Abstract
Global sourcing, or offshoring, is rapidly becoming the de facto delivery
mechanism for many IT services. The vast majority of the world' s leading IT
services vendors have now committed strategically to growing their offshore
delivery operations, and in the process they are rapidly transforming their
businesses.
Western IT services vendors included in this study now have 20- 35% of their
staff based in low-cost offshore locations. Most expect to grow this
significantly, in some cases to 40- 50% by the end of this decade. Conversely,
Eastern IT services vendors face the challenge of growing both their offshore
and onshore resources rapidly, and are increasingly keen to integrate local
Western onshore staff into their businesses - both to learn from and to sell
better through.
This report discusses the implications of this massive global transformation
for IT services vendors. We look at the main implications of the shift towards
global sourcing within IT services businesses and consider the operating
models that vendors are developing to manage their new global sourcing
businesses.
(Note: we use the terms ‘global sourcing' and ‘offshoring'
interchangeably in this report, since the distinction between the two is now
less relevant. We also refer to Western and Eastern firms to describe the two
different types of businesses in this industry context. ‘Western' refers
to US and European IT services vendors that have traditionally built their
delivery operations in the same region as their clients, and predominately in
the Western world. ‘Eastern' refers to the newer entrants to the
industry that have built their businesses directly from an offshore delivery
approach. Typically, these businesses are Indian firms; however, it can
include Russian, Chinese, and East Asian and Latin American firms.)
Table of Contents
Overview
Key messages
Shifting the model
- Offshoring in context
- Shared challenges
Implications for vendors
- A holistic and sustained approach is needed
- Sales: shifting the balance
- Processes and tools: supporting sales and delivery
- Staff: managing the staff pyramid
Structuring for success: global models
- Choosing a model: account-based and matrix
- Account-led offshore structure
- Account-led structure in practice: Capgemini
- Matrix offshore structure
- Matrix structure in practice: TCS
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