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Manufacturing pressure fuels IT outsourcing growth
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26/06/2008
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As manufacturing struggles with the global credit crunch, as well as rocketing fuel and commodity prices, the leaders are ramping up their offshore IT outsourcing initiatives.
So says Hardeep Garewal, president of strategic accounts at UK-based Indian outsourcing company ITC Infotech – and he believes that outsourcing’s greatest growth is yet to come.
“Offshore outsourcing was once seen as a way simply to manage projects. Now it’s becoming the norm and not the exception to reduce costs and boost the bottom line,” he asserts.
“Even though many companies are experiencing hard times, we are predicting growth in the next 18 months,” he adds.
He’s talking about everything from business process outsourcing to IT services, including software development, infrastructure management and help desks – even rolling out ERP packages, testing etc.
“Most of the IT budget that has been outsourced in Europe, the Nordics and the US it is related to these kinds of services and most of it comes from mainstream companies in vertical industries.
“But people don’t normally think about ISVs such as SAP, Microsoft etc – eve though they’re outsourcing all sorts of aspects, especially product development, much of it to India for the cost, speed, value added services and quality advantages.”
However, he contends that, since the percentage uptake is still small compared to what’s available, the growth potential over the coming months and years remains huge.
As for managing this and avoiding the disappointments and disasters of the past, Garewal says: “It’s fundamental. Never outsource when you’re starting off. Start off with something simple – a small project that involves some support of a small application, for example. Get a few guys to come across, do the knowledge transfer – but make sure it’s not a significant development that’s going to impact users, the business or customers.
“The problem arise when manufacturers pick large or complex projects, where users’ requirement s definition has to be collected. They suddenly find problems because the issues are not about technology – they’re about how you interact between people and companies.
“Managers don’t spend enough time on the fundamentals – working and communicating together. People are in too much of a hurry to gain the benefits, so they go for a big bang, but get a small whimper.”
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Author
Brian Tinham
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