| ng to a report released by Forrester Research, | | | | Newer pricing models, such as pricing based on |
| customers areseeking for various new capabilities | | | | outcomes and risk and reward sharing, are taking the |
| from IT outsourcers, which range from their | | | | lead over the time and materials" model, Apte |
| participation in business outcomes to greater | | | | said. However, the previous model which is linked to |
| knowledge of the customer’s area of | | | | staff cost will continue in some customer accounts, |
| business. | | | | he added. |
| Pressure has been put on outsourcers though this | | | | Customers who account for over 50 percent of |
| change, even including the top outsourcers in India | | | | revenue to India’s top five outsourcers are |
| like Infosys Technologies (INFY) and Tata | | | | ready to shift to the engagement model, which |
| Consultancy Services (TCS), who previously have | | | | demands Indian companies to invest more in |
| sold their services using the low cost and easy | | | | customer interaction, industries expertise, research |
| availability of staff in India as an important base, told | | | | and development (R&D), and creation of intellectual |
| by Sudin Apte in a telephone interview on Tuesday, | | | | property (IP), Apte said. |
| who is a principal analyst at Forrester and principal | | | | In order to overcome the challenge, the top five |
| author of the report | | | | Indian outsourcers have taken various measures, |
| Apte said that this model was getting commoditized | | | | such as increasing their investment in R&D, account |
| though it was generally identified as time and | | | | management, and building new offerings, Apte added. |
| materials" as the customer was essentially paying for | | | | For example, Infosys has introduced a platform |
| a certain number of working hours from a given | | | | named Flypp to deliver mobile applications, which it is |
| number of staff. In addition, he added that though | | | | marketing to mobile operators wanting to establish |
| the quality certifications of Indian providers or the | | | | their own branded app stores. |
| number of staff that they could offer would still be | | | | As customers are more and more demanding that |
| important, these factors would no longer be essential | | | | the supplier should manage to deliver services from |
| differentiators in the market. | | | | the various locations wherever the customers are |
| Apart from a lot of Indian companies offering | | | | present, Indian outsourcers are also setting up new |
| services from the country, many multinational | | | | delivery centers outside India, Apte said. |
| services companies such as IBM (IBM) and Accenture | | | | For instance, Wipro has set up a development center |
| (ACN) have also started their business in India to | | | | in Atlanta, while TCS announced last year that it was |
| make use of the low cost of staff in the country. | | | | planning to expand its business alliance with The Dow |
| It is estimated that new engagement and pricing | | | | Chemical Company (DOW), including establishing a |
| models accounted for about 10 percent to 12 | | | | services facility near the site of Dow’s global |
| percent of the business of India’s top five | | | | headquarters in Midland, Michigan. Centers have also |
| outsourcers in the fiscal year ended March 31, Apte | | | | been set up in Europe, Latin America, and China by |
| said. | | | | Indian companies. |
| Instead of transferring an existing IT services | | | | Indian outsourcers will also have to focus more on |
| process to India and trying to get it done at a lower | | | | client-facing roles, so that their capabilities can be |
| cost, customers now want suppliers to help them, by | | | | conveyed and demonstrated to the people in |
| developing their own platforms consisting of | | | | customer companies that are involved in outsourcing |
| processes, software, and business practices, basically | | | | decisions, according to Apte. |
| improve the way the process is managed, Apte said. | | | | In accordance with what Apte have said, Indian |
| "Customers want to see tangible business benefits, | | | | outsourcers will also have to pay more attention to |
| rather than just lower staff cost," said Apte. IT | | | | client-facing roles, by which their capabilities can be |
| departments inside companies are increasingly being | | | | conveyed and demonstrated to the people in |
| evaluated by the business value they deliver, and | | | | customer companies that are involved in outsourcing |
| which is reflected in what they are now expecting | | | | decisions. |
| from their service providers, he said. | | | | |