India emerges as ‘outcome sourcing’ hub
a cue from this shift, iGATE has unleashed an aggressive multimedia campaign targeted at mega corporations in North America in order to shift the outsourcing model from an efforts-based model to a strategic results-based approach. iGATE CEO Phaneesh Murthy said: “The old model of IT vendors getting paid on the flawed metric of effort without any risk being shared is dying in today’s times. Corporations are moving away from the T&M model that has curbed innovation in the IT industry.”
The Indian IT industry also realises that the software services segment is increasingly getting commoditised where the key selling point is lower prices. This model will become increasingly untenable for large Indian IT companies that are now putting their efforts to develop solutions, platforms and consulting capabilities where they are able to showcase their innovative abilities.
TK Kurien, CEO, IT business, Wipro, said: “One end of the market is getting commoditised and the biggest game-changer is to create value. Our goal is to transform ourselves from just an outsourcing outfit to a technology company.”
This change in strategy is also reflected in the kind of deals being bagged by Indian IT firms. Pradeep Mukherji, president and managing partner, Avasant, an IT-BPO advisory firm, said: “Outcome-based deals have a direct impact on the business of the clients. We are seeing a trend towards these kinds of deals. It is not necessarily all large deals are fully based on the outcome model. Of the large contracts, 30-40% will have an outcome-based component.”
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