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Monday, March 26, 2007

The Changing Face Of Application Outsourcing Service Provider Landscape - Part I

I recently wrote about the changing contours of ADMS outsourcing. Forrester’s latest application outsourcing assessment(of North American market) makes interesting reading. There are a number of things that shows up in the report:

A. The report notes that the service offerings of traditional players and offshore headquartered players are converging and hence they need to be treated together in evaluations. The discipline has so matured that AO providers now exhibit contrasting — and in many ways complementary strengths.

B. While certifications & endorsements are becoming less of a differentiator(given that all leading players manage to get that), the report notes the difference as seen by customers between traditional global players and the offshore headquartered/centric firms – “Traditional global players are all about having smart people who can do whatever you need them to do. The offshore players will say that they are people-independent and that it is all about the process, and while not 100% true, it is still amazingly true”.

C. The offshore firms are getting more structured and predictable, providing flexibility when attrition and rotation happens.

D. The global players may tend to have more domain competency (though may not be used much) but the offshore players tend to lead in price competitiveness and process superiority.

E. Scalability concerns are beginning to get heard - the report notes that last few months the right resource availability is sent to be tougher to ensure – going by some customers feedback.
An interesting report covering all the leading players – one thing that stood out was that the cumulative client ranking scores for offshore providers far exceed that of established global players. The major players have comparable strengths overall.

My own feeling as to where the offshore players score are – their expertise, lead and mastery in terms of managing distributed development while ensuring good process and quality standards. It is indeed a phenomenon to see their methods and skills in terms of expanding opportunities, while beginning small inside accounts. It would be interesting to see how the global majors (who have been by far the leaders in most aspects of services outsourcing) blend their offshore workforce.

I shall continue the discussion on this in the following note.

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