Sourcing in troubled times
Right in the middle of the meltdown is the Financial Services and the drama in last few months is slowly started to settle down. We don't have companies going bust over the weekend anymore.
I have been thinking about what's going on in the strategic sourcing world recently and what our reaction should be?
First of all, there is a panic in the market. I could not pick up any other word to describe what is happening out there. Unfortunately, lots of people are not able to see it as either they are isolated or they choose to live in another world.
And, people are acting as they would in any panic environment- decisions are taken by gut-feel rather than assessing the market scenario. Every IT sourcing person that I have met in last few months is looking at only one thing and that's cost. Yep, we can keep talking about the other nice stuff like strategic partnership etc. but right now cost is king.
At the same time some organization are willing to break the mould and enter unchartered territory. Either way, both will require significant innovation in the way services are delivered to client. And' that's a welcome change for everyone. Innovate and help your client. "When people fear, be greedy"- easier said than done.
Comments
One of the fallouts of current meltdown was greater govt interference in some of the most capitalistic countries of the world by means of nationalization and bailouts.
Mritunjay,
I wanted to know your comments on how nationalization and other means of govt influence is going to influence the sourcing decisions of some of the major players in BCM space.
Posted by: Sunil Sharma | November 19, 2008 12:12 PM
That's an interresting development. I do not think it will have an immediate impact on the sourcing practices in FS space. However, in the long run it will have some impact. We have had experience of selling to nationalized banks and decision making not only tend to be different but also painfully slow.
Posted by: Mritunjay | November 20, 2008 3:55 AM
Right on, cost is indeed going to be the most important factor driving sourcing decisions for companies in these tough times. And the way I see it is, with cost being at the epicenter of the sourcing decision, there is going to be a strong focus on business value delivered by vendors and clients will expect transparency in pricing and demand outcome based and transaction based pricing and emphasize more on risk/reward and gain sharing mechanisms.
And yeah like they say “Greed is an antidote to fear”, so it is time now for the outsourcing vendors to get greedy and innovate in terms of solution offerings, pricing models etc and find the right antidote for clients.
Posted by: Shimja | November 20, 2008 10:59 AM
I believe that, in the current scenario, market dynamics is going to change significantly. With M&A, govt intervention, risk aversion, shift of power bases, change in consumer patterns, cross-economy dependencies, change in priorities .... sourcing too will be looked at differently. Mritunjay has rightly pointed this out -- people will either build a mould around them or break the existing mould. The good thing about this 'Panic' is that people will be forced to think differently and this will help them come up with new ideas. In that sense i would call this (Panic) a trigger for lateral thinking. After all, necessity is the mother of all invention :)
Posted by: Manu Goel | November 21, 2008 7:53 AM
Yes, Cost will be King for the moment.But at the same time once these merged institutions and banks are out of the mess, they will start relooking at their business models, source of Funds and global operations.IT solutions and new platforms will be again on top of their 'Strategic levers' list to drive their new evolving business strategy.
Posted by: piyush pandey | December 4, 2008 10:34 AM