Beyond cost arbitrage – emerging paradigms for sustaining competitive advantage in outsourcing

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Beyond Cost Arbitrage: Emerging Paradigms for Sustaining Competitive

Advantage in Outsourcing July 13 th 2006

T.K. Kurien CEO, Wipro BPO

CONFIDENTIAL© Copyright 2005 Wipro Ltd

Business Realities

Every moment of truth needs to deliver Business Value

Need for Greater agility

Disruption in Business Models

Pricing Pressure

Commoditization

Margin Squeeze


Service Providers Dilemma

How do you objectively assess the business value of a solution?


Bridging the business value gap will fuel future IT strategy

Service providers need to ask themselves….

How do we align our thinking with that of the business stakeholders?


Moving beyond Cost Arbitrage – The New Value Drivers

Cost Arbitrage ……………………………….….Business Value Add Cost Arbitrage ……………………………….….Business Value Add

§IT infrastructure utility services §EDS's Agile Enterprise

§IBM's On Demand Business

§Remote managed services §Hosting

§Network services

§Low end, resource intensive

outsourcing §Eg Mainframe, server storage

§Software as a Service Customization of only those apps that genuinely deliver competitive

advantage

§Struggle between custom & Standard business applications continues §Usage of global sourcing for labor intensive applications

§Legacy apps §Belief That customization of business apps yields competitive advantage

FUTURE FUTURE NOW THEN

§Application Outsourcing

§Infrastructure Outsourcing

§Business Process Utilities §Transaction processing §Shared Services

§Contact Centers §Business Process Outsourcing


Business Buyer

CIO or IT buyer

Value Chain Movements– Outsourcing Perspective

ASP – Software as a Service ~ Application Utilities

Y2K Application Migration ~ EAI

ERP – commercial off the shelf Legacy Applications Management

Application Outsourcing($35 Billion)

Colocation ~ Hosting Network ~ LAN ~ WAN or Telecommunications

Desktop ~ Help Desk Mainframe ~ Midrange ~

Servers Storage

Infrastructure Outsourcing( $146 Billion)

Infrastructure utilities

Contact Centers Demand Management (CRM~ Sales)

Supply Management (Logistics ~Supply chain)

Transaction processing Enterprise Services (F&A – HRMS)

Business Process Outsourcing ($112 Billion)

Business Process Utilities

Utility computing is slowly changing the outlook of the IT service market.

Time


How are Indian service providers adapting to meet new market demands?

Cost Competitiveness

•Platform •ADM factory

Specialist

•Insightled Custom solution •Vertical specialist

•Horizontal specialist

§ COST DRIVER § VALUE & DEEP CLIENT RELATIONSHIPS


It is a matter of Choices

Indian Providers need to decide

WHERE & HOW

they want to compete

Developing Service Lines in Niche Industries

Clinical Processing Services Enhancing efficiencies by leveraging intellectual capabilities towards delivering quality

clinical processing services to Global Customers.

Ø 3D Reconstruction & Processing Services Providing 3D anatomical models for MR / CT Angiographies

Ø Collaborative Radiology Reporting Web based reporting to enhance productivity gains

Ø Oncology & Orthopedic Services Providing IMRT , 2D/ 3D Conformal Treatment Planning

3D Implant assessments, digital prosthetic templates.

Ø Clinical Trials & Medical Management Imaging trials, Pharma Covigilance Drug discovery, Outsourced research, Nurse call centers for medical care.

Medical Management

• Increasing population affected by various disease states.

• Huge spends in disease management and preventive medicine

• Aging population ; Biopharmaceuticals research & pharma covigilance

Technology drivers :

• Development in computing and information

• Growth in Technology, network and

telecommunications infrastructure,

• Use of technology by older people

Benefits of telecare : • Better access & provision of healthcare

• Reduced waiting lists, enhanced patient

outcomes and access to information

• Revenue generation and cost effectiveness.

Nontechnological drivers :

• Extended access to healthcare services,

• Aging society, driving cost reduction, etc.

Benefits of Medical Management

Managed Model

SMS enabled Pacemaker; Pill Dispenser; Telemedical Monitor

Managed Model

SMS enabled Pacemaker; Pill Dispenser; Telemedical Monitor

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