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NASSCOM: INDIA LEADERSHIP FORUM 2009 Re-shaping the Global Economy, Session 1B: Euro Vision: Is Fortress Europe opening up?
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NASSCOM: India Leadership Forum 2009
Euro Vision: Is Fortress Europe
opening up ?
Sudip Banerjee
Copyright © Larsen & Toubro Infotech Ltd. 22
Fortress Europe crumbling down !!!
Copyright © Larsen & Toubro Infotech Ltd. 3
Key Characteristics/Stereotypes
3
EU single market – but 27 different member states ! Language Barriers Cultural Barriers Lack of Outsourcing Maturity Local Presence and Infrastructure Pricing pressures and Currency fluctuations Skills shortages Protectionism – might increase Unique Business Practices across the countries; no standardization Labour laws fairly strict and rigid
4
Composition of Continental Europe Market
Continental Europe is not a homogeneous market ... but a mix of different
markets !
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Largely packaged product centric Local templates across countries. Several disparate tax rates and
currencies
5
Specific Requirements for doing business in Continental Europe
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6
Perception of Global vendorsStrong
Relationships
Cultural alignmentAs the vendors have local presence for years, they are more aligned with the specific cultural needs of clients
Offshore coordination
This is one area where clients perceive global vendors to be weak.
Cost competitiveness
Typically, the total price to clients for the same project has been seen to be 30% - 100% more for global vendors as compared to offshore providers
Language skills Clients are more comfortable with global vendors in specific cases where language skills play a major part
Transparency and access
Global vendors are perceived to be opaque about their costs and delivery, offering very little direct access to offshore resources
Str
on
g
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Weak
Clients have strong relationships with these vendors, as they have been working together for years and thus better understand customers
7
Perception of Indian vendorsS
tron
gW
eak
Onsite/offshore co-ordination
Cost transparencyIndian vendors are perceived to be more open about their pricing structure, and they generally price lower for the total offering vis-à-vis global peers
Language/Cultural alignment
For services involving a high degree of language and cultural sensitivity, Indian vendors score lower in terms of client perception
Management attention
Top management at Indian vendors is perceived to be very approachable, which gives clients a sense of satisfaction in terms of service assurance
Operating modelsCustomers believe that the operating, delivery and engagement model of Indian vendors is more efficient for global sourcing
Pressure on availability of senior talent
At times, clients have perceived a lack of availability of senior talent on projects which may be due to wage inflation, and resource crunch in India
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Generally their experiences have been positive. Initially they believed the marketing hype, then some disillusionment, but they found the alternatives not up to the mark either. For large engagements mantra for success has been – ‘local engagement managers supported by offshore teams’.
Clients have experienced strong offshore/onsite coordination from Indian vendors – something missing to varying degrees at global vendors
8
Management Attention
Strong top management focus and presence right from the start of deal pursuit is becoming an unwritten expectation
Transparency
A key issue clients have faced with global players is that of transparency, in terms of actual cost and resources being allocated to them
They therefore expect a high level of resource and cost transparency, and a billable ‘front office’ or heavy overhead simply does not meet their expectations
Flexibility
As typical Development and ERP implementation project workloads vary over time, clients expect their selected providers to be flexible in terms of resource allocation, to a maximum extent possible
A Core-Flex model of resourcing is becoming a clear expectation
Access to resources
Customers today want direct access to offshore resources, and the associated data/details on their qualifications, experience, resource usage etc.
Some customers have put strict filters in place to ensure that only employees with a certain minimum level of experience work on their account
Expectation from Indian vendors
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Risk Mitigation Models
Different models for risk mitigation like ‘No cure, no play’
99
Previous Perception The demand for resources can
be met within Europe; global sourcing didn’t exist.
Offshoring is a passing phase and the advantages are not sustainable.
Multiple languages within Europe, pose a challenge.
The unique business and cultural nuances of Europe act as deterrent to offshoring.
A lot of attempts at sourcing through countries in the Baltic region (Latvia, Lithuania, Estonia) has not really succeeded. Higher attrition and lack of availability of high end skills.
Emerging Outlook There is resource crunch in
Europe and can be met through Global Sourcing.
Global Sourcing is an emerging trend and will further expand, enhancing near shore capabilities.
Number of people being trained with Language skills.
Success stories at a variety of organizations within Europe, which depict cultural fit.
Embracing India at sourcing because of availability of talent and quality skills.
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However, change in overall perception is allowing Indian vendors to enter and explore opportunities in Continental Europe !
Change in overall perception