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Winning IT Outsourcing Deals in Emerging Markets Product Image

Winning IT Outsourcing Deals in Emerging Markets

  • ID: 311665
  • December 2005
  • Region: Europe
  • 10 pages
  • iReach

In this report we examine the key areas of consideration for vendors seeking outsourcing deals in small emerging markets where little of no mega deals exist.

We have found that vendors are increasingly moving towards more flexible contract structures built around a combination of fixed-fee/fixed bid service components and value-based/risk-reward mechanisms based on usage or defined service-level objectives.
As a consequence of this, the balance of risk and upfront cost associated with deploying a consultant during the actual contract phase has shifted away from the buyer towards the supplier.

This report reinforces the importance local and domestic market knowledge as a prerequisite to outsourcing negotiations in emerging markets. We declare that the value of local knowledge permeates the entire outsourcing process as it not only alleviates cultural issues and barriers but it cements the negotiation process through the creation of relationships and partnerships.

To conclude, we forecast a shift in trends in IT outsourcing pertaining to vendors more clearly defining their value propositions that they offer to companies. This is particularly important, as most vendors also face continually weak sales pipelines and overall shorter project durations. While most firms have traditionally regarded workforce adjustments as short-term measures in this context, vendors regard offshore and near-shore resources as part of their long-term strategies to defend profitability.

Why buy this report?
- It provides valuable insights into obtaining and maintaining outsourcing deals in emerging markets.
- It identifies critical key areas of concern for vendors
- It offers a strategic approach to emerging markets

Introduction
Key consideration for outsourcing
Importance of local and domestic market knowledge
Trends in IT outsourcing pertaining
Conclusion

The IT services market today continues to suffer from price deflation and chronic consultant oversupply. Consequently, service providers rely on various tactical measures to keep their consulting operations profitable and protect their underlying business margins. Our research shows that vendors particularly focus on maintaining the utilisation of their consultants at a consistent level.

We have found that vendors are increasingly moving towards more flexible contract structures built around a combination of fixed-fee/fixed bid service components and value-based/risk-reward mechanisms based on usage or defined service-level objectives.
As a consequence of this, the balance of risk and upfront cost associated with deploying a consultant during the actual contract phase has shifted away from the buyer towards the supplier.

The potential gains from outsourcing are achieved through proper coordination with internal systems and processes, not ad hoc attempts at blindly reducing costs. Offshore outsourcing presents multidimensional challenges of cultural differences, communication, and coordination but it main attraction to firms lies with proof of high-quality results at much lower costs.

This report reinforces the importance local and domestic market knowledge as a prerequisite to outsourcing negotiations in emerging markets. We declare that the value of local knowledge permeates the entire outsourcing process as it not only alleviates cultural issues and barriers but it cements the negotiation process through the creation of relationships and partnerships.

We maintain the significance of addressing several issues prior to relocating contact centres for the associated cost savings benefits. The emerging trend as outlined by us is that organisations are now discovering that multi-shores may be needed to both deliver high-value customer support and to manage the high cost of labour.

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