Changing outsourcing landscape
Technology companies are putting up a brave front even under pressure with their increasing bench. While it is not anything new that service providers use bench to get new business faster, in tough times like this, it is a double edged sword.
“ The year ahead will be getting tougher with lesser deals, increasing bench, increasing input cost and reduced margins than ever before …”
Companies like Tech Mahindra do not keep bench and prefer to be lean and thin even with a risk of loosing new business opportunities. Infosys and TCS are more bullish and they traditionally play with more bench. Situation however seems to be changing differently this time. Most of the companies are now looking at more permanent change to reduce cost.
There have been several instances of renegotiation of contracts where cost reduction was as high as twenty five percent with same level of services. High inflation in India is putting pressure on companies to contain their input cost, but customers are becoming increasingly aware of increasing dollar against rupees. Many of them are asking benefits to be passed on.
In one interesting case, two vendors from India fought out on this benefit with customer to get the order. It is visible that desperation is increasing with only cost reduction as the prime motive of customers as against several non cost based parameters in earlier deals. The biggest looser is Infosys as their image of premium vendor has taken a thrashing and they are forced to take a reality bite instead of completely losing out.
The year ahead will be getting tougher with lesser deals, increasing bench, increasing input cost and reduced margins than ever before. The next threat is the commoditization of several lucrative services of yester year which will force change the shape of IT outsourcing in coming years.
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