Providers’ Views

Arkadiy Dobkin, CEO, EPAM Systems
“We saw a slight slowdown in the first quarter, but we are not sure whether it is the effect of the first quarter or the recession. But as a company, we managed to get to our Q1 expectations. We are a mid-tier ITO company focused on application development, but our risk profile is much different from many others. We don’t have too many large long-term contracts, and our exposure to the U.S. market is about 45 to 50 percent only, and, to the financial-s  ervices segment, it should be about 15 percent. At the same time, we are seeing very encouraging growth opportunities in whole of Europe; particularly the kind of economies there with heavy reliance on oil and gas and other commodities.”

Beni Lopez, CEO, Nearshore Services, Softtek
“We have been seeing that decision cycles are getting longer. There’s also a change in the mix of service offerings we had expected in this quarter. We had planned for the application-development projects, but the pipeline is leaning more toward maintenance and product-oriented projects. We have quality and testing as one of our key areas — we are awaiting to see an impact here, because it is tied down to application-development activity. Our well-diversified portfolio of the U.S., Latin America, China and Europe helps us to de-risk ourselves from the economic uncertainties in the U.S. market.

We don’t foresee the need for drastic mid-course correction to our plans. We are still in the growth mode, and would continue to invest. We had anticipated a second wave of ERP implementation and signed on few projects in this area. But there may be a go-slow.”

Doug Mow, Senior Vice President, Exigen Services
“We don’t see any material effect yet. If the slowdown deepens, we foresee margin pressure brought about by the reduction in billing rates and inflation acting simultaneously. The other thing we are noticing is that customers are reacting much more quickly.

Our focus has been on providing higher value than the rate, and being able to respond to changes our customers want. We handle these things by using two things: a) a variety of contract vehicles to suit the customer — fixed rate, hybrid, etc., and b) relying on the highly iterative Agile methodology. Both of these allow us to manage change and protect margins.”

Max Staines, President, North America, Compass Consulting
“We see that organizations place a lot of emphasis on short-term measures, which become huge problems in the future. At Compass, we study outsourcing relationships and advise customers on how to derive the optimum benefit from their engagements. Overwhelmingly, we see that customers are trying to go in for pre-emptive measures to handle the slowdown. And, outsourcing is seen as an avenue to do so. Even the so-called ‘sacred cows’ are no longer an issue.

Companies may still be somewhat reactive but very aggressive in taking steps to handle the slowdown. They are saying that they are not going to wait for somebody in Washington to tell that we are in a recession. They assume the worst for the purposes of planning. Not all of them would pull the trigger on outsourcing but almost everyone would get to a point where they know what the alternatives are.”

Kartik Kaushik, Executive Vice President and Head, Polaris Americas
“We are seeing some impact gaining ground, but it has not started affecting us in any way. On the contrary, the nature of wins is getting better and our order book looks better than last year.
Our revenues are almost a third each from Asia, Europe and the U.S. — so even if the slowdown deepens, we don’t anticipate too much of an impact.

Our customer portfolio and engagement profile would also help us with new opportunities. For instance, one of the large financial-services companies rationalized its provider portfolio from 200 to three, one of which was Polaris. With the slowdown setting in and the financial crisis on Wall Street deepening, the company is adopting a more aggressive and governed path in outsourcing.

The approach is guarded, but the nature of outsourcing is changing. The capital-market business rarely got outsourced but its now a candidate. The traditional areas used to be the mainframe, the back office and retail banking, but now we are looking at the front office, middle office and risk management.

Again, it’s not a factory-model — it demands deep domain expertise from our consultants, and the project has a high consulting component. It’s no longer about programmers developing software; it’s about financial analysts running a technology-driven financial or banking process. And, this is happening across Wall Street.”

Peter Vaihansky, Vice President, Marketing, Luxoft
“We are seeing some conservative planning from some of the customers. But we have a very positive outlook for 2008 because all our strategic customers are growing well. We have more than half of our revenues coming in from financial services and EMEA region — so that shields us from the full impact of the financial crisis in the U.S. As of now, we don’t see any decline in the pipeline.

Compared to large providers we have a very low onsite-offshore ratio, therefore we are able to offer more bang for the buck, which becomes critical in adverse economic conditions.”