IT Services Marketing

Vision Problem: Why Clients and Vendors don’t see the elephant

Last month, I hosted a Breakfast With CIOs session in Silicon Valley. This very interesting session gave some insights on the pressures a CIO is facing:

- Selling IT to the C Suite as a critical component to the business is getting difficult everyday due to:
- C-suite not seeing IT as critical
- Projects not meeting goals
- Aligning IT vision to the business vision

Even as these senior leaders showcased how they successfully managed IT value delivery to the business groups, IT services providers would only distill these insights into a direct relationship to their staffing capabilities.

A project to the service market is measured in just people numbers, not in complexity, business goals, and financial benchmarks. Given this big disconnect in how clients (CIOs) and vendors see a project, how do you think the future of IT will pan out?

Thought welcome

US competing closely with India

That’s the best way to read the findings of a recent study by BDO Seidman LLP, an accounting and consulting organization. The study reveals that nearly a quarter of the chief financial officers at U.S. technology businesses who outsource plan to consider the United States as the main outsourcing destination in 2009.

The obvious reason driving this rapid growth of US in outsourcing services is the rising costs in traditional Indian destinations such as Bangalore and Mumbai, making second-tier U.S. cities like Indianapolis and Boise, Idaho, relatively more price-competitive than in the past, explains a CIO Today article.

And with the global economy burrowing deeper into recession, the pursuit of alternatives for outsourcing destinations to stretch every IT buck thin has accelerated, giving way to alternative onshore outsourcing.

As a result, such unexpected local destinations as Boise, Indianapolis and Idaho are benefiting in US. Reason: Low cost of living in these cities in comparison to other western cities such as San Francisco and Denver, according to a CIO Today article. Also, onshore outsourcing can help firms overcome the inevitable angst of working 24X7 to keep with the time zone in India.

But can this quest to substitute offshoring with onshoring beat the benefits of the dollar-rupee conversion?

Flu Hits Mexican Offshoring Business

Even after Gartner listed Mexico as one of the top 30 offshore locations, the country has been struggling to enter the spotlight of today’s global outsourcing arena.

While concerns over border violence and drug-related crime have already overshadowed the benefits of Mexico’s proximity to US, swine flu is now the latest blow for the Mexican offshoring business, according to an Infoworld article.

“A lot of businesses in Mexico are temporarily shut down, and IT services is a 24-7 business,” Gartner Research Vice President Frances Karamouzis told Inforworld. “The country also has travel restrictions in place now, which was one of the primary attractions around doing work in Mexico – the ease of travel. If you can’t travel there, that ruins business.”

The blow is akin to the Satyam scandal hit to the Indian outsourcing industry. While Indian firms tried to abate the effects by promising value-additions and transparency, there is little that Mexican firms can do.

Suggestions?

More feathers but one hat

Amid the current economic downturn, it can be tempting for service providers to accept any opportunity that comes their way, even if it involves stretching beyond their core competencies.

Big mistake.

While we still endorse diversification as ‘the mantra’ to capitalize on market inefficiencies, the company’s positioning and service capabilities carry much more weight.

Though an apparent paradox, it is important to stay focused and concentrate on your core competencies even while adding services to your portfolio.

Reason: The more you diversify beyond your core competencies, the more the competition. Furthermore, wearing many hats can limit the scope of your niche arena.

Instead, add more feathers rather than swapping hats to provide just about any service that is in demand. We suggest giving your existing competencies a whirl to diversify:

1. Unique positioning: Instead of merging in the crowd as a jack-of-all-trades, solidify your unique positioning by selling your enhanced specialized skills.

2. No restrictions: Don’t read specialized as limited. There is no limit to innovation in any field. Leveraging existing competencies, service providers can become resellers of niche products and services.

3. Value-add: Deliver more in the package. Enhance your current services to help clients develop more competitive advantages. Jean Conover, business development director at TradeMark Media suggests: “Now is the time to cultivate deeper relationships with clients and provide top-notch service. This way, your clients will come to rely on you as part of their solution.”

