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Is outsourcing coming of age? December 19, 2011

Posted by Mark Hillary in Current Affairs, IT Services, Outsourcing.
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As we head into 2012, it’s worth taking a moment to consider just how much the entire outsourcing market has changed. This is the year that the cloud really shifted from being an entirely separate concept to being intrinsically linked to the process of outsourcing.

A senior manager who made budget decisions always led the traditional market in services. It might be the CIO or the business line head – like the HR head for example – but it would always be a senior figure with a well-planned objective for the future state of the company.

This led to the traditional outsource, where an entire business process would be analysed, passed to the third party, and delivered by a service company – whether on site or remotely.

But ever since the growth of tools such as salesforce.com the model has been changing. Salesforce turned everything around by being a system that could be used over the web, with no need for any additional software, and paid for by user by the month… simple, clear, and without the need for big plans, vendor comparisons, or training programmes.

Salesforce is used by sales teams who buy it themselves on their own budget. They don’t ask a CIO to buy the system and then have maintenance teams install it.

So are cloud products like this really outsourcing? I believe so. If sales teams are trusting a third party with their information and using those tools as a part of what they do then it is just the same as if the CIO had outsourced CRM to a partner.

But it is a much more disparate world in which individual business line staff are making decisions about the tools they use to get the job done, making the job of those trying to control all of this much harder than before.

Outsourcing is not dead, it has just embraced the cloud and it now changing into something new.


Is the cloud just hype or are some missing the boat? February 15, 2011

Posted by Mark Hillary in IT Services, Outsourcing.
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I was out in Mumbai recently for the annual Nasscom conference. Nasscom is the hi-tech trade association in India and their annual leadership summit each February defines not only the direction of the industry in India, but for many regions around the world.

In fact, there were 35 other countries represented at the Nasscom event, some just as delegates, but most with an official party speaking and representing the advantages offered in their region so this has become quite an international event.
The industry in India has grown by some 23 per cent in the past year so there is strong optimism that IT firms and the BPO service players are back on a growth track again after a few years of recession. This is backed up by new orders being placed, but I wonder if there is some troubled times ahead for some of the big players in India?

One of the key topics being discussed in India was the cloud. It’s a topic that divides commentators, but what is clear is that some service companies have embraced it. Just look at firms like Salesforce.com, who are now moving beyond their CRM roots into all aspects of cloud-based services.

But many have not.

I asked several of the more traditional systems integrator firms what they think of the cloud and the opportunities it may offer them, and despite the threat to their own industry, many just rejected it as hype.

The firms making a killing today on software upgrades are going to have to evolve or die in an environment where IT systems can be paid for only as they are used – but some still seem to have their head in the sand.