Are Indian outsourcing firms turning down business out of fear of U.S. companies going bankrupt?
As a result of the current economy, there’s an uptick in U.S. companies sending work offshore to places like India. So you’d think Indian offshore companies would be happy about the potential new business opportunities and very aggressive about going after them. Think again.
Only a few Indian offshore companies are chasing these new deals, according to Partha Iyengar, vice president and regional research director at Gartner India. In a Reuters story published March 3, Iyengar went on to say that “Indian firms need to focus on revamping their sales models to help generate cost savings and add value to the client’s operations.” But not everyone agrees with this reason for not chasing potential new business.
In a follow-up comment to the story, one reader from India brought up the concern that U.S. clients could go bankrupt by the time payment is expected. He has a valid point. Although offshore outsourcing does provide some cost savings to U.S. businesses, it doesn’t guarantee they’ll come out of the recession in one piece.
Nonpayment isn’t a concern for Wipro Technologies, an IT solution and services provider in India. Wipro just follows good business sense and selects customers based on their ability to pay their bills, according to Theodore Forbath, chief strategist and practice leader in Wipro’s Boston office. “And in today’s market, it’s not a secret to see which companies are struggling and which are doing well,” he added.
Dean Lane, former CIO and current principal of The Office of the CIO, completely disagreed with the notion that Indian outsourcing companies are not aggressively going after new business. “In this market, anyone who can get business will take it,” Lane said. He also added that he knows of a number of second-tier (based on company size) Indian companies that are always looking for business. The payment issue is not affecting them at all.
It seems like Indian outsourcing businesses still want our business — they’re just being overly cautious about which companies they go into business with. And do you blame them?
Maybe CIOs can learn a lesson here from these Indian businesses. Even if the offshore market gets tighter and it’s harder to find a partner who wants your business, don’t give up your right to be selective. Make sure the partner is economically viable and has the services and reputation you need. You can be slow and steady. Hopefully it still means you’ll win the race — or in this case, survive the recession.
How much pressure are CIOs feeling to deliver the proverbial more with less? At a lunch yesterday of IT and business executives in Madison, Wis., the strain was palpable. So was a creeping weariness with the do-more-with-less strategy that’s been the boast of every hotshot CIO since IT’s own economic Armageddon of 2001-2003. It’s one thing, it seems, to do more with less when there’s money in the banks, or drive IT transformation when business goals aren’t a moving target.
“Why are people at my door asking for more work, when I have less dollars to do it?” asked David Cagigal, CIO for Alliant Energy Corp. “Some of the customers just don’t get it.”
The lunch was an invitation-only precursor to the Fusion 2009 CEO-CIO Symposium put on by the Wisconsin Technology Network. Cagigal was responding to the lunchtime talk given by Ajei Gopal, executive VP for CA Inc.’s products and technology group. Gopal gave a progress report on his company’s reorganization since the scandal-ridden days before former chairman and CEO Sanjay Kumar went to jail for improprieties related to his job, and to deliver the message that now is the time for bold action. While it may be seductive to stop spending, CIOs should be investing in long-term strategies that break down information technology silos and weave IT into every aspect of the business so that CIOs see what they need to see and respond appropriately to provide the business with (ready for the next proverbial?) end-to-end IT services.
In CA’s case, the internal strategy is not so much on gee-whiz technology, he said, but in tying technology together in innovative and novel ways to serve the customer. Moreover, Gopal predicted that in the vendor world, the integrators — not the point-solution companies — will prevail when the upturn comes because customers, too, will be looking for end-to-end solutions. (Unless, Gopal, they don’t work.)
The spiel was met with some pushback. Alliant’s Cagigal pointed out that CA was ahead of the curve, fortunate to have reinvested in its technology strategy before the crash. How do you convey the need to optimize the business now?
Another CIO observed that IT transformation is a good deal easier at a company whose business is technology than at an organization such as hers — the Wisconsin Department of Children and Families. “The challenge I have as a CIO is to try to help translate the investment of IT to the mission of the agency,” she said, to bosses who don’t understand IT well enough to appreciate the argument. If money becomes available, the agency’s instinct is to hire more social workers rather than sort through how IT could make the current workforce more efficient. (And when the need is urgent, who’s to blame them, as IT transformation doesn’t happen overnight.)
