A classic race...

It is no secret that the main Indian outsourcing companies have ambitions to move up the food chain and to be seen as mainstream players in the high end markets dominated by the "red brick"  tier 1 consultancies.  The Offshoring Times reports on this development in it's article Newer offshoring models in the offing.

As this survey from Business Today shows, the tier 1 consultancies are expanding rapidly in India.  This creates an interesting situation where strong local players are trying to make offshoring work.  In parallel with this, the Indian players are expanding their onshore presence and developing new engagement models to deliver high end services such as large program delivery, transformational outsourcing and strategy consulting.

Right now, the traditional local players appear to have an advantage in this race.  They have the "sales face", they have the offerings, and the onshore people.  Offshoring can be presented as making already good value propositions cheaper.

However, there are three components to successful global delivery.  The onsite engagement model, the offshore delivery model, and the on/offshore management model.  The Indian companies have an undoubted advantage in all three components for commodity IT services, it is more patchy for high end services but there are examples of success to be replicated.  The traditional consultancies are disadvantaged by using a local workforce that is largely ignorant of the dynamics of providing offshore services. 

The race is about people, capability, organization, process and culture.  These are exactly the challenges that face clients engaging in transformations and large program delivery.  The talent required both by clients and for internal change are scarce, senior and expensive people. 

Given that a side effect of the current economic downturn is an increased focus on utilization, there is a classic tension between short and long term benefit.  The long term winners will be those that put sufficient and timely investment into creating the new operating models.