4. Customer participation: Customer feedback can help you gauge your competitiveness. If your client’s are using other service providers to support or enhance your service, you can find plenty of opportunities for focused diversification.

To further the aim of staying true to your core competencies and resisting the temptation of veering away, just go ahead and declare your focus area to your clients. A MarketingProfs article suggests: “Define one clear purpose for all that you do; that focus could help see you through until the upturn.”

After all, throwing your feathered hat over the fence leaves you no choice but to cross the fence and get it.

Crisis? You mean opportunities?

At a time when traditional technology service providers are struggling to co-exist with the competitive SaaS and cloud computing market, innovation still remains the nucleus of any success story.

Though the timing may seem inappropriate, given the harsh economic realities all over the world, we believe maintaining status quo would be the biggest folly technology service providers would be committing.

In other words, this crisis should be perceived as a catalyst for innovation. A case in point? The dot-com bubble.

E-Commerce Times columnist Jeffrey M. Kaplan says: “While there is no question that the role of the traditional channel will be significantly impacted by the rapidly evolving on-demand services market, there is still plenty of room for innovative channel organizations to operate.”

The need of the hour is to stay abreast with the ever-changing dynamics of technological advancements. For example, service providers can uniquely position themselves with value-added and feature-rich solutions that enhance the use of SaaS and cloud computing services.

Some tips:

The lead

The seeds of any success are sown the moment you hit upon a new idea, and that is half the job done. Service providers can start by targeting the downturn requirements or the issues that come with the implementation of SaaS and cloud computing services. “User organizations of all sizes still need help evaluating and selecting the rapidly expanding array of SaaS providers and cloud computing vendors,” says Kaplan.

The crisis has also reinstated the need for value-added services at affordable prices. Service providers can capitalize on this opportunity and enhance their services portfolio with new solutions specifically designed for the downturn.

Customer requirements

The next most important step is studying the customer’s requirements and matching them with the team’s skill set. For instance, in the case of SaaS and cloud computing services, technology service providers can study the technical requirements of optimizing these services. Armed with this knowledge, the team can prioritize investment decisions and outline new services and solutions that can meet the market’s requirements.

Implementation

The next step, diversification or augmentation of the services portfolio, is a challenging task, particularly in a downturn. But if you have diligently implemented the first two steps, the probability of success is much higher, since the team would already be aware of the possible pitfalls and can address the issues in their implementation roadmap.

The key to successful implementation is to continuously innovate to deliver services that effectively address the gaps created by downturns or industry developments. And with the right approach and intelligent strategies in place, the technology services sector can dismiss the skepticism that prevails. Crisis? Do you mean opportunities?

IBM and India: I like my White Guy in the Cupboard…

Papers are avidly describing how IBM is handily winning deals with Indian corporations like Reliance, Bharti and others, where the Indian WITCH group (sorry Satyam!) is losing out. What is it with these corporate netas? They don’t trust home-grown talent? Need the white guys in their cupboards? Fie!

Think Out of the (in)Box

A recent study by a leading marketing services firm has revealed that firms that cut manufacturing and administrative functions during recession earn more profits than those that brought down their expenditure on marketing. But with the current economic scenario stretching the IT marketing budgets thin, how can firms contain the costs of acquiring and retaining customers?

Try e-mail marketing, one of the most effective and economical marketing strategies that has proved its worth across different genres of enterprises all over the world. There is a weighty and consistent body of data to prove that email marketing generates a high rate on investment. Consider this:

1. The time is now: With increased pressure on IT services to expand their role beyond sales support and contribute to revenue generation and opportunity development, email marketing could be the ideal tool that helps your team reach the target audience. It promises returns in the form of sales, downloads, inquiries and registrations.

2. Get the basics right: Understand the market and the target clients before framing the message. By delivering useful information to the prospective client, you can extend your relationship to the inbox.

3. Concept, copy and design: A good strategy, clear copy and an effective layout can engage the prospective client.

The copy should be brief, straightforward and personal. But no over promising and hard sell. Instead, the message should address the client’s problems and needs.

