CIO-Reinvented Blog - By Prashanth Rai

India BPO Industry a view - AMR Research

Phil Fersht of AMR who attended the recent Nasscom BPO meet at India has couple of reports up below is a summary of his takeaways from the Keynote ( A View From NASSCOM, Part 2: India Building a Full-Scale Services Industry)

Between the Indian outsourcing providers, there is a genuine spirit of collaboration to create a robust environment for India

Som Mittal (Nasscom President) talked about India’s resourcing issues: companies across different industries are now competing for the same talent. He discussed how 85% of the country’s outsourcing services are delivered from seven main cities. Even if companies achieve a split of 60-40 between the Tier 1 and Tier 2 cities by 2018, this still represents a 250% growth for the Tier 1 cities.

Ganesh Nataraj (CEO Zensar) stressed the prime need to focus on developing infrastructure and education reforms for the country’s 700 million people living in the villages and Tier 2 cities, which will provide future sustainability for their industry.

Mr. Bhasin (CEO Genpact) mentioned that wage inflation was now under control, citing a 10% to 12% increase on a $4,000 annual salary being far preferable to the same increase at a much higher wage.

Industry Transformation - "In the long term, business process outsourcing is going to be more focused on providing customers with supplemental managed business services that augment existing functions. There will be less focus on immediate staff displacements and short-term, cost-cutting quick fixes, as companies become more experienced with adopting more customized, knowledge-based services and look to make less dramatic transitions to them. Mr. Bhasin is correct: we are seeing a distinct transformation in the way BPO services are being utilized."

Prashanth Rai

Tags: bpo - india - offshore - managed+service - future - amr+research

SAP Summit 2008 India - Press Conference Live Blogged

Ranjan Das , President & CEO Indian Sub Continent

5th Year for SAP Summit, Largest Business IT Event India. 3500 registrants.

Introduced Bill McDermott, President & CEO World, Recent board member, Customer organization Owner for SAP

Bill Mcdermott sponsored Ranjan Das 9 months ago.

SAP India fastest growing division of SAP, Great Q1 - largest in 12 years of history. Largest single deal signed, license revenue 67% service profitability 37%  SME grew 47% (Need to validate the numbers). 43% of Market share of Enterprise Software of India with SAP. 5 times greater then the competitor. More than half SAP's business is coming from net new names who are trading from legacy or software has been purchased by Oracle.

5/6 Fortune 500 Indian Companies run SAP

18/20 Challenger companies of India run SAP

Doubled revenue and customer base

Opened 50 e-Learning Centers.

Ranjan personal background Gauwhati, Assam

IDC & Frost have given them leadership in most segments.

India has become a Support hub for SAP (self sufficient unit)

India is the 3rd largest subsidiary for SAP Globally

Not a low cost center but a hub of innovation, Cutting edge work , CRM 2007 / Industry modules/ Localization - Out of Bangalore / Gurgaon

Many Key Customer Wins in Q1 , Different Industry / Across locations/ across sizes

Partner Ecosystem is crucial for SAP growth and for customer. (need for customization, best practices & app's)

Global Services Partners - 12 Partners Globally, 5 Of them for India (Infosys, Wipro, HCL, Satyam & TCS)

SAP Ventures at work in India  (What kind of investments are they looking at?)

Snatching Market share away from Competition - Sasken, Greaves & Moser - Moving to open (???) standard space platform provided by SAP

Q1 Customer Satisfaction- 91.1% on TRIM (highest in Asiapac and Japan)

Bill McDermott comments - Very proud of Ranjan Das , Standardizing on Common platform and best industry practices, with ability to customize.

Q&A

No specific sectors for focus for venture investments

24 - 27% Software and software related services. How? Basically other geographies, but even in US double digit growth. SAP is on the CEO Agenda

McDermott - "If you need to grow you need SAP and if you want to be efficient you need SAP" - Quote of the day!!!

M&A - is a separate group - Newgen Why? Ventures is planning to close 3 investments. US investments (RedHats, Virsa, Amber Point) Always looks at it from financial lens , More return then in treasury , How innovative is this company? Joint goto Possibility.

JV with BPO companies India - Partner / Reseller

Corpus - no, Invest from our balance sheet, Investment decision (SAP India/Labs/US , Ventures on financial viability) Investing for around 11 years , 38/39 companies portfolio.