Frank Ace, CIO of the Wisconsin Department of Justice (DOJ), echoed that sentiment. For the DOJ, getting more law enforcement on the street will always be more important than adding another MB. Frank said that IT may be a victim of its own brag: The industry does promote IT as the tool that can help organizations to do more with less. And now CIOs may be caught in a trap of their own making. The cost of IT has slipped down the list of priorities for many organizations.
If you follow the trend of doing more with less, eventually you’ll do everything with nothing. IT’s a slippery slope, Gopal agreed.
“The positioning of the value of an incremental dollar spend in IT versus on something that might be seen as the first line of defense, whether it is cops on the street or social workers, is difficult.”
But it is a case that has to be made on value, Gopal said. “That is the conversion you have to make. You can’t talk about a Unix administrator, but the outcome of having that Unix administrator.”
And what happens when the recession basically turns business goals upside down? One audience member wanted to know what happens to IT shops that, like CA, forged a long-term strategy to meet business goals, when those goals no longer exist? The market trend upon which the IT investment is predicated is no longer viable.
The question was met with a kind of grim silence from Gopal and the audience — a reminder of how cataclysmic this recession has already been for some companies.
This being the Midwest, the hand-wringing did not go on too long without a rejoinder. An IT executive with Kohler Co. admonished the audience not to whine. CIOs are working themselves into a lather about cost reductions, but everybody across the company is feeling the pain. And the worst thing IT could do now is single itself out as a victim. “You will generate a lot of resentment among other staff,” he said.
If you’re located anywhere on the East Coast, then I probably don’t need to tell you that we’re covered in several inches of snow, with more to come. Seriously, when will this winter end?
In the meantime, distract yourself with our latest SearchCIO.com content on data protection, log management tools, SaaS CRM and VoIP’s role in IT disaster recovery.
Data protection quiz for enterprise CIOs – Do you know how to protect your organization’s sensitive data? Take this quiz and find out.
Log management tool, SIM boxes combine to form security architecture – A new chief information security officer builds an information security architecture to analyze log files and create metrics for business discussions on compliance and security.
Using SaaS CRM for application integration gives users single sign-on – Learn how a financial services firm modernized system functionality by integrating Software as a Service CRM with 10 back-end systems in a $250k project. The result: time savings, new clients and big ROI.
When IT disaster recovery plan is put to the test, VoIP becomes savior – As floods test a utility’s IT disaster recovery plan, a Voice over Internet Protocol installation rescues business continuity efforts and shows the importance of DR planning for offices other than your headquarters.
It’s always refreshing to hear about a company that had to put its IT disaster recovery plan into action and comes out the other side having faced unexpected challenges with valor – and just enough battle scars to improve the plan for next time.
That was the case at Alliant Energy, as our Linda Tucci writes this week. The Midwest utility now has a 10-page document of lessons learned following the Iowa flooding last summer, when its Cedar Rapids, Iowa, high-rise was evacuated and IT had to RTTO (rise to the occasion).
One issue: The company’s IT disaster recovery plan focused on headquarters in Madison, Wis., and so didn’t contain contingency plans for things like the Cedar Rapids building (home to a redundant data center) shutting down. Luckily, the local leadership secured space around town and expanded a VoIP deployment then in process to get operations up and running much more quickly than they would have otherwise.
What’s in the rest of the 10 pages? Stay tuned; you’ll find more DR lessons learned in our disaster recovery and business continuity coverage to come.
A story on SearchCIO.com this week about eight qualities of a good leader during a recession included a lot of leadership advice for IT professionals. While I was doing the interviews for this piece, a nugget from leadership expert Jason Jennings, about being a “fish out of water” leader, really stood out to me:
Jennings identifies several traits that set conventional leaders apart from great leaders, who he terms “fish out of water.” Conventional leaders cast themselves as larger than life and sure in their stances. They are secretive and avoid signs of weakness. A fish-out-of-water leader, meanwhile, is humble and expresses self-doubt when appropriate. He is honest and admits fault when necessary.
