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Sunday, February 18, 2007

ERP’s Center Of Gravity Shifts To India

Its heady times for the last two years for the Indian headquartered service providers’ enterprise applications practices. Its now cleat that for the top 5-6 players, both Oracle apps & SAP practice head counts have on average more than doubled in the last two years alone. Some practices for some of these companies have trebled or quadrupled in the last two years. This is somewhat unexplainable – the enterprise apps space has become easier for big offshore players to muscle in – they did it when established methodologies for offshoring in development, integration, enhancement and production support were not put in place by product players themselves who boasted of having invested in millions and millions on their R&D. Its entirely to the credit of the offshore players that they were able to spot such opportunities, lay out good methodologies and frameworks for such developments & gaining customer confidence and goodwill to engage and grow this opportunity pie. There’s also a discernible shift from more technically focused engagements to a more balanced, function-led approach -Global rollouts, instance consolidations, integrations,upgrades are being executed in increasingly big numbers by offshore firms a lot more. From their perspective, such balanced portfolio of service offerings enables them to effectively compete against traditional global integrators and outsourcers. Some people do not recognize the strategy of offshore players while they scaled up. In reality - “Production support” and “staff augmentation” should not be considered pejorative terms. In fact while working on such opportunities in the early days of offshore enterprise application opportunities these players gained substantial visibility into the overall ERP opportunity within a client helping in mining and deepening opportunities and in the process help themselves to tap servicing new prospects across the value chain.

Bruce Richardson sums up the
capabilities and the real stature that the offshore players have managed to win for themselves. He writes,

If you want to know what’s really happening with SAP or Oracle software, get a visa and book your flight to India. I would argue that many of the Indian firms have the best insights into what’s really happening at customer accounts. They may lag some of the insights into emerging technologies, but they catch on quickly. Looking back at my notes from the last two trips, I would estimate that the total number of SAP consultants and developers in India is likely to be around 50,000.As for Oracle applications skills, many firms told me that their “Oracle business is about 80% of the size of SAP.” That would yield somewhere around 35,000 to 40,000 consultants and developers. He adds, If you look at the “Contributor Recognition Program”, you’ll see that Indians continue to play the key role in the development of the ecosystem.

To be fair, he also notes that it has taken longer for the other “New Dimension” products to take off. Supplier relationship management is likely to be the next big category based on the amount of work currently underway. Few firms talked about any SAP projects in supply chain management or product lifecycle management, as of now.

My sense is Bruce will definitely get a different impression on this front when he visits the offshore firms next time around. Sure there's room for improvement in capabilities but the fact is the pace of change is indeed very real - they are climbing up the sphistication curve much faster than ever. The offshore players strength/global players with big offshore presence are set to grow faster and faster and they may take the dominant share in the enterprise apps place in the global market.

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