Shortage of Resources in Analytics , in tier 2/3 cities & netweaver / BPP. Shortage of 60K resources to keep up with demand as of last year.

800 Million Global workers in CRM

Government Market  - SAP Plan

Upgrade - Bill Mcdermott - What must be done eventually best be done immediately!!

Bill Mcd - Making Every customer a best run business, Our word is our bond...1 Billion might not stopping point, Will keep going. Virtuous Cycle - Customer invests in SAP, SAP invests in customer.

Ventures Avg Deal Size 4/5Million $

My Questions which I need to get an answer for "Is the new offering of enterprise support one of the first steps towards growing services revenue for SAP, is it likely to put SAP at logger horns with IT Services "Partners" - will there be some love lost because of this."

Tags: sap - sap+summit+india - sapsummit08 - enterprise+software - sapphire08+india

Prashanth Rai

Hot off the Press: SAP BBD Available in India

Just got my hands on a press release that was a big surprise to me, SAP Business By Design is now available in India.

This is pretty cool news!!

Tags: sap - sap+bbd - business+by+design - saas

Prashanth Rai

China a player in IT Services Outsourcing / Offshoring

Mckinsey Quarterly recently has some interesting articles on this topic, For some time (years) now people have been talking about the potential of China as a competitor to India in the offshoring/Outsourcing business.

Excerpt from a 2005 article in MQ

China's spectacular economic success has prompted speculation that the country's software-outsourcing industry could soon compete with India's. A recent McKinsey study of China's software sector,¹ however, shows that it will be many years before the country poses a threat to its continental rival in this arena. For starters, the Chinese must consolidate their highly fragmented industry to gain the size and expertise needed to capture large international projects. Currently, there is little movement in this direction.

To be sure, signs of healthy expansion abound in China's IT industry. The number of engineering graduates and software-applications professionals has grown considerably in recent years. Since 1997, annual revenues in software and IT services have risen by 42 percent a year, on average, reaching $6.8 billion in 2003.² Moreover, the number of English-speaking graduates in the workforce—particularly crucial in software outsourcing—has doubled since 2000, to more than 24 million in 2004.

But after 3 years looks like some of the key issues still persist:

 

But according to a more recent article looks like near shoring for North Asian countries might be the key for the Chinese Outsourcing/Offshoring industry:

China currently accounts for less than 10 percent of the global market for the offshoring and outsourcing of services. Yet McKinsey research—including interviews with officials at many Chinese government agencies, executives at Chinese leading services providers, and managers at Chinese services-outsourcing parks—suggests that by implementing an aggressive strategy to develop the sector and cultivate talent, the country could capture opportunities worth $56 billion a year by 2015.

China faces formidable challenges but can also draw on unique strengths. The country’s two million Japanese and Korean speakers, for example, should help it increase its lead in the North Asian market for the “near-shoring” of IT application and business-process-outsourcing (BPO) services. But a dearth of workers who can manage international projects and have strong English-language skills will make it harder for the country to become a leading provider of services to companies in Europe or the United States.

Tags: offshoring - outsourcing - India - china

Prashanth Rai 

Enterprise Support By SAP

Is this an effort to reduce the implementation and maintenance costs or is it an effort to take away money from the implementation partners or both, We will soon find out.

In Sapphire recently SAP introduced an offering called SAP enterprise support.

IDC on Enterprise Support

SAP Enterprise Support develops and expands selected SAP capabilities to provide greater support flexibility and protect mission-critical processes for both large and midsize enterprises.

SAP Enterprise Support includes new features, tools, and processes that apply throughout the life cycle of a customer’s SAP environment. From design and build through implementation, operations, and ongoing upgrades, SAP Enterprise Support can support SAP customers at every phase of their SAP life cycle.

SAP Enterprise Support provides new tools and capabilities for a change management process that can be applied from scoping to deployment. By utilizing one process throughout the life cycle, SAP Enterprise Support can help customers maintain consistent levels of support for change and quality management while potentially reducing the risk of production downtime.

Enterprise Support also includes third party applications

By expanding SAP Enterprise Support to include third-party applications sold by SAP, the company is providing a single point of contact for enterprises with increasingly heterogeneous environments. This enables SAP to offer a more complete software support solution to its customers.

Tags: sapphire08 - sapphire08+berlin - enterprise+support - AMS - SI

Prashanth Rai