IT services providers are struggling to develop their offshore delivery capabilities to meet the increasingly sophisticated needs of their clients.
The biggest trend sweeping through the IT services sector is the increasing use of low-lost labor in offshore locations. Although India is currently the number-one destination for offshored software and processing services, client companies are keen to look at alternative locations such as China, Eastern Europe, and Russia in order to achieve even greater cost savings.
A new report from Forrester Research Inc has assessed the progress that six major services companies, three Indian vendors and three large Western players, have made in implementing global delivery models, or GDMs It found that IBM, EDS, Accenture, Tata Consultancy Services, Wipro and Infosys have much work to do in order to have a genuine GDM, with none leading in its adoption.
John C McCarthy, vice president at Forrester, said: The grouped ranking of the vendors is an indication that the move to a low-cost GDM is at the beginning of an evolution which will take place over the next three to five years. As providers expand into new locations, develop new capabilities and increase GDM services, they will face unique challenges.
Forrester evaluated the suppliers against 60 criteria, reflecting a fully developed low-cost global delivery model, and found that while the six suppliers are making a broad range of GDM investments, there is no clear leader yet.
The Indian and the Western vendors face a different set of challenges in building up their global delivery capabilities. According to Forrester, TCS, Wipro and Infosys need to improve their account management, to become more multicultural, and to invest in more vertical-specific skills.
The challenges for IBM, EDS and Accenture are to motivate their onshore sales people to sell the company’s GDM capabilities, to further invest in establishing consistent global processes, and to expand their offshore technical and quality skill sets.