Cloud Computing an IT Operations Outsourcing trend; Will China steal India’s thunder?

Amazon knows somehow that listening to the voices and walking in the footsteps of IBM will eventually help them get there somewhere. Today I had an investor call and funny thing is that lately I am getting people asking me and mixing invariably technology trends such as virtualization and outsourcing. Obviously, if you saw one of my presentations, you’d understand that mixing business talk with technology cakewalk is what we are all heading towards. Versatilists will understand that talk and will be able to walk that walk.

Should Indian outsourcing firms like Wipro, Satyam, Infosys, Patni, TCS, HCL etc want to maintain and sustain the typical growth trend then they will have to be just more that “preferred outsourcing parties”, being number one on such a list can be a terrible thing. They have to get on to other things. They have to go after global footprints and with globalized leaders. They cannot afford to have those “typical indians” who may be technology savvy but fail miserably in cultural compatibility. Indian’s are mostly portrayed as simple, naive folk, while they would like to believe otherwise. The fact remains that the twang and the absolute unglobal facade betrays the brilliance that many executives have.

Secondly they cannot afford to wait for an acquisition to come their way. SI or any other consulting firms such as CSC, ACS etc may be doing their businesses and Indian firms stuck to their one exciting but today innovation-less business model. This needs to change dramatically. They have great tools in their arsenal, they are great in process and structure, they are excellent in execution and very much driven for the “sake of India’s glory and pride”. This, when combined with a newly carved up niche can help the Indian firms to take on the like of IBM, Accenture, HP/EDS.

Should they not do this, they will soon see a gradual disappearance of several traditional ITO, most of them will be repalced with the “Self-Service Models and Frameworks”. Then customers just don’t need any Indian’s to answer the phone or emails. They can “fix” or “restore” their previously saved state.

How does all this have anything to do with Cloud Computing? Should they be able to deliver applications through their own infrastructures and participate/collaborate with other firms to expand their “Global Infrastructure Footprint”, they will be able to compete for that $100 Bn market.

How can it happen then?

  • Go for multiple acquisitions (SaaS firms, SalesForce, Rackspace and other smaller ones)
  • Get into the Consulting/SI business by acquiring more nimble European and US competitors of not-so-nimble suffering SI firms
  • Get into innovation, Research, Ideation (Idea Generation), Web 2.o techniques to do online, Real-Time reporting/dashboard/pre-sales etc (This list can go on and on)
  • Hire true and global staff across global offices, mere acquisitions will not help. Unconventional times ask for unconventional, versatilists.
  • Get glocal with a typical “two-way longitudinal services distribution and delivery model“. Meaning US served by S. America and S. America served by US etc
  • Get into infrastructure market, if not yet explored.

Anyways, here’s the other story:

Whereas SaaS is predominantly a Business Process Outsourcing trend, Cloud Computing is predominantly an IT operation outsourcing trend. IBM and its shift towards services, supported by best-in-class hardware, has been leading this IT outsourcing concept for more than a decade now. However, IBM’s main clientele have been large scale, high-availability, high-liability business such as Wall Street, credit card companies, and insurers. The shift created by SaaS as well as Cloud Computing is retargeting the IT supported business process services towards the mid-market where it will proliferate in a very different direction. High-availability is costly, as is high-security. Those are attributes that the mid-market is not going to pay for: they sure haven’t paid for it in their own IT infrastructures. That will allow Cloud Computing service providers, such as Amazon Web Services, to provide a truly disruptive technology since it brings a whole new group of customers into the market. A segment that is cummulatively speaking more valuable than the high-end customers of yesteryear.

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