IT and business alignment Business agility and speed to market Business process re-engineering IT cost reduction IT reliability and efficiency IT strategic planning Revenue generating IT innovations Security and privacy CIO leadership role
1 million people by 2008. appreciating Rupee against US Dollar. denting the earnings of the ITeS-BPO industry in India.3 per cent higher yo. and with the high attrition rates.y. it is posing a big challenge. It is observed that an average Indian call centre employee works with a company for 11 months. With attrition rates ranging between 25-40 per cent in the ITes-BPO industry. there are several external challenges like the growing debate in the western world against outsourcing. y y Rising Attrition Rate: High attrition rates in the ITeS-BPO segment is one of the major concerns for the companies. It is estimated that every one per cent rupee appreciation against the US Dollar hits the ITeS-BPO companies¶ operating margins by 20-30 basis points (bps).Attracting and retaining new customer Expanding current customer relationships Creating new products or services: innovation Reducing enterprise cost Improving business processes Expanding into new markets or geographies Increasing the use of information and analytics Consolidating business operations Targeting markets and customers more effectively Managing change initiatives Improving enterprise workforce effectiveness The Indian ITeS-BPO industry has been on a strong growth trajectory for the last decade. The continuous rupee appreciation would impact ITeS-BPO industry earnings. It is expected that the Indian ITeS-BPO industry would employ around 1. regulation etc. which is resulting in shortage of quality human resources. companies are increasingly poaching from their competitors. However at the same time the industry needs to tackle various issues related to operation. The industry has achieved several milestones in the past and is well placed to bank on emerging opportunities. This might provide an opportunity for other emerging countries like China and Philippines to gain shares in the global market. . This chapter touches upon several key issues and challenges. where as an average UK call center employee stays in a company for 3 years. Appreciation of the Rupee: As of mid Oct 07. Apart from the loss of skill sets. the Rupee-US Dollar exchange rate was 12. compounding the problem further. the cost of recruitment and training represent additional expenditure for the ITeS-BPO firms. Further.
With dissimilarity in tax regime. According to NASSCOM. just behind India.Attracting and retaining new customer and expanding current customer relationships 2.CIO leadership role 11. China has advantages in terms of cost and available infrastructure facilities. the existing STPI units would opt to reinvent themselves as SEZ units. Emergence of China: 13. Therefore. Expanding into new markets or geographies 6. Rising Attrition Rate 8.Increase usage of analytics . It should also be kept in mind that low cost competitors like China are emerging rapidly. China may catch up with India¶s position in the global outsourcing market in the long run. Improving business processes 5.Note: Oct 07 exchange has been taken on 18th Oct 07 Source: RBI y y End of Tax benefits at STPI: Uncertainty about continuation of the tax holidays in 2009 may slow down the industry growth.Reducing enterprise cost 4.Security and privacy 7.Managing change initiatives 12. 1. According to A T Kearney¶s Global Service Location Index 2007. unless India takes precautionary measures. Emergence of China: China has been emerging as one of the favourable outsourcing destinations in the global outsourcing landscape. the software services revenue in China is expected to reach US$ 20 billion by 2010 from around US$ 12. China is aggressively taking steps to overcome the shortcomings in terms of required language skills. Further.Creating new products or services: innovation 3. Consolidating business operations 15.3 billion in 2006. Appreciation of the Rupee: 9.Improving enterprise workforce effectiveness 14.56. China secured second position with a total score of 6.Goverment Issues (End of Tax benefits at STPI: ) 10.
the wave of consolidation as several large M&A deals were scripted in the industry High levels of absorption: The rapid growth of Indian ITES-BPO in the last eighteen months has contributed to a continued mismatch between the demand and supply of experienced resources in the industry. 5) Hybrid-pricing models Onshore expansion to strengthen global delivery capabilities: According to Gartner. clients and revenues. Indian ITES-BPO companies are acquiring companies in the U.S. Consolidating business operations Trends in Indian ITES-BPO market Continued market consolidation: The last eighteen months have been a period of significant market activity for the ITES-BPO sector in India. Even so. Indian ITES-BPO added approx. Coupled with the growing stock of firms expanding their offshore initiatives in India. with ready resources. Vendor maturity ± managing people risk: In spite of the relatively high people risk ± attributed to the high turnover and attrition ± Indian companies displayed increasing maturity as companies deployed innovative employee retention strategies. 2) Per seat or full time employee (FTE) per month.Emergence of China and other Economies 3. demand for experienced professionals outpaced their supply and attrition levels in the industry remain between 25-40% . This growing . access to a new set of skills or domain and process expertise in the target market. The most commonly adopted pricing models include: 1) Per-unit time / variable costing (per seat. Appreciation of the Rupee Operational Effectiveness External Effectiveness 1.Rising Attrition Rate 1. and other locations with several objectives. Government Issues (End of Tax benefits at STPI: ) 2.). Security and privacy 6. Consequently employment generation and attrition levels remain high.Cost Reduction Revenue Generation 1. etc. Expanding into new markets or geographies 3. Creating new products or services: innovation 4. by having a strong local presence beyond just a sales office. Improving enterprise workforce effectiveness 2. These include access to a new market beyond just a toe-hold. per hour. educational guidance and assistance and a greater emphasis on improving the quality of work-life Maturity pricing and engagement models: The maturity of the third-party model has brought with it a variety of pricing and engagement models. 3) Activity based billing. access to a new technology or intellectual property and also greater credibility with target clients.Improving business processes 1.000 jobs in FY 2003-04 ± with the number expected to double in the current fiscal. 74.Reducing enterprise cost 2. Managing change initiatives 3. 4) Gain-share models.Attracting and retaining new customer and expanding current customer relationships 2. CIO leadership role 5. Increase usage of analytics 4. These included ± employee recognition schemes. career planning services.
Time difference between India and America is approximately 12 hours. SEI CMM etc. Following Quality Standards such as ISO 9000. Opportunities Threats Lack of data security systems Countries like China and Philippines with qualified workforce making efforts to overcome the English language barrier IT development concentrated in a few cities only Increasing number of working age people India 's well developed soft infrastructure Upcoming International Players in the market . Adobe. Low wages benefit will soon come to an end. Oracle. English-speaking professionals Cost competitiveness Quality telecommunications infrastructure Indian time zone (24 x 7 services to the global customers).trend further highlights the transformation of offshore outsourcing to global Strengths Highly skilled human resource Low wage structure Quality of work Initiatives taken by the Government (setting up Hi-Tech Parks and implementation of e-governance projects) Many global players have set-up operations in India like Microsoft. Weaknesses Absence of practical knowledge Less Research and Development Contribution of IT sector to India 's GDP is still rather small. Employee salaries in IT sector are increasing tremendously. which is High quality IT education market beneficial for outsourcing of work. etc.
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