Value Sourcing: The Future of Outsourcing


About the Authors

Alok Kumar

A seasoned IT management professional, focused on bringing stakeholder value through innovation and creating value in challenging environments. Alok has a strong background of manufacturing, telecom and retail domains.

Alok has been responsible for setting up Sears Holdings India offshore development center. Being the first employee of the company, he could collect a capable team to generate very high value for Sears in a short span of time. Alok is closely working with Sears Holdings executive team to chart out and strategize the future value generating strategies and executing them with perfection.The best practices in Sears India has resulted in propelling Sears India up the value chain in very short time and rated as the golden company by Economic Times of India for the year 2011.

Alok has published “Handwriting Speaks” in 2005 which is a book on graphology. He contributes on management subjects on his blog and is a regular speaker to various forums and management institutes.

Keith Sherwell

keith sherwell

A seasoned IT executive and strong leader, focused on creating business value with emphasis on delivery of quality services and achievement of results, with a strong background in large financial organizations.In his career, Keith has been a catalyst for innovation and change as a transformational leader.

Formally, Keith was SVP and CIO of Sears Holdings Corporation. Prior to his stint at Sears he was SVP at American Express where he lead the re-architecture of the company’s Global Network Infrastructure and associated transformation of the company’s Network Operations and Site Services functions.

With a passion for Flying, he holds Fixed Wing, Rotary and Glider licenses.

About the Book

Value Sourcing – The Future of Outsourcing talks about delivering value outcomes as the prime reason for outsourcing in the future. Historically, outsourcing has been done for cost advantage and gaining economic value and in the future global, technological and business changes would continue to propagate value proposition of low cost and higher value to end customer. Over the next two decades as the demand matures to higher skills and experience than just bodies, there will be a paradigm shift in value of IT outsourcing. It will be no more just about cost saving, but on outcomes that will help the customer provide better value to their end customer.

The book begins with a brief history of outsourcing, covering the whole cycle of outsourcing from what began as movement of labor from one place to another as a way to reduce cost to setting up of colonial empires by European powers for their cost and trade benefit. As technology advanced and it became possible for work to be transported from one place to another, labor became more static and work started being outsourced from one place to another for the purpose of cost saving. Against the backdrop of a staggering economy and rising cost during the Regan era, many US companies were compelled to move manufacturing outside the US to countries where cost was lower. This led to the beginning of outsourcing. The real boom came during the Y2K crisis, which created a huge shortage of software engineers and programmers. Since their supply was short in the US, Indian talent rushed in to fill in the void. This eventually opened the gates for Indian software capabilities. India emerged as a popular destination for outsourcing, primarily because of the supply of skilled labor, which could be employed at low cost, giving companies huge cost advantage.

Chapter two focuses on how the IT revolution began in India. Starting from body shopping form of outsourcing to now moving up the value chain and delivering greater value to companies, India has emerged as a favorable destination for outsourcing. To boost this growth, huge investment was made in education and favorable developments and policies were initiated by the government. However, now after completing one life cycle, Indian IT is plagued with multitudes of problems in areas of skilled labor, inflation, rising local cost and lack of innovation. All these problems are challenging the traditional body shopping model of outsourcing. Along with internal problems, there are numerous global scenarios that are changing and transforming the IT scene, throwing the existing practices in a light of doubt.

Chapter four talks about the new disruptive technologies of cloud computing, SOA, mobile computing Big data and Social media. These new technologies present new platforms with the ability to break traditional outsourcing models and bring about a change in the balance of delivery.

There are also many new business drivers such as the social media platform, pay per use pricing models, software commoditization, changing role and responsibilities of the CIO, customer enabled technology and gamification. All these changes have added a new dimension to outsourcing- of value generation. IT companies need to harness these changes and realign their businesses to offer cost and value. Companies can no longer focus on reaping maximum profit margins but need to deliver more value with less.

The book then introduces the GIC model of outsourcing as a favourable option for cost saving and adding meaningful capabilities to the parent organization. India has emerged as a popular location for setting up GICs. GICs hold the promise of offering better cost saving then third party vendor, and India has the capability to sustain this cost arbitrage for 12-15 years. Factors of low cost delivery, sufficient talent pool, a robust infrastructure and ecosystem, innovation-conducive environment and a growing domestic market, have positioned India as an ideal location for setting up GICs. The book concludes by introducing future modes on which outsourcing will be based and which will focus more on value creation.