What is the perception of Indian IT services in the International markets? Just really how strong is the India Inc. brand?

Today, a number of individual companies have gained recognition amongst some of the larger users of technology, particularly sectors like financial services. We now hear names of Indian companies more and more often, which was not the case a year or two ago.

As a matter of interest, the entire publicity surrounding outsourcing backlash and the sheer growth of the outsourcing industry per se has generated a lot of awareness amongst organizations. Many organizations that were not aware about this phenomenon or didn’t even understand this option are suddenly getting interested in it. So there has been a beneficial outcome of all that publicity since it is raising awareness about the Indian competency - their capabilities, technical expertise, and the low cost factor.

Talking of companies who are currently using Indian IT services – the ones I have interacted with seem to be very happy. More often than not companies in US are pleasantly surprised by the quality of service they get in comparison to the cost they are paying. And most of them are prepared to do more business with Indian companies moving forward. So, definitely, the atmosphere is very good and positive for the Indian IT players.

Talking of outsourcing - the traditional model of outsourcing has been there for ages with companies like IBM, EDS, CSE ruling the roost. What do you thing the new generation MSPs bring to the table?

The single biggest difference is the telecommunications and the Internet, which means that things can be done and processes can be automated over the web, something that was not possible before. Today you see the convergence of things like document management, content and workflow over the Internet. Add into it the possibility of doing things remotely – the proposition becomes stronger.

So, whereas the old concept of outsourcing revolved around the transfer of assets from one company to another, the new concept of outsourcing - discreet outsourcing - defines the ability of an organization located even at the other side of the world to discreetly tap into some part of individual business and help do it remotely, less expensively, automate it in some way and manage resources from remote locations. And all these are things are possible to do today thanks to the explosion of the internet, the reduction in global telecommunications cost and fact that many more businesses now use electronic processes which makes them more amenable to new outsourcing technology.

But Internet being universal can be used by all the organizations– even the old champions of outsourcing? Then why is the new generation MSPs booming and their old counterparts losing ground?

Well, those large companies are looking to do business in different ways now. If you look at IBM or Accenture, their major concentration is now business transformation outsourcing, which is more like taking a business entity, looking at its processes and not just automating them but also fundamentally changing them by adding a lot of vertical and technology expertise and coming up with an altogether new and radically different entity of business. And that for them is much more high margin high value business proposition. As a consequence, they are not necessarily focusing on a whole lot of other opportunities that are emerging in the market. This is opening a gap in the market for companies to come in with things like managed services provision, with the phenomenon of offshore BPO and other such services.

The other phenomenon is that all of these markets are growing very quickly. The IT industry as a whole is one of the world’s fastest growing industry. And even within the IT industry this whole area of IT services and BPO is growing faster than any other category. So, consequently, you got a pie that is growing big very quick an its not even possible for some of the larger players, no matter how big they are, to scale up and cover all the new options available in this pie. And therefore, the new age managed services players are benefiting from the emergence of this new opportunity.

If the pie is growing at such a phenomenal rate – why are the old players not vying for a share in it?

Oh! Don’t get me wrong there – they are trying to do everything – but can they do everything – No! even if they are big, they can’t do everything. You look at where IT companies in India have been successful in few last years is in the area of developing customized applications – that’s a field where a lot of big traditional companies haven’t spent a lot of time on and thus are not able to provide that service. You look at the new IBM organization and their IMS division, which is responsible for new application development – it’s not a very strategic part of their business. They have got a lot of products and lot of initiatives. They want to be just about everywhere but you cannot be executing seamlessly focused on all fronts all the time! On the other hand, we have these small new emerging companies, which are very focused with respect to what they offer – they only do one thing but do it best- they can be very effective competitors even against the biggest companies of the world!

From a CIOs’ point of view, which model of outsourcing is more beneficial and costt-effective – traditional or discreet outsourcing?

Well, it’s not a case of one-size fits all – it’s a case-to-case scenario here. A set of CIOs who feel that their current environment their current business processes are so out of touch from what they need to be –they would want to undertake a fundamental transformation process and they might talk to vendors like IBM Accenture and others. But it’s a very big risk strategy, involves huge cost and takes time, nevertheless something that they need to do.

Another set of CIO’s will be open to outsourcing but they might decide to outsource the whole lot to a third vendor and put them in charge of providing all the IT services. Again, not a very popular option these days. It is a complicated contract to negotiatiate and it does not take into account a lot of changes that take place in IT and new technology infrastructures. Most of these don’t suit the newer outsourcing arrangements, are not very flexible and thus result in a lot of discontented customers.

What is gaining popularity nowadays is discreet outsourcing. CIOs realize that there are something’s we do quite well that we will retain those in-house, others we will outsource. So, they will say that we will give our application development to one vendor,network management to the second and desktop management to the third. And they will look at best of breed providers that have core competencies and key skills in each of those discreet areas. And that’s probably the area in which we are observing most of the interest and growth right now.

According to a report by Gartner "Thirty-two percent of a company's IT budget is spent on internal resources to service information technology." How effectively a CIO can cut down on his operational costs?

Today, there are a number of options that allow an IT manager to really cut into their operational costs. To reduce operational costs CIOs should consider increased use of offshore and external service providers who are able to do things like managed services at a much lesser cost than the local service providers or in-house options by the company itself.

