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October 2009 Quick Hits - News, Trends & Analysis

Mid-size Outsourcing Companies Shine
Due to the changing market conditions in this recession it is predicted that the top three Indian IT services firms (TCS, Wipro, Infosys) will expect slower growth than the overall industry. As quoted on Offshoring times "The growth of the Indian IT industry will come from sectors where Tata Consultancy Services (TCS), Wipro and Infosys do not have a presence, therefore causing the market leaders to lag the industry. According to the analysts, one of the reasons for this trend is that the Business Process Outsourcing (BPO) sector is likely to grow faster than IT services in the coming years. BPO exports are expected to be larger in absolute dollars than IT services by 2020, according to Nasscom data. The major share (over 40 percent) of the BPO opportunity continues to be in relatively lower-value customer interaction services, which is not an area of focus for the big three IT firms". The big three focus primarily on Tier 1 companies, and as that market place saturates, smaller providers will be better positioned to work with mid-size companies as they have already been focusing and delivering in that market segment consistently.

Indian Offshore Provider Closes Major Middle Eastern Deal
The Middle East Outsourcing market has been fairing well during the global recession. Historically, they have an appetite for outsourcing to local providers, but in the past 5 years many offshore providers have been gaining ground in the region through local partnerships. Tech Mahindra have recently closed two deals in the region with Emirates Telecom & Saudi Telecom. As quoted on offshoring times about the Emirate Telecom deal "The deal with Tech Mahindra includes IT implementation and managed services. It is one of the largest deals for Tech Mahindra in the region. He said the deal size could be between $40 million and $50 million. Multinational firms Hewlett Packard and Cisco, which provide server and networking hardware, have also won different parts of the deal". It clearly demonstrates a shift in the region to explore value offering from offshore providers.

CIOs Scrutinize Google's Cloud
Google is seen as a great advocate for the individual but often fails to convince the corporate crowd that it has the processes and rigour to deliver a service comparable to a Microsoft, Oracle and IBM. It was reported on Computerweekly that Google received a sceptical reception from CIOs at an annual outsourcing conference. Robert Whiteside of Google Europe spent 30 minutes promoting the internet firm's commercial credentials and cloud computing services, but most of the feedback was fairly harsh. Some of the feedback: "How can we trust an American company with our European data", "Does Google have the due diligence and processes in place to run a secure data centre", and "We are scared of sending personal information over the internet".

Google responded by noting that "cloud services were three to five times cheaper than in-house IT and that they would remove the stresses of managing technology, increase profitability, improve customer satisfaction and give IT directors more time". My recommendation to Google would be to open a data centre within the EU to avoid EU Data law complications, ensure the cloud environment achieves the necessary security qualifications/standards, and then to offer the services at lower prices than its competitors and I am sure we will see many of these concerns disappear.


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