Also, include a space for response, or direct the reader to a Web page with more information or response space.

4. Call out: Give special attention to your subject line, as this is what will invite the reader to your offer. Say what is necessary to encourage readers to open the message in a simple way. Don’t try to trick the reader like a spammer would.

A wake-up call for the body shoppers

The last decade has been kind to bodyshoppers who escaped under the USCIS scanner, brought in talent (that in itself is questionable) on a dubious visa justification, and made a pile by shopping these folks around. From the experiences of many consultants I have met, this decade was quite like before Lincoln abolished the dark acts of slavery: low or no pay, pitiable conditions, and high profits for the masters.

In the last two months, many things have happened. A CIO of the nation is under watch for scandal, firms in the mid-West caught for unregulated staffing acts, and so on.

Many firms are closing shop because they fear this year the H1B program would not be so kind or blind on them. Oh…what a pity.

If only the community had:
- agreed to play together and not outbid each other
- honestly kept to the pay and hourly rates for the consultants
- insisted that clients be made aware of the minimum legal rates
- insisted on charging those rates and made the numbers transparent

No, the greed precedes good business practice. Let this be a wake-up call. Be honest. Insist on toeing the legal line. Get the nation-wide agencies to form an alliance.

Ask TiE if it will raise its hand to help (I doubt it, but no harm in asking).

Opportunities galore, but is the Indian IT industry equipped?

In these troubled times, the grass, as always, seems to be greener on the other side. As troubled American firms are scaling back, an increasing number of IT outsourcing companies both in India and abroad are realizing that the center of gravity need not always be the US. Today, the force is where opportunities abound.

Courtesy globalization, India is now the new darling, the new draw, for these IT outsourcing firms. While India is no oddity to the spiraling global crisis, the economy is still growing unlike many developed economies that are facing a recession.

An Associated Press article points out the country’s potential: Just about 2% of Indians have computers; half the population doesn’t have access to primary healthcare; 80% of households don’t use banks; and there is a dire need for teachers. Now, all of these are problems that only technology can solve.

Yet, there is skepticism all around. According to Forrester research: India will account for just $34 billion of the $1.66 trillion global information technology services market this year.

Can a predicted market share overshadow the opportunities that prevail in developing nations? Even multinationals are doing more business in India’s home market than Indian companies are. They have certainly seen the potential.

That said, even this industry, known for its robust growth, needs to embrace industry best practices to realize the full potential of the prevailing opportunities.

It takes no rocket science to analyze that the current opportunities demand long-term investments, innovation and maximum productivity. IT companies will have to be prepared to loose revenues in the short-term, provide more than just cheap labor and most importantly INNOVATE.

All this, obviously, for a larger good: to enhance India’s rank in the global market place.

Satyam Scandal: A wake-up call for India

The Satyam fiasco has emerged at a time when India is struggling to sustain its glory as the IT outsourcing industry darling. As mentioned in a previous post ‘Is India’s position jeopardized in the outsourcing game?’: Such countries as China, Vietnam, Philippines, Russia, Poland and other in Eastern Europe can give India a run for its money.

The main issues that clients face with Indian outsourcing firms are communication, under-qualified staff, turnover of key personnel and delay in deliveries, according to a recent Information Week survey. And these findings are consistent with last year’s survey.

Now the Satyam scandal may just accelerate the pursuit of alternatives or other offshore destinations by international clients. The survey reveals that 38% of respondents plan to decrease their involvement with Indian firms this year.

While on the contrary, 31% say they’ll do more work with them. Cost saving is the most frequently mentioned advantage, cited by 72% followed by access to technical skills (33%) and the long-term partnerships (26%).

The emphasis now, along with value-addition, should be on making the firm trustworthy. Especially since IT providers have significant access to sensitive data, proprietary systems and intellectual property.

As companies in other countries will try to capitalize on the crisis, it is now vital for Indian IT industry to adopt the best practices in outsourcing—knowledge-driven, value-addition, risk management, project documentation and an absolute transparent process.