Unfortunately, many “conventional” business executives have made news in the past several months as corporate scandals and mammoth bailouts have grabbed headlines, Jennings said. And that’s why leaders should aim for something different.
“‘Fish out of water’ is a good way to describe people who buck conventional wisdom and don’t just go along,” Jennings said.
I couldn’t agree more strongly with Jennings on this. Clearly, the leadership model that has defined much of the past decade is not working out the way anybody hoped. A confident leader is one thing; a deluded manager with the attitude, “I’m sure I’m right and this is how it’s going to be done and I’m not interested in anybody else’s opinions on this” is not.
Sure, that might seem obvious to some, but I’m surprised how many workplace “leaders” I’ve encountered who don’t seem to understand that humility and honesty will get them further with their staff – and even their superiors – than blatant posturing.
Do you agree with the traits listed in our leadership qualities article? What leadership qualities do you view as crucial during tough times? Feel free to share your comments below.
Also, I’m thinking of writing a companion piece about the qualities of a good IT employee during a recession. If you’re a CIO or IT leader who would like to talk to me about what you look for in employees during rough times, please e-mail me.
Happy Presidents Day! If you’re in the office today (or even if you’re not), check out the latest stories from SearchCIO.com:
Economic downturn hits IT budgets — Our comprehensive survey of IT spending plans for 2009 shows that the recession is taking a bite out of IT budgets, particularly for hardware purchases. Security and compliance spending is up, and the focus on business intelligence continues. Does this mesh with your organization’s spending patterns in 2009? Add your comments below!
Network access control case studies show varied options — Network access control is controversial but needed, experts say. Read our collection of case studies — including our latest story on why one architect chose Microsoft NAP — to learn how three universities have put the technology to work.
Seven tips to improving enterprise data protection — CIOs should take a holistic approach to enterprise data protection. Security expert Mark Egan offers seven tips for enhancing your data protection policy.
IT support costs trimmed via workforce realignment, remote access tool — The Salvation Army helps those in need, but sometimes it needs a bit of help, too. The organization is turning to workforce realignment and clientless remote access tools to stave off layoffs, cut costs and increase efficiencies during this recession.
Of interest to me this week: stories of how CIOs are approaching IT consolidation not just in the data center, but also in their organizations. It’s no surprise that flat or reduced budgets impel a leader to look at roles and processes to find efficiencies, and often, when you’ve already done this time and again, your next choice is a massive restructuring.
Often that means IT centralization: Organizations that moved IT out into the business units to get closer to users are finding, as the Salvation Army did, that bringing them back together makes more economic sense, especially given technologies to manage branch offices remotely. Then there’s the move to combine disparate IT units, as is the case in Tulare County in California, where Lee Root, IT division manager, merged two county IT departments. That’s not unlike what Stephen Fletcher set out to do for the state of Utah — combine 24 separate IT departments and 1,000 IT employees into one central IT unit. When we spoke to him in 2007, he expected the effort to take three years.
IT centralization is no small effort — as Tulare County’s Root says, “We had to merge two separate workflows, two separate IT systems, two separate policies and we had to find a new way to manage IT services” — and large enterprise mergers have many times that number of systems and policies. Indeed, there are many other considerations, as Susan Cramm, former Taco Bell CIO, writes in a piece on IT Centralization or Decentralization, and the answer isn’t always soup-to-nuts centralization. Still, evaluating your organization with some centralization in mind makes too much sense not to consider in these tough economic times, and I expect we’ll see a lot more of it.
Welcome back, readers! This past week at SearchCIO.com, we covered desktop virtualization, Software as a Service (SaaS) contract negotiations, IT vendor management offices and data protection services and strategies. Check out the full stories below!
Desktop virtualization not all about cost savings – Virtual desktops have strong security and management benefits, but looking to desktop virtualization to save money may be a stretch. Read this article to get an idea of the benefits and drawbacks.
