some new definitions:
Core: Processes that enable and amplify your chosen vector of competitive differentiation
Context: All other processes
This Core and context can be again classified on ‘Mission critical’ and ‘Non-Mission-Critical’ which leads us with four quadrants. See the picture below to get a better idea:
Indian service companies, which are offering ‘pure-vanilla-service’ come under the bottom right side of this model, which is popularly known as ‘outsourcing’. There is very little value addition can happen here as it falls under ‘non-core’ activity.
Sitting in places like India, contributing into the ‘core’ portion is extremely difficult. Following are the major challenges Indian companies are facing now:
- The offshore team is totally un-aware of the customer needs. They are far away from the customers and most of the technology products won’t get deployed in countries like India. I won’t see this changing in the near future because these ’emerging markets’ need to mature a lot before they start adapting any new technologies. Except for the areas mobility I don’t see any technology has taken off in countries like India.
- The local job market is over-heated where retaining talent has become uphill task. Engineers jump jobs every 1-2 years and its very hard to build the product building expertise with this mindset. I have personally seen engineers dedicating 30 years in a same product and understanding ‘nuts-and-bolts’ it. Its very very hard to such stuff here.
- The offshore leadership team is primarily grown in the engineering domain and lack business acumen. For example a second level manager don’t have much idea about the big picture of the overall product. They only possess expertise in areas like: resource management, delivery management and to certain extent program management.
Now, how does the future looks from here on?
At one end its hard to imagine any US/UK based company to offshore the ‘core’ work because it doesn’t make business sense.On the other end the offshore entity can’t do much because they don’t know the customer. In a way the ‘offshoring’ is stuck in top right portion (quadrant-III) of the Geoffrey Moore model. In my perspective, it will continue to stay there for a long period
of time until the local market gains significance. The local market growth will mainly depend on multiple factors like: Good governance, robust infrastructure, litracy and technology awareness. I would say the ‘india-offshore-story’ has just begun and it is foolish to start celebrations at this point in time. These companies have got to cover much more distance before they really achieve ‘value creation’.