Vincent Nair
Managing Principal,
Australia & New Zealand
WIPRO Infotech
CIO Executive Council
AUSTRALIAN CIO DIALOGUES
Will Outsourcing and Off Shoring
do it for your Business?
Vincent Nair
The Agenda
1
2
3
4
5
6
7
Outsourcing Overview
Trends in Outsourcing
Evolution of GDM
India as a Pivot in GDM
India’s Competitive Tool – Why India?
Indian IT Industry – Best Practices
Future Evolution of Global Outsourcing
Differences –
$ Savings
& Technology Savvy
Insource/Outsource/Off
Shore
Up to 50% Budget Savings
Future
Near Shore
/Off Shore
Future
Outsourced but on
Shore
Future
Co Sourced Infrastructure
Future
In Sourced Infrastructure
Current
1
Off Shore
2
3
4
5
Time
(Years)
The CIO Noise in Australia
Peter Mahlar - CIO Coles Myer
“ I want to know what is over the horizon. Don’t talk to me about bits and
bytes. If I am going to invest millions with your company, you need to talk to
me about the Future…”
Peter Holland - Knowledge and Information Systems General Manager
Toyota, Australia
“ The days of an enterprise resource planning system sitting in the backroom
churning away are gone… reducing day-to-day costs of running an IT shop
will be the priority…”
Michelle Tredenick – CIO National Australia Bank
“ Skills shortage in some hot technology areas are looming….we have to
choose to outsource or off shore some of the work
Global Trends in Outsourcing
IT Services & Offshore Market
$ Bn
Unite
d
States
2004
Total Offsho %
IT
red
Servic
es
252.1
7.5 3.0
%
2009 (E)
Offsho
red to
India
%
5.5 74.0
%
Total Offsho %
IT
red
Servic
es
355.0
14.6 4.1
%
1. Offshoring
US and Western
Weste
191.6is a key element
1.7 0.9of outsourcing
1.4 strategy
84.3 in258.1
3.7Europe
1.5
strategy – Is%
a cost, quality, value based %
rn 2. India – A pivot of the offshoring
%
Europdestination
e 3. Trends indicate increasing momentum towards utilizing Indian capabilities in
Asia the future
84.6
0.2 0.3
0.1 62.1
121.5
Pacifi
%
1. Can Australia leverage %
offshoring more?
c 2. Has Australia explored Indian opportunities enough?
Source: IDC
0.9 0.8
%
Outsourcing Trends in Australia
For the most recent infrastructure services for which you have offshored, please select the
types of services you have purchased
India
Strategy (12.0%)
Other (20.0%)
China
Data entry (4.0%)
Development and
design (28.0%)
Training (4.0%)
Phillipines
Singapore
Integration/implem
entation (4.0%)
Support/help desk
(20.0%)
Malaysia
Monitoring/manag
ement (8.0%)
Japan
Note: n=30
New Zealand
1-4%
5-9%
Don’t know
10-14%
others
15-19%
20-24%
0
more than 30%
0
5
10
15
(% of responses)
20
% OF COST SAVINGS EXPERIENCED
5
10
15
20
25
30
(% of responses)
35
40
25
Preference for countries
Source, IDC Australia Offshore Outsourcing Survey, 2005
The CIO Journey
Leading to 2nd Generation
Outsourcing
Evolution of Global Delivery
Paradigm
Future of Global
Delivery
Integrated Delivery
Unified Processes
for Customer Centricity
Geo – Agnostic
virtual delivery
Source: Forrester
India as a Pivot in GDM
Worldwide Offshore IT Services Share
Low Cost Global Delivery Player
by Region, 2004
2.1% 1.7%
3.3%
3.8%
4.5%
2.3%
6.8%
75.5%
Total = $9.8 Bn.
India
CEE
Philippines
Latin America
China
Canada
MEA
Others
India well established on the Global Outsourcing Stage
Source: IDC and Forrester
ICT = India’s Competitive Tool –
Why?
