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Public Council Teleconference: Application Rationalization — Hidden Costs and Smart Decisions
November 17 at 11:00 am US/Eastern (GMT-5)
Join Honorio Padrón, of The Hackett Group, who will share the drivers for companies to tackle application rationalization and the results of research that define the hidden cost of complexity. Additionally, we will discuss key decision milestones—to start or not, holding the course steady and fulfilling expectations.
Virtual Desktop Cost-Benefit Analysis — Michael Jacobs, Catlin Group
The analysis contained in this presentation measures the cost of everything from the machines and licenses to the infrastructure for virtual vs. traditional desktop environments.
Honor your best senior team members - Apply for the CIO Ones to Watch Award
Get well-earned public recognition for your top up-and-coming team members, your IT organization and your enterprise. Award winners will be announced, publicized and feted in May 2010, great timing to help attract new IT recruits to your company.
Learn more about the CIO Executive Council »October 03, 2008 — CIO —
The ongoing credit crisis is a concern for everyone in nearly every industry—fear of lost jobs, foreclosed homes and bankrupt businesses. But those lost jobs are likely to further bolster the booming offshore outsourcing market—so the experts predicted. (Also read How to Save Your Job During a Recession and 10 Secrets for Searching for a Job During a Recession.)
Fast-forward two months: it's time for them to eat their words. Neither are customers outsourcing more nor is the industry growing any faster. In fact each day service providers only revise their growth estimates in the downward direction.
Some brave analysts are finally coming out with the truth. Days after Wall Street's collapse, vice-president and principal analyst with US research firm Forrester, John McCarthy, said the scale of the crisis had rendered all previous studies including Forrester's own survey, released earlier this month, redundant, and that Indian IT providers should prepare for slower growth and lower profits. "It is naive to say an economic slowdown is good because cost-cutting will lead to higher offshoring. This is no longer a recession, it is fundamental restructuring of financial services that is taking place," says McCarthy.
What the hell happened in these two months?
Multiple factors are at play here—some recent developments and some historic issues that have been building over time.
About 20 percent to 40 percent of the revenues of offshore outsourcing firms are tied to the financial services industry. With its collapse, companies have been forced to look to other vertical markets. In normal circumstances, that should have been enough to offset the revenue erosion. But the problem is, that everyone is in the same boat and those other industries are also impacted by the crisis, fading consumer demand and reduction in spend.
For example, the travel vertical has started seeing a rise in ticket cancellations and refunds, which has led service providers like WNS to greater conservatism on revised guidance. Hexaware stated that delayed decision-making is spreading out from BFSI to travel, and it has now reduced its annual growth estimate from 24 percent to 7 or 9 percent. Sasken is now cautious about telecom handset segment as all the top-five handset customers are seeing a slowdown in sales (a u-turn from Sasken's bullish stand on this segment a couple of months ago).
So, suddenly all players are chasing a smaller market, in which there was little differentiation amongst players anyway, and it will lead to pricing pressure, reduced profitability and less growth.