Presentation given by David Carpini, SVP of Symphony Services, at the Intellect UK Summit on Offshore Product Development in February 2009. Carpini covers trends in outsourced software product development and implications for the European market.
4. Different Mission – Understanding what drives Product companies is the key IP Protection Time = Release Dates Customer Facing v. Internal Applications Product Development is NOT IT Services Release Date Budget MRD/PRD IP Protection Principles Development = ƒ(Release Date, PRD, R&D budget)
5. Different Mission – Understanding what drives Product companies is the key IP Protection Time = Release Dates Customer Facing v. Internal Applications Different Skills Product Development Rigor Background & Quality of Talent Dedicated Development teams Non-transient Product Development is NOT IT Services EVP Engineering Head of Dev Head of QA Head of Support GOC Mgr GOC dovetails into the Engineering Department QA Manager Dev Mgr 1 Dev Mgr 2 Software Architect QA Leads Config Support Dev Leads Dev Leads Sr Dev Engrs Sr Dev Engrs Sr QA Engr Dev Engrs Dev Engrs Access to Centers of Excellence/Practice Lines for troubleshooting and/or project-based needs QA Engr CoEs / QMS / HR & Recruitment / IT / Finance Symphony GOC is an extension of our client’s engineering organization
6. Different Mission – Understanding what drives Product companies is the key IP Protection Time = Release Dates Customer Facing v. Internal Applications Different Skills Product Development Rigor Background & Quality of Talent Dedicated Development teams Non-transient Rise of Specialized Providers 100% Focus on Product Development Different Operational Models Different Contracting Models Product Development is NOT IT Services If you are looking for Product Development expertise and you are talking to an ITO provider then you are both in the wrong meeting!
7. OPD is not ITO Impact of the Economy on Outsourcing Trends and Observations
10. Impact of the Economy Deer-in-the-Headlights phase has passed Non-Decision Phase conserved cash But the Economy has created a Call-to-Action McKinsey & Duke Offshoring Research Network recommend to Invest in R&D in a Downturn Speed and costs limit new captive options However, European ISV’s are slow to Adopt Global R&D Strategies 60% not leveraging offshore 10% have captives What Are You Doing Today? What Will You Do? Source: Zinnov Management Consulting Pvt. Ltd.
11. OPD is not ITO Impact of the Economy on Outsourcing The Productivity Challenge Trends and Observations
12. Clients should not experience short term job losses and a less effective workforce 11 Good Partners ensure Effectiveness and Productivity through a Metrics driven approach
13. OPD is not ITO Impact of the Economy on Outsourcing The Productivity Challenge Rise of Performance-based Contracting Trends and Observations 12
14. Recent Events Change the Way People Look at Outsourcing Contracts Economic Crisis is launching a new wave of competitive pressures for providers Satyam scandal fuels the flames for more contract control Outcome-based Contracting Moves dialogue away from rates (lowest-common-denominator) to business alignment discussion SLA based contracts and output based pricing Can be a win-win for both provider and customer if structured correctly Expect Greater Flexibility of Contracting Vehicles Balance “great terms” versus profitability and sustainability for your engagement The Rise of Performance-based Contracts 13
15. OPD is not ITO Impact of the Economy on Outsourcing The Productivity Challenge Rise of Performance-based Contracting Captives Beware Trends and Observations 14
16. Captives are falling short of the mark – especially SME launched captives Scale is critical to financial effectiveness. Sub-scale captives encounter 30% - 50% Lower Productivity versus onshore teams 35% Higher Cost than working with a provider Difficulty with Recruiting and Retention While many analysts peg the magic number at 500 or more, even at 200, almost ¾ of captives don’t pass muster Market Correction: 70% reduction of new captive launches over past 4 years 60% of Captives are failing according to Forrester Research Source: Zinnov Management Consulting Pvt. Ltd.
17. About Symphony - Markets Served and Sample Clients Enterprise Software Storage & ILM Web/E-Commerce Telecom & Mobile High Tech Mfg Service Providers
Be prepared to talk about why captives fail:Inability to invest in best practices and toolsNo career path – screws up balanced pyramid – who wants a 5 year guy doing fresher work?Infrastructure and administration costsMention that attrition has been a historical problem, but that today it’s not a big issue with the downturn. Wipro, Infosys laying off for first time.