Performance
1
Abundant
Talent
• India has 28% of suitable talent among all cost
competitive offshore locations
• Key stakeholders are taking initiatives to
further enhance India’s talent proposition
Quality &
2 Scaleable
Infrastructure
• Significant primary infrastructure is being built in
leading centres
• ~ 25 million sq feet of Class A real estate was
available in 2005
• End-to-end network uptime for India and other
offshore locations vis-à-vis US levels (~99.95%)
Operational
3
Excellence
• India based players have managed to maintain
quality and cost leadership vis-à-vis other
countries
Conducive
4 Business
Environment
• India’s business environment is competitive
with those in other countries
• Key government policy interventions have
catalyzed growth
Growing
5 Domestic IT/
BPO Market
• Increase in domestic spending on IT
Critical
Ingredients of
India’s success
= Low
Highlights
= High
Source: Nasscom-McKinsey Report 2005, Wipro Estimates
Indian IT Industry – Innovating
Constantly (1/2)
Building complete services portfolio
Pioneering the Global Delivery Model
1.
Indian IT Industry: Value added
Offshoring
1.
2.
Leading IT companies have transformed
into Full Service Providers
2.
Wipro Example: Strong 360º Portfolio
Vertical Focus
Others
10%
Telecom
OEM
17%
Manufact
-uring
12%
Embeded
15%
Telecom
Service
Providers
5%
Energy &
Utilities
11%
Finance
18%
Retail
12%
Custom
App Dev &
Maintenance
30%
R&D
Services
Testing
26%
IT Enabled Services
Consulting
Infrastructure Package Services /
7%
5%
Services Implementation BPO
10%
12%
10%
India pioneered the Global Delivery
Model
Talent Development – A critical
success factor
Wipro Example: Global Delivery
Capabilities
Indian IT Industry – Innovating
Constantly (2/2)
Quality Leadership
1.
2.
Differentiation through Innovation
80 of the world’s 117 SEI CMM Level 5
companies are based in India
R&D centers by GE, Microsoft, IBM,
DELL, CISCO, Intel etc. set up in India
Wipro Example: The Wipro Way
Process
Excellence
Customer
Centricity
Business
Excellence
Personal
Change
People
Management
1. New Service Lines
2.
3.
4.
IP / Point Solutions based on deep
domain understanding
Non linear Business Models
Business Impact SLA Delivery
Wipro Example: Innovative Delivery
Future Evolution of Global
Outsourcing
Service
Oriented
Architecture
Standards
Based
Components
Virtualised
Resource
Model
End to end
Management
Driving Business Agility
Flexible
Operating
Cost Models
Flexible
Sourcing
Models
Our Preparedness thru Integrated
Delivery Framework
PMO – Managed Services
Cob IT Framework
People
Process
Transition Phase
Technology
Life-cycle Management
Initiation Phase
Plan
KAP
& Planning Phase
Implementation
Phase
Acquire
Hand over to
Sustenance
Continual Improvement
(Six Sigma)
Customer
Extranet
IT Infrastructure
(ITIL Practice)
COCOON
Reduction
Deliver
Application Services
(SEI CMMi)
Project management
Defect
Monitor
Six
Sigma
Human Resources
(PCMM)
I PAT
Quality
Management
Projects
(PMI)
Knowledge Management
Veloci-Q
K Net
Wipro Blueprint
: Getting
it right
Outsourcing
- What
to and How
to the first time
3
How to manage
what is outsourced
2
1
What to outsource
1
What to
outsource
Application Assessment
 Questionnaires/interviews
 Study application inventory,
documentation status,
demonstrations of applications
 Offshoreability of applications
How to outsource
2





How to
outsource
Sequencing plan
Application sequencing plan
SLA’s
Risk mitigation
Performance metrics
Governance Model
3
How to manage
what is outsourced
Engagement approach





Engagement plan
Timelines for transition
Change management
Cost savings analysis
Cultural synchronization
Conclusion
• CIO key competency today is Strategic Thinking and Planning vs
operational management.
• Outsourcing and Off Shoring is no longer an option but an enterprise
wide business strategy.
• India is the destination of choice for outsourcing and off shoring
• All surveys point to ‘integration’ as the top most technology priority
Questions to:
Vincent.Nair@wipro.com