In SaaS contract negotiations, focus on customization, future pricing – In a recession, everybody is looking to make and save money where possible. Changing pricing models, longer contracts and customization are making it harder to switch providers, so build safety nets into your SaaS contracts.
How to build an IT vendor management office or standards body – Vendor management offices and standards bodies can help large organizations save money on IT purchasing and better manage vendor relations, both critical during a recession. Read this story for advice on how to set up a vendor management office and insights into how they can properly assess vendors.
Data protection services and strategies for enterprise CIOs – Enterprise CIOs can improve data protection in their organizations by reviewing the strategies, case studies, tips and technologies in this extensive guide.
A couple of recent stories, “VDI vs. fat clients: The tradeoffs,” and “Virtual desktops and virtualized applications: An FAQ for IT executives,” caused a few readers to reach out to tell me I missed the boat on some of the key benefits of desktop virtualization.
One reader wrote:
“Your article today, ‘Virtual desktops and virtualized applications: An FAQ for IT executives,’ caught my eye. I did not notice any mention of disaster recovery/business continuity or security in your article.”
In response to the VDI vs. fat client article, another reader called me on having to be connected at all times when using VDI and not including a remedy for the high storage costs related to using this technology:
“I think some of the benefits of VDI were missed by this article. Granted, you need to be network-connected, but one advantage is you can connect to your virtual session from any device that can bring up a Web session. We are currently piloting a VDI solution — I have been running on a VDI session for about six months utilizing an HP thin client device. When I go home, I can hop on my personally owned desktop and connect to all my corporate applications — no lugging a laptop around, no added cost of a laptop over a desktop and no concerns that I will lose corporate data if my laptop is lost or stolen.
“From the storage perspective — some of these problems can be solved by thin provisioning. Also, the next release of VMware VDI will help mitigate some of the added storage costs.
“While the points made are valid — the article could have expounded on the benefits a lot more.”
Yet another reader said the piece was spot on as far as the tradeoffs of VDI but again brought up the question of how to address storage costs:
“It essentially confirms my own line of thinking, having investigated a thin client desktop solution. It would have been nice to compare the actual storage needs in a table so we could see just how much more storage you need for a virtualized solution.”
Storage, disaster recovery and security are obviously top of mind for these readers. Where else did I miss the boat?
Will the economic recession result in an uptick in IT education and training? That seems to be the case at some high-powered New York law firms, where attorneys with unbillable hours on their hands are showing an increased interest in how their IT systems work.
Karen Levy, director of global technology for Debevoise & Plimpton LLP, said that getting face time with the law firm rainmakers is a perennial challenge. They were too busy jetting around the world to talk to you, said Levy, a panelist at the Chief Information and Technology Officers Forum in New York this week.
Recently, Levy’s trainers were asked to do a presentation on Excel at a small subpractice group luncheon they assumed would be attended by junior associates.
“There were 25 partners in the room,” she said, adding, “which gave me a stomachache.” But the sea change gives CIOs an opening.
“I think for the past 15 years at these conferences we have had multiple sessions talking about how challenging it has been to get good training to our lawyers, who are so busy billing hours that it is actually too expensive for us to train them, because there is such opportunity costs,” she said.
“We now have this window of opportunity where they have a little more time, they want to be busy and we can tailor some training classes and keep their professional development going in the period of the downturn,” she said. Her team is developing specific IT education and training for the firm’s lawyers, as a result.
The flip side of that, chimed in Peter Lesser, director of global technology at Skadden, Arps, Slate, Meagher & Flom LLP, is that because the attorneys are less busy, “they call us more.”
His team is seeing an uptick in the number of calls to the call center. “People have so much spare time. If I was to do the math on the number of hours I’ve spent with our technology committee members, in the past eight weeks the hours have gone up tremendously, because even some of those partners are just less busy and they are trying to find ways to fill their time,” Lesser said, adding that it is incumbent on CIOs to take advantage of that time to educate their customers and build stronger relationships with power brokers.
“We have an opportunity to get in front of people that it was hard to get to before,” Lesser said.