Second option is trying to refresh their infrastructure to be more commodity product based. So remove as much proprietary hardware and software environment as they can- move to standalone commodity environments like Intel equipment or the standardized operating environments, explore what can be done with open source.

How important is visibility into the IT operations for a CIO?

It’s very important. Infact we at Gartner are trying to give new acronyms to the whole phenomena! We talk about –business activity monitoring or corporate performance management balanced score card and all these things. Visibility is very much on the mind of the global CIO and a corporate dashboard is really required to understand what’s going on in the infrastructure! So as they outsource and as they use the telecommunications infrastructure they still want to get back those sense, beats and metrics in real time to get a feel of their corporate systems. They don’t want to lose visibility at all and want to be in the thick of action even if the process is being outsourced to the other part of the world!

Talking about Managed services, what is your take on remote infrastructure outsourcing? How do you think the market will grow?

The whole concept of managed services provisioning what Gartner calls the ‘remote infrastructure management is reasonably new. I think remote outsourcing is not something that most CIOs have really yet studied and understand very well until now. But we are seeing this changing and that too quite quickly. The entire phenomenon of offshore infrastructure services is gaining more and more visibility and awareness these days in all the parts of the world. But with more successful case studies coming out and word of mouth spreading faster– people have started believing in this phenomenon. We at Gartner call it a mega trend – which means it’s an irreversible trend and almost every one of our customers will adopt this model over the next couple of years!

How can a CIO benefit from remote infrastructure management?

Well, the whole area of infrastructure management is a complicated area. Finding people with the right skills, retaining those people and managing them is a major headache for most of the companies. I mean they are in the business of say flying airplanes or doing insurance or developing new drugs. They are not in the business of figuring out how to hire a systems administrators, systems programmers, train them retain them and keep them skilled, manage them - that’s not their competency and they don’t want to be bothered by it. So, that’s a headache they rather not have in many situations.

The other factor they have figured out is of course cost. Doing all this is an expensive option for them. To develop in-house capabilities and keep them trained and invest in people and infrastructure. So, if there is a possibility of all this being done well and in a less expensive manner by someone else, they are more than happy!

And the third reason is rapid change in the technology itself! So, even if they do develop competencies in-house and spend that much amount of money – to keep the resources updated with the latest technology is a major challenge for them. A third party vendor, whose core competency is technology is much more adept at keeping pace with the rapid technology changes than these organizations. And it again makes the organizations focused on their businesses and not defocused with managing large no of resources!

And the fourth reason that is catching up fast is – 24x7 economy. 24x7 infrastructure performance monitoring and visibility have become important in a business era when a single minute of system unavailability can cost millions! Remote management helps you to tap into skilled resources working in different time zones and ensuring your infrastructure is up and running always!


The new economy brings in the adoption of new age processes like ITIL, BS7799 – How important is a process structure for a vendor and how aware are global CIOs of these processes?

Since the boom of technology came to end, CIOs across the world have been talking not just technology but about governance, organization structure, rigor, portfolio management and process. Its now that they have actually got time to pause for breath. They are not being inundated by something new that we have to learn faster and better than the industry and the shift has happened to improve the backend processes! They are looking at things like ITIL, which provides stronger methodologies and industry standard based processes to improve what’s on hand. Its beginning to fade a bit now because most of the organizations in the US have already dome it or are in the process of doing it.


If you were to sum up 3 major concern areas for CIOs today – what would those be?

One key concern that CIO’s have is measuring and reporting the value IT is contributing to the business. Its called Business value of IT – measuring, justifying and convincing other people within the organization that IT is delivering value.

Second issue is the sourcing strategies – there are so many options, models alternatives, so many providers, and so many issues with respect to people, policies, environmental issues that weren’t available 4-5 years ago. Managing relationships with vendors, ensuring SLA compliance and other such challenges like ensuring flexibility, room for innovation, rewards, penalties, incentives – the entire gamut of concerns related to sourcing is predominantly a major issue.

Third would be IT Governance – just the whole issue of how is the IS organization structured. What are the responsibilities, what are the decision-making authorities, the organizational construct, what are the process delegation lines, - this consumes a lot of attention of the CIO’s because they want to arrive at an optimum organization structure.

Going beyond the strategic issues what are the operational concerns?

	Cutting costs. Budget constraints. If they can reduce their spending on the operational aspect of running an infrastructure – that’s their prime concern.
	Asset management, lifecycle management - How they go about managing their assets across the organization, security, performance, configuration, capacity, change, administration.
	Another tactical issue is tracking new technologies developments and scaling up, understanding the viability of vendors using those technologies and aligning business with IT
	Staffing issues – hiring, training, retaining, motivating employees and developing requisite skill sets

Infact, one of the reasons why outsourcing has gained popularity is because it addresses all the above pain areas of a CIO effectively.

It was indeed a great session Bob, but to end it, our readers would like to know something about you as well!

Sure, I have been in the IT industry for 23 years now, after passing from a university in the UK. My background is in systems programming in IBM mainframe environments and then working into software industry into system management with companies like Candle Corporation. I set up Candle’s Asia -Pac operations. And then I had a company that distributed Tivoli’s products across Asia pacific till the time Tivoli was acquired by IBM. That was when I joined Gartner as an analyst originally and I have been with them for 9 years now!