Indian Providers: Those Things in the Forest are Called Trees

We recently hosted a roundtable with senior sourcing executives from some major companies. The discussion was far-reaching  and quite provocative. One topic really brought out the passion: These executives just don't see eye to eye with Indian providers.

I’ve written previously about the conversations I’ve had with most of the leading executives of the major India-based providers. To a person, and to a company, they cite their firm commitments to quality-based relationships geared around productivity.

The earful I got at the roundtable suggested that is lip service. The senior sourcing executives voiced an escalating level of impatience with the offshore providers on the essential question of the business model. They said they saw no evidence that Indian providers are willing to be measured by objectives such as service levels and output.

I’ve long held the view that the deeper entrenched the India-based providers become in a model that is focused almost exclusively on lower labor costs, the harder it will be for them to “mature” to what clients really seek. Indeed, several of the senior executives at our roundtable said the deadline had already passed, so they are moving on to do business with providers that are willing to commit to true outsourcing, with true service measures.

Sounds like the race for bodies is giving way to a race for services.

Comments

[Phil Fersht]

Peter,

The offshore labor arbitrage element has clearly become standard issue among providers, and the differentiators are moving towards outcome-based factors. We are now hitting a floor with the low-cost approach and clients want to understand who can deliver outcome-based solutions, can offer continual innovation (or at least understand what innovation means) and have an approach in place that can help measure these outcomes. What's more (as you point out here), sourcing executives are becoming increasingly savvy at learning how these engagements should be structured and managed.

What is also fascinatng is the demand for offshore captive work. This is going to force provders to be far more service-centric with how they operate if they are to win these types of deals.

What has impressed me with the leading Indian providers is their skill and ability to sell their solutions. Over the next couple of years, we will see whether they can adapt their current approach to satisfy these changing (and more complex) customer requirements.

PF.