GS- In what areas (BPO) would you expect budgetary cuts in 2012? How would these cuts impact BPO activity? Or is there a scope for increased spends? Where and why?

Ramesh- Platform BPO and optimized operations through Technology solutions are the trends. Those who are geared up to provide services in this model will be benefited.

GS- What are some of the shifts in the dynamics of global services (include global sourcing of services, outsourcing, offshoring, IT services, BPO) you would expect in 2012?

Ramesh- The focus will be on improved Return on Investments. These are being enabled through improved productivities with the same spend, alternate geographies & new technologies.

GS- If you are an enterprise services buyer, how have your expectations from service providers changed? If you are a service provider, how have your customer’s expectations of you changed?

Ramesh- As a service provider, we see customers look at our value adds as the key differentiator. They are also looking at end-to-end or ‘One stop shop’ solutions. Customers also want us to take more risk and ownership and put our ‘skin in the game’

GS- Amongst the various segments in IT outsourcing: a) Application development and maintenance b) Infrastructure management c) Packaged applications implementation and d) product engineering/ development- what is the outlook for 2012? What are some of the new drivers for these segments? What shifts do you observe in these segments and overall IT outsourcing?

Ramesh- In ADM area, clients are looking at ‘keep the lights on’ without much spend. Another trend is to move to ‘off-the-shelf’ and SaaS based solutions rather than in-house custom software development. In Infrastructure Management, the focus is on optimizing the existing IT infrastructure as well as going for new technologies which have higher ROI
For Product Engineering - since past couple of years there has been seeing significant outsourcing maturity across multiple domains/verticals especially in High Tech, Manufacturing, Automotive and Aerospace. Forward looking Product Engineering companies set up India captives after successfully engaging with Indian product engineering service companies. North America maintains leadership position in Outsourced product engineering market followed by EU and Japan. Due to EU economic crisis & general economic uncertainty R&D budgets are expected downsized for demand creation related products and solutions. Growth in areas for Demand fulfillment related products and services would continue in key segments. Significant R&D investments in cleantech and energy efficient products & solutions can be expected in 2012.

GS- What are some of the new drivers for these segments?

Ramesh- Labor cost arbitrage is likely to be replaced by domain expertise as the major demand driver as India moves towards offering niche and premium product engineering services. As India poses a large consumption driven market many product companies eying India would need localized customization and support services for their products

GS- What shifts do you observe in these segments and overall IT outsourcing?

Ramesh-  Fundamental shifts in engagement model from T&M based to outcome oriented model is becoming the norm. Certain services which are at the bottom of the value chain are becoming increasingly commoditized putting margin pressures on traditional large outsourcing services companies. Established service companies are exiting from low margin services and verticals making way for innovative small and medium product engineering services companies to engage with marquee product companies.

GS- Which are some of the most promising verticals in ITO for 2012? For BPO?

Ramesh- Life Sciences and Smart Energy are the verticals that we are seeing significant traction and growth for ITO.

GS- If you were to give three pointers for ITO/ BPO in 2012, what would they be? How should service providers align themselves to these? How would enterprise buyers of services align themselves to these?

Ramesh- Service providers should be :
1. prepared to invest in their business in order to build innovative solutions for their clients
2. gain domain expertise and as a result get closer to their client’s business in order to provide more value
3. develop a risk appetite so that they can work with their clients and get paid for providing an outcome based solution

Enterprise buyers will need to invest in technologies to take advantage of emerging paradigms such as mobility, social networking in order to be more effective.

GS- Any specific comments on specific emerging areas, geos, practices, etc. related to outsourcing in 2012?

Ramesh- There will be high focus in the emerging verticals such as Smart energy, Life Sciences. Near shore centers like lower cost locations within the US or Europe region as well as alternative destinations for offshore like China, Vietnam, Philippines etc are gaining ground.